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Global IT and techno-jingoism

By John Coulter  (China Daily)

17:44, June 04, 2013

By 2020, the world will have about 50 billion connected electronic devices. We will have our own smartphones and computers, and organizations will have them spread everywhere from offices to tractors and boats to planes, monitoring rivers, air and soil.

To start understanding what this means, think of cellphones. About 1.75 billion sets were sold in 2012, and Samsung and Apple together took up 52 percent of the smartphone market's share in the fourth quarter of last year. But despite that, the big business and long-term dominance of wireless network equipment is with Ericsson -38 percent globally. The sales of Ericsson's cellphone may have dropped to a few percent, but the company has a century of history in infrastructure network, which, unlike cell- phones, cannot be changed according to our whims and fancies.

China's two wireless network equipment companies, Huawei and ZTE, have changed from minor players to global giants in a few years. It is this phenomenon that has prompted some people to use techno-jingoism to thwart the two companies' attempts to invest in the United States and European Union countries. Their rationale is as ridiculous as the corny plots of some old James Bond movies in which Chinese were depicted as the bad guys.

The simple fact is that, as a spin-off from the three-decade GDP growth miracle, Chinese entrepreneurs have hit the ground at speed with confidence and vigor. And like Haier in household appliances and Lenovo in PCs, Huawei and ZTE have rocketed to the front after learning hard lessons from Western companies and spreading throughout China's regions before going national and global.

The Huawei CEO is justified in boasting that the company has 140,000 hardworking, well-trained, motivated workers in 140 countries, and it innovates technologies and improves management systems. While "only" 27.2 million Huawei smartphones were sold in 2012, the year-on-year increase was 73.8 percent.

More to the point, and worryingly for Ericsson, is the fact that Huawei network services have pioneered "integrated revenue and customer management", which is very attractive to customers and encourages end-to-end technology purchase rather than large customers buying segments that don't match.

If the core industry in a new greenfield development project in western China - such as a mine or oilfield - and attendant agriculture, water, power and transportation sectors are all part of a Huawei network, their efficient operational management and transparency would show how disjointed are the monitoring and management of a city whose different departments use different servers.

The techno-jingoists in the US and the EU either accuse China of granting unfair subsidies to its industries that lead to loss of jobs back home or allege that China poses a threat to their national security. They refuse to acknowledge that since 2008, the US government has pumped several trillion dollars into stimulus and quantitative easing packages to help banks and other industries, which common sense says were subsidies.

China has reason to wonder what is wrong with its government helping enterprises when AT&T openly contributes millions of dollars to American political parties as well as lobbies the US government ($130 million declared since 1998). And EU bailouts should disqualify its member states from even trying to criticize China for giving subsidies to its enterprises.

The second accusation leveled at Huawei and ZTE by the US, and recently by the EU and India, is that the use of communication networks associated with China could invite commercial and military espionage. Essentially, that may be possible. It is also likely that some people may spy to gain financial or strategic advantage.

But banning the two Chinese companies from selling their products in a country is similar to cutting off your nose to spite your face. Huawei and ZTE are already major global players, offering advanced technologies at low prices. And you do not cut them out just to feel safe.

Think past the oratory in parliaments. Many old equipments branded in Texas or Milan still have chips, boards and/or black boxes shipped from Shenzhen in China. Would it not be better to go really global and establish standard monitoring practices to expose all hidden codes or tricks. If UN standardized random checks were instituted, then Westerners buying from China and Iranians buying from the West would feel equally safe.

Neither techo-jingoism nor fear-mongering has any place in peaceful global integration. About 100 years ago, technophobia was aggressively promoted by Thomas Alva Edison to protect his direct current power facilities from the superior alternating current network introduced in Europe. To spread fear among people, he gruesomely had an elephant electrocuted in order to convince New York state to replace hanging with the electric chair for the death sentence. This was an outrageous example of generating fear for technology.

Huawei and ZTE are not run by the "bad guys" of old Bond movies. It is true that the founder of Huawei is a former military officer. It is also true that Chinese companies have to become more transparent and should accept checks and balances. But no EU company has demanded an investigation against any Chinese IT enterprise. The EU's commercial associations are vociferously against investigations and bans. So why has the European Commission initiated techno-jingoism?

Before pointing the finger at a Chinese CEO who used to be in the military, people should check out Ericsson, which is controlled by the Wallenberg family that indirectly controls companies that account for one-third of Sweden's GDP and exercise a powerful influence on many European governments. And, by the way, the Wallenberg family's motto is Esse non viden (To be, not to be seen).

The author is an Australian researcher collaborating with Chinese academic and commercial institutions.

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