Huawei balks at US demands to give up 3Leaf assets for security reasons

15:52, February 17, 2011      

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China's largest telecommunication equipment manufacture Huawei recently rejected a call by the Committee on Foreign Investment in the United States to shed its 3Leaf Systems assets acquired in May 2005 — a deal the committee has deemed a threat to national security.

The committee told Huawei to divest from the technology assets bought from 3Leaf Systems, or it will recommend to U.S. President Barack Obama that the deal be unraveled.

Huawei has decided to take its chances with the president, who does not have to act on the recommendation, said Bill Plummer, vice president for government affairs for Huawei USA, in the Wall Street Journal.

Plummer noted that the company was willing to negotiate a broad national security agreement that could alleviate concerns from some officials.

Some U.S. lawmakers believe Huawei's acquisition of 3Leaf, a company founded in 2004 that develops cloud computing technology, would threaten national security and "pose a serious risk to U.S. computer networks." Huawei purchased 3Leaf for 2 million U.S. dollars in May 2010.

Previously, the U.S. government has rejected investment bids by several Chinese companies on national security grounds, including a joint bid worth 2.2 billion U.S. dollars by Huawei for U.S. technology firm 3Com in 2008.

In a press conference today, Yao Jian, spokesman of China's Ministry of Commerce, urged the United States to increase transparency of its security review.

"We hope that relevant laws and regulations in the United States will treat both Chinese companies and enterprises from other countries fairly and treat Chinese listed companies, private companies and state-owned enterprises indiscriminately," Yao said, adding that the U.S. government should introduce transparent and predictable processes.

The Committee on Foreign Investment in the United States is an inter-agency committee of the U.S. government that reviews the national security implications of foreign investments in U.S. companies or operations. The committee blocked Huawei's acquisition of 3Com and Northwest Nonferrous International Investment Company's investment in Firstgold on security grounds.

By People's Daily Online
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