Chinese Huawei Takes on U.S. Telecom Market

ChipGuy writes "With funds on loan from the Chinese government, Chinese equipment giant, Huawei is undercutting big rivals like Cisco and Nortel, and is using money to buy its way into the U.S. market. Overseas in Europe and Asia it already has become a major force. There are parallels with auto industry and home appliances. It took a little while before prices became a determining factor and shifted growth away from North American vendors. Telecom will go through the same curve. Huawei is curently selling EVDO phones for about $130 and WCDMA phones about $250 which is about 30% than everyone else on the market. Huawei's agenda is pretty clear - get business and sales at any cost. And that means bad news for already struggling telecom industry."

Comments

30% what?

[Luke727]

Higher? Lower? Fucking idiots.

Its Cheeper!

[Anonymous Coward]

Sounds good. Cheeper is better.

Shouldn't this be what the WTO covers?

[antifoidulus]

Too bad the US is:
a) violating the WTO rules currently.
b) too addicted to Chinese money to fund Bush's spending splurge/tax cutting spree to really bring any meaningful grievances against China....
Am I the only one who sees how insane Bush's spending policies are? Maybe it's not the wisest idea to become dependant on a country whose primary objective seems to be to destroy us...but then again, this country did elect Bush...twice....

Re:Shouldn't this be what the WTO covers?

[AtariAmarok]

"China can simply produce goods far cheaper than we do. This is simply an example of what happens when you have an overregulated economy in the US."

China, as a socialist country, relies on a lot of slave labour. This hardly makes competition fair. Mexico would be a better example for comparison: cheaper, but without slave labour.

Re:Shouldn't this be what the WTO covers?

[Ghost-in-the-shell]

Just exactly what rules in the WTO are they breaking? Are you refering to the ITU rules set forth by the UN?

It is nice to make such a statment but you do not back it up like you did with your second point. Elaborate please.

There is an old saying

[Anonymous Coward]

Capitalists will sell you the rope from which you will hang them with

Can anyone explain to me WHY?

[Adam Avangelist]

I do not understand this form of economics. Why exactly is the Chinese government allowed to fund this company, is this not unfair to American and other countries corporations? Isn't this violating free-trade with China and Bush and Clinton both advocated?

Re:Can anyone explain to me WHY?

[andyfaeglasgow]

First of all, the Chinese government is *not* funding them. They are giving them a loan on which they charge interest.

Secondly, the US government can hardly complain about subsidies. A recent bloomberg article states that the US government has spent $117 billion on the war in Iraq (almost 8 x more than the Chinese loan).

Now...I wonder which companies benefit from that?

Re:Can anyone explain to me WHY?

[NeMon'ess]

Why exactly is the Chinese government allowed to fund this company?

Because American managers and CEOs are self-serving and would rather have a global playing field on which to profit instead of just the domestic market. You see they'd rather outsource their companies to save money, except for the management jobs. They get rich, most Americans suffer, and in the long run the country goes to hell becuase the school system falls apart.

Under the pure capitalism, there is no minimum wage, which does in fact mean that Nike and Levis can move their garment factories back here, and there's plenty of employment. But since the jobs pay 3rd world wages, the country becomes a third world nation where the middle class barely exists, the owners and managers live like kings, and everybody else takes it up the ass.

Hey America

[Anonymous Coward]

If you want to keep your country, quit offshore outsourcing, and quit purchasing foreign tech. Begin innovating again, quit taking the quick-and-easy development path, remember that "God is in the details."

Hey Corporate America: If America ceases to be the great land of opportunity as it once was, it is because you sold us out.

China crash will be fun...

[otis wildflower]

.. when they end up having to deindex the RMB in order to clean up their banking structure..

http://www.asianresearch.org/articles/2263.html

Remember how the last Asian Crisis (tm) came about from lots of nonperforming loans of cheap money for phallic skyscrapers (among other things). Guess where the biggest concrete and steel dicks are these days? Shanghai, Chicom Hong Kong, and the coveted Taiwan ROC... I'm thinking Soros is chomping at the bit for the opportuninty to fuck China _and_ the US over in a spectacular fashion once the dike starts to crack...

Given that and recent reporting of labor shortages in Guangdong..

http://www.nytimes.com/2005/04/03/international/as ia/03china.html

The next few years should be interesting indeed.

At any rate, there's enough dollars in China to support an interesting shopping spree. I'm thinking they'll buy GM after they declare bankrupcy, and use those brands plus Chinese labor (and, hopefully, American labor after the UAW is destroyed by bankrupcy renegotiation) to enter the US auto market.

Good news for consumers

[Charles Dodgeson]

And that means bad news for already struggling telecom industry.

Competition is good for consumers, and in the long run it is good for the industry as well. It's only bad news for the entrenched players.

If China wants to tax its citizens so that it can sell me cheap telecoms products, I'm not going to complain.

Re:Good news for consumers

[Charles Dodgeson]

Will you be complaining when they have a monopoly in the telecom business

Of course I would be complaining. But I just don't see them as becoming a monopoly. It is typical for a business, when entering into a new market to use "deep pockets" to try to undersell the established rivals.

Breaking into a market and establishing a monopoly are two very separate things. Sure, you have to do the first to do the second, but they are still separate.

Or how about every other company has to cut its R&D budget to compete and the whole market slows to a crawl?

Let me see if I understand what you are saying. Are you saying that tech companies need to be protected from competition so that they've got enough money to do R&D? If so, you might have a case. I agree that ATT's Bell Labs was great. But the advantages of competition, I think, are even more important. The over all benefits to the economy are enough that we can fund high quality public research labs (AKA universities).

Who says Communism doesn't work?

[FunFactor100]

Great....westerners give communist China financial assistance...then they try to put our companies out of business. What the hell are we doing business with a communist country with such horrendous human rights violations?

China's ok...but Cuba's bad?

Re:Who says Communism doesn't work?

[Jeff DeMaagd]

Communism as an economic system or political?

Communism as an economic system really hasn't worked out very often or very well on a national or global scale. China is now very capitalistic from an economic standpoint. China isn't refuting the arguments that communism's economics can't stand the test of time, I think they are proving that as they saw the need to shift.

Re:Who says Communism doesn't work?

[dalutong]

The world is a interconnected place. More so all the time. We don't really have choices as to who we will work with and who we won't work with. This is more true the larger/richer/more powerful and influential the country is.

i think this is a good thing. there are too many weird ideas floating around among different world populations. i hope having to deal with them will spread the idea of ethnorelativism around some.

also, regardless of your opinion of the government, there are still 1.3 billion people who shouldn't be excluded from the global dialogue. if you want to change the government, then find ways to increase financial stability, social mobility and general education.

"social entrepreneurship" is a good place to start -- C.K. Prahalad has some good articles and books on it from a macro level. There are also many sources for learning how to do it on a microlevel. northsouthdev.org is one micro-level institution in nigeria doing social entrepreneurship. it was started by a Brit with 50,000 dollars. It has helped something like 1000 nigerians contribute to the economy. Micro Financing Institutes like his help local entrepreneurs who don't have the collateral to go to a normal bank get loans to start businesses. He has had a 0% default rate on the loans and has made a lot of money helping people.

With financial stability, social mobility and quality education, change in the government can happen. If these "democratic norms" don't exist, any government that was more free would have a serious likelihood of collapse.

I spent seven years in China. It is a wonderful place. I don't approve of everything the Chinese government does, but I do think that they are managing the economy well. I think that China will become an increasingly free country over the next 45 years.

It is important to understand that different peoples want different types of lives. The Chinese don't dream of an American life. They would not want to obsess over politics as much. In fact, the interest in politics would be so low if there was a democractic government put in place now, it would collapse or be twice as corrupt for that lack of interest alone. That's one of the reasons why Russia's government has regressed. That's why a lot of new democracies regress. Without the democratic norms already being in place, democracy fails one way or another.

Re:Who says Communism doesn't work?

[NeMon'ess]

Communism has never been tried on a global scale, which is part of why it hasn't worked out very well. China is exploiting capitalism, sucking up lots of dollars and technology and giving its people jobs. Then by sometimes ignoring patents and intellectual property, its companies gain technology and market share. What China should work towards is socialism, where it uses all the wealth its pulling in to better the lives of all its people.

Now that we have computers and can better allocate resources, modified communism could work if done on a global scale. But when non-communist countries try to upset the balance, say by an arms race, communism has to divert resources and it becomes harder to provide for the People.

Foreign corp vs. outsourced US corps

[Anonymous Coward]

What's the difference? Who cares? Are we going to lose any US jobs (besides corporate management) from this? No.

Yes, pleas explaine WHY!

[Saeed al-Sahaf]

I just can not understand why the American government is allowed to fund Boeing, General Dynamics, several oil companies, and Halliburton. Is this not unfair to American and other countries corporations?

Re:If you are concerned about overspending...

[gnuman99]

Balanced Budget. Is this some magic noone understands anymore? It is *irrelevent* if you spend money as long as you take in as much as you spend. Period.

It is irrelevent if you think Bush spends less than would Kerry if Kerry would have a balanced budget.

The current deficits are >5% of GDP. This is insane. Compound that with the fact that no one saves any money in the US and you have a recipie for disaster.

Americans mad at the Chinese

[gspr]

I can understand your frustation, it's not hard. But come on, can you really be mad at the Chinese ("unfair") competition? They're essentially just doing what you taught them to do. Extreme capitalism backfiring?
The best of luck to you, though. I have no wish to see the US come crashing down.

Re:Americans mad at the Chinese

[mplex]

Fair competition with China would mean adjusting their undervalued currency that allows their exports to expload at a 40% reduced cost. It's hard to compete with you start at that level.

Re:Americans mad at the Chinese

[DeepHurtn!]

But it's not an inherently level playing field -- the US has a 150 year head start and near-global economic and military hegemony. From China's point of view, manipulating their currency is just a way of trying *to* level the playing field. "Fair competition" is a totally abstract concept that covers up what's really important -- the ebbs and flows of power.

price or quality?

[kraut]

From the summary: " There are parallels with auto industry and home appliances. It took a little while before prices became a determining factor and shifted growth away from North American vendors."

I thought the problem with American cars in the 70s was quality, not (just) price.

Re:Huawei = Thiefs

[MemoryDragon]

To bad for nortel, that the laid off the workers first... GE currently does the same over here in Germany with people laid off by the suddenly share holder value hungry Siemens. Such things mostly can be blamed to management mistakes, no worker would jump to a weird competitor if the current workplace is ok. But with managements who think that their workers researchers and generally their personal workforce is just replacable for lower cost somewhere else, you dont really can expect that once such an opportunity arises, that people simply will be loyal to the greedy bastards who threw them out for raising the shareholder value in the first place.

Struggling ???

[ilmdba]

The telecom/automotive/airline/etc/etc/etc industries are NOT struggling. last time i checked (about 10 seconds ago) these industries are BOOMING.

look around you. everyone has wheels/multiple cell phones/flies everywhere for the holidays/etc/etc.

the problem is that even though everyone (almost) on this planet esposes global markets and free competition, if -their- company ends up on the short end of the stick (mainly due to the upper management of the worst run of these companies collecting millions in compensation for lackluster performace), they cry to the government for a bailout. fuck that.

half the telecom/auto/airlines NEED TO GO OUT OF BUSINESS, and let the better run companies in these markets take over. simple as that.

Re:Didn't Huawei steal Cisco software?

[kvigor]

Not just Cisco. I formerly worked for a certain very large US telecom equipment manufacturer, and Huawei was selling a unit that was bug-identical to one of ours. The story, as related to me, was that said large company attempted to sue in China (they weren't selling into the US at the time). Said lawsuit came to a screeching halt when it became apparent that the Chinese government was the primary investor and the eventual result of the lawsuit was therefore completely predictable.

I am surprised to see that Cisco settled with them in US court. I expect the company in question, which has phalanxes of lawyers on salary, won't roll over so easily when it comes to defending the domestic market.

Re:Reminiscent of Hynix?

[1010011010]

Move to Europe :)

Uh, yeah... which part actually allows immigration these days? :)

Let the China bashing begin

[Anonymous Coward]

China bashing has become a slashdot tradition. Whenever we get a story that centers on this country at this site, regardless of whether that story is about progress (e.g. cracking md5, ip6 networks) or opression (e.g. web censorship,dissident jailing), there is a splash of generously moderated comments whose content is tainted with negative bias.

Being appalled at censorship, for example, is a matter I agree with, as I suppose most visitors to this site are.

There are however comments such as these in this very thread
http://hardware.slashdot.org/comments.pl?sid=14482 6&cid=12127913
"...a country whose primary objective seems to be to destroy us..."

This is the most flagrant example of this bias, but it does not take much browsing at +3 or +4 to find more.

I will not waste my time refuting these silly, uninformed biases and comments. I just want to emphasize their existance for lurkers, whose knowledge may be shaped by such comments, and those who post, whose arrogance is reinforced by them. Arrogance (bias) is the end of wisdom.

Before you post such rubbish, please go read a variety of reliable and credible sources about the country. Then, you will actually be able to state something of substance, a more informed analysis or criticism. For those of you fond of bashing, this habit of having informed opinions will give you more weight to swing with.

-An American who is sometimes ashamed at his fellowes rash conclusions based on insufficient evidence. Ignorant arrogance like this, my friends, is not the way forward.

Re:Mainly because military reduction is untenable.

[MKalus]

You are trying to utilize a security v. disarmament paradigm in a world that needs security right now. Disarmament only works if it is unilateral, and unfortunately we live in a world that has North Korea, Iran and Venezuela as entities willing to pursue their goals outside of the realm of diplomacy and economic leverage.

Okay, I just spent 5 minutes laughin. you can't be serious, can you?

The only country right now I see projecting force outside of it's own borders under strange ideas is actually the US, the sabel ratteling that is done by the other countries is (so far) just that. And heck, if the situation would be reverse, so would be the US.

Welcome to the year 2005! Limited war and police action is the name of the game, and the U.S. military is frequently the only regional security vendor in many world markets.


Welcome to the world since the end of WorldWar II, where all those small little conflicts happened constantly.

And before that we had those little colonial wars et al... Nothing new to see here.

You won't see anything but an increase in military funding in the next 10 years, and that's a good thing. Globalization needs strong security controls and safeguards. The U.S. military through its operating centers around the world provides that. The size, scope and nature of the U.S. military is changing. Because the U.S. needs them, the World needs them, and you need them.

Contrary to popular american believe the rest of the world does not need an ueber Babysitter to take care of their business, actually, the rest of the world can manage just fine on it's own. Thanks for asking though.

Re:If you are concerned about overspending...

[gnuman99]

Lots of people save money in the US. Who's hard-earned money are you spending when you buy your house, car, education, and anything else you borrow for?

When I borrow, then I'm spending someone else's money and my future income. But I can default on that loan!

This is NOT saving money. Savings are when you have a liquid asset like cash, gold, stocks, bonds. Property is not a liquid asset. And loans are liabilities, NOT savings!!

In other coutries, like Japan, people actually save money. It is not uncommon for people to buy a car with cash. Heck, people can buy a house with cash. That is saving money.

When Japan's economy tanked, the situation is not catastophic. All that happens is people can lose money (purchasing power) in the inflation period.

In the US, the opposite is true. People buy everything with loans. What is most dangerous are 90+% financing of homes. If the housing market collapses thanks to high inflation thanks to collapsing US dolar thanks to trade deficit (see how deficits hurt the economy?), the mortages will be worth more than the property!! This can be catasrophic (banks going bankrupt!) which will bring down the economy into a depression much, much worse than in the 1930s (back then people didn't borrow money like they do now so it wasn't that bad :)

If the US doesn't improve its deficit situation (trade and fiscal), this collapse of the US economy can happen sooner rather than later. As soon as banks around the world start dumping US$ in favour of the EUR.

Re:Mainly because military reduction is untenable.

[MKalus]

The other function of the armed forces is increasingly to provide training and logistics for native militaries, and to work as a formal security parter (within a coalition) in a given theatre. In this area the US does not have near the capacity that is needed. It needs to easily be doubled or tripled, and since it's a long process to train these type of people it needs to start now.

The US is doing this since it's existance more or less, there are plenty of people who know how to teach. School of the Americas is the most well known of these endavours, and if you look at their graduates, you'll see just how well it is going (yes, I am sarcastic here).

Still even more forces need to be trained for covert missions. For example, when the US recieved reports France that Saddams intelligence units were planning covert ops in the US, they should have done their own covert operation and assasinated Saddam. Instead they asked the UN to help, and when the UN did nothing, they invaded Iraq which led to far too much needless death.

THIS is one of those things we will clash for a very long time. I do not believe that the "preemptive" going to war or killing others is agreeable or just be allowed.

Any nation who acts that way is nothing else but terrorists themselves.