Huawei Calls Charge of Unfair Government Help 'Hogwash'

itwbennett writes "Huawei's $30 billion credit line from the Chinese Development Bank gives it an unfair advantage over rivals, said U.S. Export-Import Bank Chairman and President Fred Hochberg in a speech Wednesday at the Center for American Progress in Washington, D.C. 'The reality is [that] opaque state-directed capital allows foreign governments to target their financing at specific sectors and companies, while aggressively grabbing market share in an attempt to dominate a market,' Hochberg said. Responding to the charges, a Huawei spokesman called the charge 'hogwash.'"

Re:It's not unethical, just different

[nedlohs]

Except it is not different.

The US Government handed a $30 billion credit line to Bear Stearns/JP Morgan Chase in 2008. The Penn Central Railroad and Lokheed bailouts were in 1970 and 1971, so it's been at least 30 years that the US has routinely been handing over loans and credit lines to companies. Sure to try and stop them failing, but clearly them failing benefits their competitors...

How financing works

[Shual]

Contrary to what is stated in many comments here, there is no loan to Huawei. The loan is to the customers of Huawei, the telecom operators. Here is how it works: Huawei sells equipment to the telecom operator. The Chinese Development Bank pays Huawei. The telecom operator pays back the loan to the Chinese Development Bank over many years at very favorable conditions. Telecom operators absolutely love this setup as they can buy equipment without putting cash on the table. This is a huge competitive advantage for Huawei, and it explains why Huawei has grown to be the #2 telecom vendor in the world (behind Ericsson) in a matter of years. None of the western vendors (Ericsson, Alcatel-Lucent, Nokia Siemens Networks, Cisco) can give similar financing conditions to the operators, and this is going to very effectively kill the European and North-American competitors of Huawei.

Re:It's not unethical, just different

[Anonymous Coward]

Oh lets see... in my lifetime now...
Goverment bailouts....

1970 3.2 billion penn central railroad
1971 1.4 billion lockheed
1974 7.8 billion Franklin National Bank
1975 9.4 billion new york city
1980 4.0 billion Chrysler
1984 9.5 billion Continental Illinois National Bank and Trust Company
1989 293.3 billion Savings & Loan
2001 18.6 billion Airline industry
2008 30.0 billion bear sterns
2008 400 billion Fannie Mae / Freddie Mac
2008 180 billion American International Group (A.I.G.)
2008 25 billion General Motors, Ford and Chrysler again.
2008 700 billion Troubled Asset Relief Program
2008 280 billion citigroup
2009 142.2 billion bank of america

Hows that for a start. And those are just the 'big' ones.

We're hypocrites.