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Huawei Calls Charge of Unfair Government Help 'Hogwash' 90

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.'"
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Huawei Calls Charge of Unfair Government Help 'Hogwash'

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  • I don't see how a multibillion dollar government loan to Huawei is any different from a multibillion dollar government loan to Chevrolet. (Hey that rhymes!)
    • yuppers, the USA is just as guilty of cronie capitalism too
      • Don't forget how they use the NSA to spy on foreign rivals during contract bidding (eg. Airbus vs. Boeing).

    • Chevrolet has established markets worldwide. Huawei is "breaking into the market" worldwide right now. They give the equipment for free to customers, and get their money later in support fees. This is killing all other Telecom vendors worldwide. The customers still pay the same amount in the long run. Also, Huawei did not have the same startup costs as other Telecom vendors, as part of their equipment is stolen from Nokia, Ericsson and Cisco.
      • Also, Huawei did not have the same startup costs as other Telecom vendors, as part of their equipment is stolen from Nokia, Ericsson and Cisco.

        If Nokia, Ericsson and Cisco can prove that their tech was misappropriated, then perhaps they should get Huawei's shipments stopped at the US and EU borders.

        • I believe that Huawei cannot sell any of their Telecom equipment in the US. The Huawei switches exhibit the same bugs that the cisco switches have. I was in Addis Ababa, Ethiopia several years ago, and ETC had a room of Huawei equipment, and some of it was openly running Nokia Networks software.
          • by Anonymous Coward

            Working as an african telecom consultant in the US I can agree with the parent that chinese manufactures often steal tech company's software and designs. Then they take those stolen products and use them in africa where no US company can do anything about it. It further drives home that we can't do anything about it since most of those "vendors" don't sell to the western world.

    • The GM loans were meant to bridge GM in an economic crisis, and allow it to go through bankruptcy reorganization without having to layoff tens, if not hundreds of thousands of employees and allied tradespeople. The Huawei loan is for development, to expand into new business. Both are completely acceptable forms of industrial policy; the difference between China and the US is that China actually has an industrial policy and seems to make loans, grants and government procurement in a systematic way to favor

    • To be fair, it is different from the multi-trillion dollar loans effectively given to US banks by the Treasury via Quantitative Easing.

    • I don't see how a multibillion dollar government loan to Huawei is any different from a multibillion dollar government loan to Chevrolet. (Hey that rhymes!)

      It's OK when the US does it but not when the Chinese do it. Duh!

      The Chinese are this season's French.

    • by mcrbids ( 148650 )

      Back when socialism wasn't a four letter word, it was commonplace for the US govt. to fund development in areas that were deemed strategic. Boeing benefit from billions in exploratory funding, as did Lockheed, Honeywell, and too many other companies to name.

      Cisco, for example, exists because of federal research dollars into Darpa Net.

      The US would do well to remember how we used to do it before China learned from us!

    • by Anonymous Coward

      As if yanks didn't do the same with Boeing.

    • Funny how the WTO doesn't agree....

      Just earlier this year, the WTO expressly noted that the government loans given to Airbus were legal and proper, and the only thing that was the interest rate, which was to be raised. The loans themselves are not at issue any more - which Boeing was trying to have stopped.

      What is also funny is this bloke takes issue with a Chinese company having a government credit line, when the U.S. Export-Import Bank is just that - a US government credit line to any business that wishe

  • protection of own telecommunication industry by governments. i am happy such a thing could never happen in Japan (yeah, sure, forbidding prepaid contracts and not doing anything against monopolistic business practices was just to protect the people from phone scams) or the US (accepting bundled phones as a standard pratice for sure is only for the convenience of the customers), Germany (Wasnt it practical to keep the landline network in the Hands of a former monopolist, which still offers services to the cu

  • I'm tired of the rhetoric presenting Chinese economic policy as inherently unethical. America has implemented excellent strategies for operating and integrating a government and an economy (at least when they work right), but that doesn't mean we possess moral authority on what's Right and what's Wrong in politics and finance.

    These kind of connections between Chinese government and business aren't inherently wrong (or inherently right). They're just different. Murdering protestors and imprisoning reporter
    • by nedlohs ( 1335013 ) on Saturday June 18, 2011 @10:18AM (#36485028)

      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...

      • Your examples are really demonstration only that the US spent at least 37 years between those bailouts not "routinely handing over loans and credit lines to companies". You need continuous examples over that long period of time to show it's "routine". Indeed, their relative infrequency shows that they're extraordinary. Not that any are necessarily OK, but saying they're "routine" is not supported by what you show.

        • Re: (Score:2, Informative)

          by 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 G

          • That is a good start, and sufficient to show it's routine.

            FWIW, I'm no hypocrite. I don't defend most of those specific bailouts, especially the banks and aerospace ones, and also the way the railroad one neutered the railroad industry. The NYC bailout is almost entirely different - that's not a private subsidy, though it enabled the corporations that drove the bankruptcy to get even further from paying their way. Nor do I say that government subsidies to private interests, particularly strategic industries

            • And even in the collective capacity, the US is not exactly a "hypocrite" - hypocrisy is a human characteristic, while groups of humans (governments, corporations) are always self-contradictory in rules of behavior.

              I completely disagree.

              When a person, who is a part of group A, criticizes group B for behavior X, and says this his group is better than group B because behavior X is bad/wrong/stupid, but then it's shown that group A in fact also does behavior X just as much or even worse than group B, that's hyp

              • Sure, but you didn't completely disagree with me. Indeed, you explicitly completely agreed with me:

                "in the collective capacity, the US is not exactly a "hypocrite""
                "No, a group can't really be hypocritical"
                "while groups of humans (governments, corporations) are always self-contradictory in rules of behavior"
                "there's no such thing as a group of humans where they all agree on everything all the time."

                I am not a flag-waver. I am not a hypocrite. Nor is the US, as a country is incapable of hypocrisy.

      • by gl4ss ( 559668 )
        the difference is that they're building the company with the credit - not that they got credit from elsewhere and built a company with it and then went to government. the solution if you don't like this and happen to be in market for some cheap 3g dongles is incredibly simple. BUY THE CHINESE SUBSIDIZED PRODUCTS, that's the only way to screw 'em really.
    • China routinely prevents countries like the US from defending its domestic industries by insisting that government subsidies are unfair trade competition. Yet here China is doing precisely that, subsidizing Huawei to compete with foreign competition. It's an argument within the rules that China is using to make gains. It's within those rules that the argument is either wrong or right.

      Or, rather, that the rules are wrong. I agree with the Chinese that it's OK to subsidize domestic companies in their foreign

      • Don't forget that the US uses the CIA to advance corporate interests in foreign countries. Loaning money is one of the nicer things they do.
      • This is why the WTO should be abolished, and all talk of "unfair trade competition" should be ceased. If a country wants to give subsidies to certain industries, that's their right. It might not be good for people in another country, but that country may think it's better for themselves and their people, and that's all that's important. Similarly, countries that don't like this "unfair competition" are free to enact tariffs or other trade barriers to protect their own domestic industries and their own ci

        • I tend to agree about the rules of the WTO, which should be abandoned because they're smokescreens that never enforce the actually mythical "free trade". But some world trade organization with rules is necessary. Because trade is most effective when conducted by consistent, well understood rules. However mutual they might be is up to the parties involved. The US operates under many rules these days that disadvantage both foreigners and Americans, because they advantage some rich Americans and some of their

          • I disagree in principle. I think we should go back to the way things were 100+ years ago. If a country doesn't like certain things the US does, they should just erect some trade barriers/tariffs against the US.

            Nearly every country is going to do things to advantage themselves over others. Why wouldn't they? If I'm the leader of country A, why should I put the desires of country B's citizens over my own? It's my citizens who elected me, not those other people. Or, if I'm the leader of corrupt country C

            • I'm all for enforcing the effects of trade according to domestic policy by enforcing tariffs. But the more systematic trade rules are made globally, the more the trade is executed according to the values of what's traded, rather than according to how it's traded. Trade is not a matter of right, but what's best for consumers, producers, freighters, marketers, and the rest of the apparatus surrounding trade is for the rules to be consistent, not a special case for each country.

              Not that any of this means that

              • Trade is not a matter of right, but what's best for consumers, producers, freighters, marketers, and the rest of the apparatus surrounding trade is for the rules to be consistent, not a special case for each country.

                It's the job of a country's government to decide what's best for the consumers, producers, freighters, marketers, and everyone else inside that country. Any dealings with consumers, producers, et al in other countries needs to be done according to agreements between the countries involves. Why

                • Because without rules, and with less consistent rules, countries are disadvantaged in trade against other countries that have consistent rules. "Consistent" doesn't mean "one size fits all". And a country like the US is free to negotiate rules approved by its internal, elected organization: the Senate.

                  The problem is that Americans don't oversee our own political system properly. We don't primary candidates within the parties, we don't insist candidates face their records in general elections. Hell, we don't

                  • Because without rules, and with less consistent rules, countries are disadvantaged in trade against other countries that have consistent rules.

                    It's each country's responsibility to manage itself properly, and figure out how to manage its trade relations.

                    The problem is that Americans don't oversee our own political system properly. [snipped criticism of US electorate] The US can enact nearly any kind of trade rules it wants - and it does, because what "it wants" is what its plutocrats want. If Americans org

    • It is globally admitted that China spies on the west in order to help their home grown industries. Huawei has been determined to be the beneficiary of spying by the Chines Govt dozens of times by western governments & corporations. Huawei & the Chinese Govt brush the claims off as false but you don't need to convict them in a court to see governments informally outlawing the use of Huawei on any secure networks. The pattern is quite clear & is a major factor in why no RFP that I have ever seen h

  • has anyone forgotten this, already? nokia getting a $EUR 500 million loan for "restructuring purposes"? and ST Thompson - the business cards of all employees at the ST Chip Foundry has the local university on one side and ST on the other: in this way, ST is able to bypass restrictions on EU Grants to "businesses only". so, yes, it's complete horse-shit for the U.S. Govt to be "complaining" about any funding or investment, when it happens the world over. oh - and have we forgotten the world-wide bank bailouts, already? effectively, *any* business loans prior to the outrageous and non-capitalistic bank bailouts could be classified as "Government Loans". several banks in the UK are now Goverment-owned for goodness sake!

  • So governments want to protect the big companies in their countries? Why would that be a bad thing? You can argue that it prevents a true market from appearing but a true market is not necessarily good for every country.

    Sometimes we need to think both globally and locally. It is important that China has good and big companies in every major area (one reason is to make sure know-how exists in the country). It is important that the US, Japan, Germany, UK, etc. also have. Locally, the cost of loosing knowledge

  • by NicknamesAreStupid ( 1040118 ) on Saturday June 18, 2011 @11:26AM (#36485402)
    . . . from Cisco, a true-blue American company with $40 billion in offshore profits that will be used to expand, hire, and acquire outside of the United States in order to avoid U.S. income taxes.
  • How financing works (Score:4, Informative)

    by Shual ( 574676 ) on Saturday June 18, 2011 @11:38AM (#36485470)
    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.
    • If that's true, then Huawei's denial is the hogwash. It's a wordgame (and a shellgame with the money).

      The correct response from the US is more demand-side financing guaranteed by the US government. Far better than all the supply-side giveaways that don't really grow market or efficiency, and clearly necessary given China's cash advantages.

    • This is a good explanation of why these loans are bad.

      $30 Billion is enough financing for Huawei to corner any market that they choose. That gives them too much power.

      While the Chinese may have embraced capitalism (in the wake of the demise of the USSR), they certainly don't believe in free market economics, and will use whatever means they can to control and manipulate the markets.

      You can boo hoo the US governments corporate bail outs all you want. But the bail outs were never intended to grab and

  • by Doc Ruby ( 173196 ) on Saturday June 18, 2011 @11:49AM (#36485524) Homepage Journal

    I understand that English is probably not the Huawei spokesperson's first language. But calling the claim that China's $60B government credit line is an unfair competition subsidy "hogwash" means that Huawei is denying that it is a subsidy, or that it exists. It exists, and it it is a subsidy. It's debatable how wrong or illegal it is. But it's is not "hogwash".

  • I don't understand why this is being discussed in terms of 'fairness' at all. Someone elaborate. This is a chinese company and the chinese gov't is not capitalist, so there is no requirement for them to give fukk all about fairness. They make their own rules in their own land and have every right to burn every competitor to the ground and leave huawei the last standing if they felt like it.
  • crap (Score:4, Funny)

    by Lehk228 ( 705449 ) on Saturday June 18, 2011 @12:19PM (#36485688) Journal
    Huawei needs the help, I bought one of their tablets and returned it the following day, it was a total piece of crap
  • I'm pretty happy with my bottom end Huawei bar phone. Pretty well thought out (has the software drivers to interface with windoze via USB built in). A lot better than the LG phone I was using but to be fair it is newer. The best thing about it is it is a lot more in the realm of open standards so I can interface with it via linux and things aren't locked down in an innovation stifling way. Now if the software was all open-source/easier to update I could fix a few bugs and it would be perfect. (like getting

  • They've got a history of calling this kind of game around other countries, and turn around and doing it themselves.
    Probably 100% of NAFTA legal claims -from- the USA could be considered as examples. Most particularly around softwood (the US doesn't have the infrastructure - or the timber anymore, so they sued my homeland) and tomatoes (a 10-year-old southern US failure against a 100+ year old British Columbian success)

    I'll just assume it's more US protectionism. It usually is.
  • Banks in India gave 84% of loans [rbi.org.in] to http://en.wikipedia.org/wiki/Forward_caste [wikipedia.org] community

  • I remember Lee Iaccoca in the late 1980s going before Congress asking for tariffs against Japanese automobiles because, "It isn't fair. They [the Japanese] work harder [than Americans]." I was shocked and bewildered by his statement. Is he saying that working hard gives one an unfair advantage over the lazy? Is he telling Congress that Americans are lazy? How can that be an argument against anything?

    When I see someone whining about things that are "not fair," I can't help but remember Iaccoca's plea.

The intelligence of any discussion diminishes with the square of the number of participants. -- Adam Walinsky