Huawei, Spurned by US, Spends $3.4 Billion in Europe

Huawei officials say the friendlier relationship with Europe will be a boon for both the company and the region.

Huawei Technologies, the huge Chinese tech vendor that is the target of U.S. lawmakers' distrust, is trumpeting its investments and plans in Europe, a region company executives say is friendlier and more open to their products.

At the World Economic Forum in Davos, Switzerland, Huawei officials said the vendor spent $3.4 billion in 2013 buying components, engineering services and logistical services from Europe, adding that the total will grow in the future. In addition, they said Huawei currently employs more than 7,700 in Europe, has created two R&D centers with 14 locations on the Continent, and also has set up six centers of expertise in such areas as finance, marketing and service.

Huawei also is working with European carriers, universities and industry organizations on such issues as standards, R&D and procurement.

The company's efforts in Europe will only create more situations that are beneficial to both Huawei and the region's countries, according to Ken Hu, Huawei’s deputy chairman and rotating CEO.

"Huawei regards Europe as a key competency center," Hu said Jan. 23 during the event in Switzerland. "By localizing our operations and collaborating extensively with European partners, we have improved our overall capabilities. At the same time, our global value chain enabled the capability transfer from Europe to other parts of the world, which generated even greater value from these capabilities. In this process, we have also created a large number of job opportunities for Europe and helped move the industry forward.”

The vendor's warm relationship with European officials and private companies stands in sharp contrast to its dealings with the United States. U.S. lawmakers for years have expressed concern about Huawei and other major Chinese tech vendors, including ZTE, and their alleged close ties to the Chinese government. They see such companies as threats to national security, and worry that Huawei's telecom equipment—including networking hardware like switches and routers—could include backdoors that would give the Chinese government access to U.S. networks and sensitive data, and could become a launching pad for cyber-attacks.

A congressional report in October 2012 reiterated those concerns and cautioned U.S. telecoms about buying Huawei and ZTE equipment.

Officials with Huawei and ZTE, as well as the Chinese government, have denied the U.S. allegations.

More recently, the Obama Administration and other U.S. lawmakers last month expressed concerns about Huawei's deal to supply broadband equipment for a project in South Korea that will build a next-generation network in Seoul. South Korean mobile carrier LG Uplus put Huawei on its list of equipment providers for its fourth-generation network. The list also includes Ericsson, Samsung and Nokia, but the United States has an extensive security agreement with the country, which hosts about 28,000 U.S. troops.

In a Nov. 27 letter to the Obama Administration, Sen. Robert Menendez (D-N.J.), chairman of the Senate Foreign Relations Committee, and Sen. Dianne Feinstein (D-Calif.), chairwoman of the Senate Intelligence Committee, asked President Obama to warn South Korean officials about the risks.

Hu told The Wall Street Journal that the United States' efforts in South Korea made no sense.

"Why would they do this?" Hu asked. "We feel quite regretful. It's a normal business activity, and it shouldn't be affected by these groundless claims."

Huawei officials have pushed back against the actions by U.S. lawmakers, with Ren Zhengfei, Huawei's founder and CEO, saying in December that the vendor is no longer interested in selling telecommunications equipment in the United States. However, Zhengfei and other Huawei executives have said the company will continue to sell other products—from smartphones to servers and storage appliances—in the United States.

"Our go-to-market strategy in the U.S. for the enterprise business remains unchanged, and we are fully behind our customers, partners and channels," Jane Li, chief operating officer of Huawei Enterprise USA, told eWEEK last year.