Despite full access to Huawei’s headquarters in Shenzhen and her executives (including Chen Lifan, a board member and a senior vice president), CNET continues to report with astounding accusations and insinuations. At the heart of the issue is American and Australian press accusing Huawei of potentially assisting the Chinese government of hacking into American and Australian computers. The CNET report is wrapped up by a segment where writer Jay Greene (who along with Roger Cheng wrote the article) is interviewed by CNET’s Editor, Bridget Carey, titled, “The espionage anxiety over Huawei.” Now, how do you prove that you are not a spy when your accuser merely accuse you of spying? Isn’t the accuser obligated to present evidence? How does a person prove that he is not a savage to a racist who accuses him of such? The video segment below shows what’s wrong with CNET and the American (and Australian) media in general when they lose faculty in judging how ludicrous their own narratives are.
According to this hacking study done by the NCC Group, in Q2 of 2012:
The research tracks the origins of unauthorised network access attempts across the world. From April-June 2012, 22.5% of all monitored attempts originated in the US, 49 million more than January-March, when the nation was responsible for 17.4% of global hacks. China was responsible for 15.8% of the monitored global total, and Russia for 13.3%, up on 13.7% and 12.4% respectively.
The United States is in fact the largest source of hacks on this planet. If we apply the same logic CNET Editor, Bridget Carey, used in the line of questioning she had for Jay Greene, the narrative should be that the United States government is the largest source of hacks in our world. Therefore, Cisco and all American network equipment companies are suspect. It would then be up to Cisco and the likes to prove that they are not under American government control. Until then, Cisco products are not to be sold anywhere outside America.
But, why do markets around the world not block Cisco products? That is because if Cisco is ever caught giving a backdoor to the U.S. government allowing for future sabotage, that’d be the end of the company. Likewise, for Huawei.
One may say, well, the Chinese government is hacking. But, so far, American media or the U.S. government have not produced any evidence.
What about the phishing attacks against Google’s Gmail?
In Google’s latest accusations about phishing attacks originating from China, in fact, Cisco’s very own security expert has discredited the claims. Venture Beat’s Matt Marshall wrote:
Here’s what we know: Mila Parkour, the Washington-based IT specialist at the security specialists Contagio Malware Dump who first spotted the attacks three months ago, and wrote about it here, documented a series of attacks from various locations. These also included Korea and New York.
This has some other experts asking questions, including Mary Landesman, a respected senior security researcher at Cisco. I called her up to ask her point of view of the attacks, and she pointed out that the Contagio documentation alone is not enough to pinpoint Jinan as the source.
“The Jinan, China connection seems to be coming from fact that some phishing emails were sent through 163.com,” she says, “but if that’s evidence, then I think it’s worth questioning. That’s a funny email for cyber [activity].” The domain 163.com may be based in Jinan, but that doesn’t mean that’s where the attack really originated.
By way of explanation, if someone sends a phishing attack through a Gmail account, that doesn’t mean that the attack originated from Mountain View, California (the home of Google, which owns Gmail), she said.
Now, look at how Google planted the insinuations into the American press:
Through the strength of our cloud-based security and abuse detection systems*, we recently uncovered a campaign to collect user passwords, likely through phishing. This campaign, which appears to originate from Jinan, China, affected what seem to be the personal Gmail accounts of hundreds of users including, among others, senior U.S. government officials, Chinese political activists, officials in several Asian countries (predominantly South Korea), military personnel and journalists.
Bingo, American press runs with it, accusing the Chinese government of hacking Google. Remember, Google to date has not offered any evidence!
For whatever reason, Huawei is now mired in this supposed Chinese government hacking of American computers.
If we look at the following chart of the world’s largest telecom equipment providers by revenue broken up by the four markets, Huawei in fact beats Cisco to a pulp everywhere else except in the U.S.. Huawei’s revenue within the U.S. market is almost non-existent. That is because of the accusations thrown at the company and American IT managers are afraid to purchase Huawei products fearing backlash. As the CNET article reports, American politicians in fact personally call American telcos to block Huawei’s deals.
The smearing against China and Huawei as a Chinese company is part of this grander collective defamation. Unlike iPhones and iPads allowed through where China only adds a little bit of value via assembling them, Huawei’s products in fact can fully displace Cisco’s in totality. Perhaps a more apt “proof” to be undertaken is why this isn’t American protectionism.
For those of us who see rampant jingoism in the American press, that CNET article misses no beat in delivering that nonsense:
For all its efforts to become a more Western-style technology power, Huawei continues to struggle to address the concerns of governments and businesses in the United States and elsewhere.
Since when is a Chinese-style technology power not acceptable? Why must it be Western-style? CNET wants to equate “Western-style” to “successful and trust-worthy.” How else might an American reader interpret that?
Huawei might need the Chinese media’s help in doing some defamation against Cisco before that American protectionism truly drops. It’s hard to imagine any other way. Huawei’s Chen Lifan is asking for ideas!
BEIJING SHOTS says
nice to see the australian pupets completely silent on apple tracking iphone users gps locations. also silent on google, and facebook tracking everyones online activity
pug_ster says
I don’t know if you notice, but the picture in the article displays 5 Huawei employees lined up like in a soldier-parade type pattern.
Huawei is an incredibility successful company and the West simply does not like it. So they make excuses like this to try to block this company to make inroads in the US.
JackTan says
Totally off the topic, but I hope some of the editors here can read this http://www.prospectmagazine.co.uk/politics/mark-kitto-youll-never-be-chinese-leaving-china/
and post your thoughts on the blog.
Cheers
silentchinese says
“The United States is in fact the largest source of hacks on this planet. If we apply the same logic CNET Editor, Bridget Carey, used in the line of questioning she had for Jay Greene, the narrative should be that the United States government is the largest source of hacks in our world. Therefore, Cisco and all American network equipment companies are suspect. It would then be up to Cisco and the likes to prove that they are not under American government control. Until then, Cisco products are not to be sold anywhere outside America.”…
You guys are wrong. Huawei and ZTE and chinese government would be stupid if they didn’t develop any tricks.
The thing is… US Government has the biggest cyber warfare capability in the world.
Tap everyone’s phone/fax/mobile/satcom on the planet? already done, ECHELON since 1970s.
Purposily design a info collector and hacker software to spy on your potential enemies? Done, FLAME.
World’s first special built cyber attack virus that has successfully attacked a real infrastrcture? Accomplished: Stuxnet.
Whatever huawei or china is doing, whatever they are accused by CNET or CNN or whoever these brain dead journalists are. even if they are true, they are no where near the destructiveness, capability and reach of aforementioned semi-open cyberwarfare programs (not to mention those that are completely dark). So one truly should suggest that China and Huawei actually do develope some capability in this regard, only if just to defend itself and keep up with the Yanks.
YinYang says
@silentchinese
Call me naive. If Cisco is planting trojans in its products, I think it would be irresponsible of the Chinese government to not kick the company out of China. They are doing $billions of business in China!
U.S.’s control of so much of the Internet’s backbone, tapping capabilities, and etc would mean she would not need to undermine Cisco’s product credibility.
Of course we can’t know for sure. Only the U.S. government and Cisco know.
I doubt Cisco’s products need to be subjected to such risks.
no-name says
According to various reports / articles available via the web, Google has made secret agreements with many major western intelligence organisations including the NSA and Mossad. With Google’s juggernaut global footprint already now becoming very firmly established nobody can compare or compete with the west when it comes to espionage and covert operations including electronic siphoning. Thus the lies and accusations that are being continuously hurled at Huawei (and ZTE) are nothing more than a smokescreen to cover the moves being made by Google, NSA and its Israeli counterpart. I dare say these three are in some way directly connected with the spread of the Flame virus. A new variant of this virus has just been discovered in recent days but I have been unable to recall its (newest) name right now.
no-name says
Around mid-August 2012, a hitherto unknown malicious computer program was discovered infecting many machines in the Middle East. It was found that the program siphoned off passwords and bank account numbers and could delete itself after (presumably) completing all its tasks. The stealthy and complex nature of the spyware including certain parts of the program itself convinced researchers and sleuths that it came from the same people who produced the Flame virus. The name of this latest Flame variant is Gauss.
TonyPow says
Did Huawei steal Cisco’s technology?
Do they pass info. to the Chinese government on sensitive data from their routers?
They’re all unfounded accusations to fight competition. If the secrets can be stolen that easily, we have to blame Cisco for not protecting their secrets and we would have many companies like Huawei. For the same reason and fear, China should not buy products from Cisco. Cisco is using this to protect its bidding from Huawei unfairly. This tactic works successfully in US, but not outside.
The fact is there is no trap door to steal data from the network. If there is one, a good percentage of the global traffic has to be routed via the Chinese equipment already. It is a fact that companies spy against each other, no matter it is a Chinese company or an American company.
Cisco and its rival Huawei are riding on the economy. Hence I expect Cisco’s stock price will fluctuate with today’s range (as of 2012) and it will take off after two or three years hopefully when the global economy recovers. Huawei will be in better position in the long term as their research and manufacture costs are far lower than US. Huawei’s products are very competitive and will capture market shares outside US. The margin of the industry will still be favorable.
gaijin says
The article is incredibly off-base. You would have been right on point if you
compared Raytheon with Huawei (if Raytheon made networking equipment that is).
Would the Chinese govt allow Raytheon’s hypothetical routers in the China backbone.
I bet not and if they did it would be terribly irresponsible of them.
On one side you have Huawei – private Chinese company with well documented ties to
the PLA (party and army functionaries are permanently stationed in the Huawei executive
building in Shenzhen). Its finances and practices obscure (IP theft was a common practice
a few years ago and many believe it still is rampant although a bit more finessed), and its
success (so far) attributed mainly to underselling the competition.
On the other side you have Cisco – public US company, quite transparent (esp. when compared
to Huawei), and motivated by markets to play straight. Cisco customers would have fled already
and Cisco stock would have been in the dumpster, if there was even a hint of “foul play”.
So, you can bet there is no “classified” project within Cisco. Can you say the same about
Huawei ? Heck, even the Chinese government is pretty sure about Cisco’s benign nature
(as far as Chinese national security is concerned) and allows Cisco equipment
to be used in sensitive points in the Chinese network infrastructure.
Get over it, not everyone is out to get China and the Chinese, and not everything is motivated
by “racism” and “China envy”. These things exist in the West and the US. However,
the US and the West (still) sometimes they do things for a real reason :-).
Ray says
@gaijin
So basically, you are saying that China can openly discriminate against Boeing in all future purchase becasue the latter has close ties with the Pentagon?
Nice try, but stupid argument.
gaijin says
@Ray
I do not use words like “stupid” etc because they tend to
degenerate the conversation. So, please try to keep it civil
if you reply.
On the hypothetical discrimination vs Boeing
and my supposedly “stupid” argument:
(i) The Chinese govt cannot for the time being discriminate against
Boeing. It does not have many other options, although (if you
noticed) it prefers dealing with Airbus much more..
(ii) Even the Chinese government knows that dealing with Boeing
on civilian aircraft purchases is safe. The reason is similar to the
the one that makes it safe to deal with Cisco. The arm of Boeing
contracting for the Pentagon, has almost nothing to do with the
commercial aircraft division. The “firewalls” there are quite high,
and being applied rigorously and to a certain extend transparently,
because they are driven by both laws and financial interests.
(iii) Even if the situation at Boeing was as murky as the one in Huawei,
the threat posed to Chinese national security by planting “bugs” in
individual commercial planes is both minimal and easily controllable.
That is not the case for a network backbone router.
So, please try to come back with something more coherent. There are many
nuances in every example. You’d better examine these nuances, especially if you use the
example to insult someone with a different viewpoint.
And speaking of nuances, I have more comment (on the original content of the article):
The data used to illustrate Huawei’s “dominance” over Cisco outside the US are very
misleading. They only focus on the smaller and saturated part of the
market (telecom). I would challenge the author to present the same graphs for
the larger (and growing) part of the market, which is datacom. A different picture
would emerge, which would make the arguments sound much more
hollow (and perhaps jingoistic). I would (in good faith) attribute that omission
to lack of knowledge of the networking equipment sector, but would nevertheless
urge the author to investigate further and perhaps post his revised conclusions.
Ray says
@gaijin
Then why do you start your post by accusing Huawei of being a thief by using offensive word such as theft? I am simply speaking to you using a tone of voice you seems to understand.
The major reason China is dealing with Airbus more these days is because Airbus is willing to give more contract manufacturing of aircraft parts and aircraft assembly to Chinese companies. Your argument is based on Huawei and ZTE being used by the Chinese government against US strategic interest. So if Boeing is to stop selling spares to China under US government pressure, it would rendered a part of China air transport fleet useless.
So in reality, the US buying from Huawei and ZTE is as safe as China buying Boeing from the US. In real life how could Huawei and ZTE get away from providing “compromised” telecommunication in the US market? It is like saying Boeing would sell a plane that failed safety test to China. The whole espionage/national security used against Huawei and ZTE tantamount to a straw man’s argument.
The US telecommunication market used to be the largest in the world but now has been passed by China, EU and India. And because North American companies used to depend too much on North American’s telecommunication market, and failed to be competitive in overseas market, their sales rank have been dropping. Nortel went out of business and Lucent was taken over by the European. If you talk about world market share, Cisco is on the way out. The only saving grace is that it is protected by a closed US market.
Your judgement is seriously skewed by your own prejudice. I am willing to bet in ten years’ times Cisco will ceased to exist because it will no longer has the scale to compete with the Chinese and European companies.
I hate to say this but my earlier comment on your argument has to stand due simply to the following points you provided:
(ii) Even the Chinese government knows that dealing with Boeing on civilian aircraft purchases is safe. The reason is similar to the one that makes it safe to deal with Cisco. The arm of Boeing contracting for the Pentagon, has almost nothing to do with the commercial aircraft division. The “firewalls” there are quite high, and being applied rigorously and to a certain extend transparently, because they are driven by both laws and financial interests.
(iii) Even if the situation at Boeing was as murky as the one in Huawei, the threat posed to Chinese national security by planting “bugs” in individual commercial planes is both minimal and easily controllable. That is not the case for a network backbone router.
gaijin says
@Ray
I completely fail to understand the point of your last paragraph.
I pointed out the differences in comparing Huawei as a vendor to the US telco
infrastructure, with Boeing to the Chinese transport infrastructure. These differences and nuances make it an “apples vs oranges” false argument. You just repeated my argument and declared victory. In the west we are suspicious of such arguments since they usually are the tools of demagogues. So, please elaborate.
Also, before you accuse me of prejudice wrt Huawei and/or Cisco, I will point out that
I did not use the term “theft” lightly. It is a fact that Huawei used to simply
copy (i.e. in IP terms “steal”) Cisco’s designs and firmware/software. These days Huawei comes up with boxes that imitate other’s about a year later than them and gain market share because of lower price (perfectly valid strategy, btw). Huawei can afford to do that because they have cheaper R&D, they leverage the same semiconductor vendors, and they are a privately held company. Do your own research. In a rational world facts are just facts – prejudices are another thing.
I will also agree with you that I too think that in 10 years Cisco might be a shadow of its current self. However, I think that Cisco’s potential demise is not going to come by Huawei or ZTE. If it comes it will be caused by the same forces that caused the demise of Sun Microsystems and the retreat of the once mighty IBM in the computing sector. BTW, how much do you know about the networking equipment sector ? Did you even bother checking the difference between datacom and telecom before replying ?
YinYang says
gaijin’s accusations are pretty stupid. There was a case in 2003 involving supposed copying of some Cisco code in some Huawei’s products. That was settled out of court and Huawei mitigated by modifying its products. ASIDE FROM THAT, THERE IS NO CASE OF THEFT. If Cisco thinks it can do more damage to Huawei, it would have.
So, gaijin, show us a case where Huawei has stolen IP. You won’t be able to, because, as Huawei has openly stated to the U.S. government, show it.
Oh, for crying out loud, the graph in the OP says telecom market. And, your logic is idiotic, because Huawei is precisely dominant in telecom equipment, but has virtually ZERO marketshare in the U.S. simply due to protectionism.
And, this is the thing with you racist type. Why must Huawei “comes up with boxes that imitate other’s?” How do you know Huawei is imitating? Do you actually know what IP’s they have that make them more cost-effective? You are racist and believe there is no other way than ‘copy.’ As the OP said, Huawei pours billions of $$$ into R&D each year. But you racist types rather pretend that fact doesn’t exist.
YinYang says
Ray – you can throw this troll’s comments into the spam queue if you’d like. Personally, I’d prefer to not engage in his retarded arguments.
Ray says
@YinYang
I agree with you but I want to show our readers here how these racists argued their pathetic position.
EU slaps a record fine on Intel
http://news.bbc.co.uk/2/hi/8047546.stm
EU slaps Microsoft with $1.35 billion fine
http://news.cnet.com/8301-10784_3-9880256-7.html
From the above examples, it is clear that those anchor US tech companies are considered detrimental to world economy and acted illegally. In contrast Huawei was never legally convicted as you’ve said. Nevertheless, to those morons what they believed is the truth regardless how untenable their position is. They will say the courts in Europe are kangaroo court.
(i) The Chinese govt cannot for the time being discriminate against Boeing. It does not have many other options, although (if you noticed) it prefers dealing with Airbus much more..
(Basically, he is arrogantly saying the whole world has to submit to US domination because they have no choice.)
(ii) Even the Chinese government knows that dealing with Boeing on civilian aircraft purchases is safe. The reason is similar to the one that makes it safe to deal with Cisco. The arm of Boeing contracting for the Pentagon, has almost nothing to do with the commercial aircraft division. The “firewalls” there are quite high, and being applied rigorously and to a certain extend transparently, because they are driven by both laws and financial interests.
(He is so stupid to see that the argument goes both ways. “Even the US government knows that dealing with Huawei or ZTE on telecommunication equipment is safe. The reason is similar to the one that makes it safe to deal with Lenovo. The arm of Huawei contracting for the Pentagon, has almost nothing to do with the civilian division. The “firewalls” there are quite high, and being applied rigorously and to a certain extend transparently, because they are driven by both laws and financial interests.” And when a dim wit used term like “there is nothing to do with civilian division”, “the firewalls there are quite high”, you know that he is speaking out of his a$$. I just want the whole world to see that.)
(iii) Even if the situation at Boeing was as murky as the one in Huawei, the threat posed to Chinese national security by planting “bugs” in individual commercial planes is both minimal and easily controllable. That is not the case for a network backbone router.
(Same generalization. It is sort of like Hilary Clinton telling African leaders to be wary of China’s neo-colonialism. Imagine what she would say if being asked whether one should be wary of US neo-colonialism. This gaijin argument would definitely go like this, “No, we US are not neo-colonist because we are not while the Chinese are neo-colonist because they are neo-colonist.” There is no reasonable fact presented. The basic argument is that we are the good guys and they are the bad guys because we said so. It is sort a silly “no silver buried here story” in that Boeing’s plane to Chinese government was caught with bugs planted by US intelligence units. He is basically trying to white washed and down play the whole thing as a tragic comedy.)
Ray says
@YinYang
Last but not least most idiots confused head start with innovation. In field that are more equal, Chinese scientist proved to be as good as anybody else. Just compare Beidou and Galileo sat-nav system.
And China is not unique, given equal terms anybody can do it too.
YinYang says
@Ray
Well put. Thanks for laying it bare for everyone to see.
Ray says
“China is an important market for Cisco, which had global revenue of US$40 billion last year. China accounted for only a 4% share of its revenue but created profit returns of 30%. ”
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1206&MainCatID=12&id=20121028000015
jxie says
@Ray
There is something wrong with those numbers. Assuming the numbers may not be the most up-to-date ones. Last time Cisco’s global revenue was at $40 billion, it was 2010, and its profit then was $7.8 billion. 4% of the revenue would be $1.6 billion, and 30% of the profit would be $2.3 billion — you can’t generate $2.3 billion profit on $1.6 billion sales. A more plausible explanation is that the profit margin of Cisco in China was 30%, while its global post-tax profit margin was at 19%.
A far bigger potential setback all businesses involved may suffer, if this silly politically driven “war” started by the US congress flairs up, is the cross-border inter- and intra-company flow of materials and ideas may get hampered. Cisco sources a lot of components, and does a lot of the R&D, customer supports in China — and vice versa, Huawei, ZTE though have relatively little revenue in the US, source a lot of components from the US.
Ray says
@jxie
I believe your analysis is correct. GM, Yum etc got disproportionatly high profit from the Chinese market.
Black Pheonix says
An episode of US founding father Hamilton, as IP thief:
http://www.delanceyplace.com/view_sresults.php?1982
in the earliest days of United States history, we tried hard to steal British technology, and the British tried just as hard to stop us. With a combination of innovation and resourcefulness, intellectual property theft, protective tariffs to help our industries compete against the British, British loans to finance our development, and our rapid population growth – nineteenth century U.S. industry surpassed Britain’s:
“Hindering the transfer of technology from Britain to America was another British mercantilist technique. In 1719, Britain banned the emigration of skilled workers in industries including steel, iron, brass, watchmaking, and wool. The law punished suborning, or recruitment, of skilled workers for employment abroad with fines or imprisonment. Skilled immigrants who did not return to Britain within six months of being warned by a British official faced the confiscation of their goods and property and the withdrawal of their citizenship. Britain followed its ban on the emigration of skilled workers with a ban on the export of wool and silk technology in 1750. In 1781 and 1785, the act was enlarged into a comprehensive ban on machinery of all kinds. The ban on skilled emigrants was repealed only in 1825, while the ban on technology exports lasted until 1842. …
“[In drafting the Report on Manufactures, a key blueprint for America’s industrial development, Secretary of Treasury Alexander] Hamilton supported [his assistant Tench] Coxe’s proposals for encouraging skilled immigration, proposing that the federal government fund a board that would import both foreign workers and foreign technology. In 1787, in his capacity as secretary of the Pennsylvania Society for the Encouragement of Manufactures and the Useful Arts, Coxe had provided support for a British emigrant, Andrew Mitchell, to return to Britain and pirate textile technology, a scheme that failed when Mitchell was discovered and forced to flee to Copenhagen. Thomas Digges smuggled nearly two dozen British textile workers to the United States, including some hired by Hamilton. …
“In addition to recommending policies to encourage manufacturing and the immigration of skilled labor, Hamilton sought to promote American industrialization directly. When he failed to persuade Congress to support the SUM, he and allies obtained a charter for the company from the state of New Jersey and founded the city of Paterson. … Following initial failures, Paterson became one of the most important centers of American manufacturing until the second half of the twentieth century.
“The British government was alarmed by the Report on Manufactures and SUM. George Hammond, the British minister in Philadelphia, urged the British government ‘To prevent the emigration and exportation of machines necessary to the different branches of manufactures.’ British agents in the newly independent United States worked to stymie American manufacturing development. In 1787, Phineas Bond, the British consul in Philadelphia, bought four carding and spinning machines that had been smuggled into the United States and sent them back to Britain. Bond kept his superiors in London informed about American theft of British technology and called for enforcement of laws ‘against seducing manufacturers and conveying away implements of manufacturing.’ …
Black Pheonix says
To sum up the story:
Britain imposed an “export control” ban on US in the 1700’s.
US government ignored British law, and actively engaged to pirate, copy, and encouraged private citizens to engage in smuggling, theft, of British technologies, along with bribes.
So, really:
IP and export control laws are just in the eyes of the beholders.
Americans were (and are) IP pirates. American teens still carry on the spirit of Hamilton, in pirating movies and music.
But, on the flip side, US government is behaving now like the British government in the 1700’s, trying to stamp out pirates, (as was the British behaving in the 1700’s as the Spanish were trying to stamp out British pirates in the 1600’s).
But it is futile, because it is IN the American blood as it was in the British blood. (Hence, so many British were willing to help the Americans in smuggling and piracy).
Some in the West talks about the rather imaginary “historical respect for IP.”
Well, if you are a pirate like Hamilton, then the “respect” only exists once the IP is American owned and takes over the British market!
And we all like to be like Hamilton, and American!