Huawei and ZTE,the two Chinese telecom equipment makers keep making headlines for all the wrong reasons.These 2 firms have won over a large amount of marketshare in the past 5 years in the telecom equipment space through their lower priced products.However foreign countries view both firms with suspicion because of their close ties with the Chinese government.Huawei was founded by former Chinese army officers while ZTE too has close relations with the administration.This frequently puts them at a disadvantage while bidding for non-Chinese projects.

Huawei and ZTE viewed as Security Concerns by Foreign Governments

Huawei and ZTE were banned by the Indian government due to security concerns.USA has also put obstacles over Huawei acquiring telecom equipment maker 3Com.While USA does not want these 2 firms to acquire state of the art technology ,India  does not wish them Chinese firms to be involved in building critical communications infrastructure.While both firms have tried to assuage concerns,it has not manged to convince the governments in these countries as of now.While Telecom operators are lobbying for Huawei and ZTE because of their cheaper equipment,the security establishment is not too impressed.

Huawei also accused of Piracy and Stealing of Intellectual Property

Huawei has managed to become the 2nd largest telecom equipment producer in a short span of 10 years by overtaking stalwarts like Motoroloa,Nokia Siemens and others.This has naturally led to allegations of technology pilfering and stealing of trade secrets.Cisco had earlier filed a case against Huawei which was later settled.Now Motorola has filed a case in the USA accusing the top management of Huawei of knowingly being involved in the theft of proprietary Motorola information.Note Motorola has already sold its telecom equipment business to Nokia for $1.2 billion.The Telecom Equipment business has lately been a tough one with Nortel filing for bankruptcy and other firms bleeding red ink.

China coming under fire from MNCs

China has been recently facing a lot of criticism from foreign companies.This relates to forced technology transfer to local firms in exchange for market access and discrimination against MNCs.Siemens and BASF had raised concerns with the Chinese premier over these issues.The stealing of IP and the weak enforcement of laws has been a long standing concern and this recent lawsuit will only increase the bad reputation.

Motorola sues Huawei for trade secret theft – Reuters

U.S. mobile phone maker Motorola Inc (MOT.N) has sued China’s Huawei Technologies Co HWT.UL for alleged theft of trade secrets, highlighting the fast-growing Chinese firm’s difficulty in shaking the nation’s reputation for piracy.In an initial suit, filed in 2008, Motorola sued five of its former workers for allegedly sharing trade secrets with Lemko, which was also named in the suit and has a reseller agreement with Huawei.In the amended complaint, filed on July 16 in a federal court in Chicago, Motorola claimed an engineer shared information about a Motorola transceiver and other technology with Huawei’s founder, Ren Zhengfei, a former officer in China’s People’s Liberation Army.Motorola claimed a string of emails tagged “Motorola Confidential Proprietary” showed that “Huawei and its officers knew they were receiving stolen Motorola proprietary trade secrets and confidential information without Motorola’s authorization and consent,” according to the suit.