Chen Weihua

Pay the lobbyists to beat double standards

By Chen Weihua (China Daily)
Updated: 2011-03-14 07:54

So far, the reaction among politicians and the public in the United States on the possible acquisition of the New York Stock Exchange by Deutsche Boerse AG and Nasdaq by the London Stock Exchange has been relatively muted. There has been less panic, protest or paranoia than expected.

What a different story it would have been if the buyers were the Shanghai Stock Exchange or another Chinese firm. You can be sure there would have been a furious outcry and immediate objections from lawmakers on Capitol Hill and that the media would have been analyzing the political, instead of the business, implications of the deals and that the Committee on Foreign Investment in the United States (CFIUS), an inter-governmental agency that reviews foreign investments for national security risks, would certainly have rejected the acquisition of these US icons by Chinese companies because of "national security concerns".

That kind of discrimination is exactly what Huawei Technologies and several Chinese companies have experienced in the US in the past few years.

Huawei, the world's second largest mobile network equipment manufacturer, has been developing well in other parts of the world, from Europe to Latin America, yet its US expansion has constantly hit snags.

On Feb 11, the CFIUS formally rejected Huawei's purchase of 3Leaf, a California-based cloud-computing company, although the deal had already been completed. The CFIUS, Congress and the Pentagon finally forced Huawei to relinquish the deal.

Just last November, Sprint Nextel, the third largest mobile phone operator in the US, had to drop Huawei and ZTE, another Chinese telecom equipment manufacturer, from its network expansion contracts following political pressure from Capitol Hill, after several US lawmakers wrote a letter claiming the Chinese firms posed a threat to US national security.

A deeply frustrated Huawei this time decided not to remain silent. In an open letter posted on its website 10 days ago, Huawei US Chairman Ken Hu invited the US authorities to conduct a formal investigation into the company's alleged ties to the Chinese military, theft of intellectual property rights, government funding and its threat to US national security, all of which the privately-owned Huawei has denied.

At a time when high unemployment still haunts the US, the witch-hunt that accompanies any Chinese firms seeking to invest and create jobs in the US is making the situation worse, denying job opportunities to US citizens and denying win-win opportunities for companies in both countries.

If it adopted a tit-for-tat witch-hunt, China could well block many deals by overseas companies, since quite a few domestic industries, such as the automobile, cooking oil and even upscale cosmetics, are already dominated by foreign players, including US companies.