U.S. overreacts to Chinese firm's normal acquisition

0 CommentsPrint E-mail Xinhua, February 20, 2011
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Chinese and foreign experts said Saturday that the United States had overreacted to a 2-million-dollar deal of a Chinese hi-tech company's purchase of a U.S. company, and called to remove non-trade barriers between the two countries.

Any technology-intensive corporation may perform technical trade and investment activities under the global industrialization, and it was unreasonable for the U.S. government to block such normal activities, said Wu Yixin, a researcher with the Shenzhen Academy of Social Sciences.

Chinese telecommunications manufacturer Huawei Technologies Co., which bought the U.S.-based 3Leaf Systems last May, was told recently by a U.S. security review panel that it must sell 3Leaf or the committee would recommend U.S. President Obama cancel the deal.

"The U.S. should hold a fair attitude towards Chinese companies, instead of overreaction, as it should realize the importance of open trade and investment to boost the country's economic growth and job creations," Wu said.

Harley Seyedin, president of the American Chamber of Commerce in South China, said that small and medium-sized companies in the U.S. often sell patents and even companies themselves to earn profits and step up industrialization, and such sales are very common.

"Investment on science and technology is never too much, and the U.S. should encourage Chinese companies to invest in American companies, which are advantageous for both sides," he told Xinhua.

Huawei said the company welcomes probes from the U.S. side, and would not withdraw the purchase.

"No matter what the result is, we will wait and see," said a senior manager, who asked not to release his name.

This is not the only case for Huawei encountering setbacks in acquisitions in the United States. In 2008, its buyout attempt of 3Com with Bain Capital was rejected by the U.S. government for "security reasons", and in 2010, Huawei was once again blocked from purchasing the mobile wireless network division of Motorola, as well as 2Wire, an American supplier of broadband Internet software.

According to the rankings released by the World Intellectual Property Organization (WIPO) on Feb. 11, Huawei ranked in the 4th position in terms of patent application in the world. Economists say that business acquisitions are quite common among global hi-tech and intellectual giants.

Guo Shiping, a professor of international trade with Shenzhen University, said most properties that Chinese companies bought in the United States would be operated by local employees.

"What Huawei bought from 3Leaf were the insolvent parts, and it is definitely helpful for the country's tough job market at the moment," said Guo.

Purchase activities of Chinese companies in the United States are good for the trade balance of the two countries, experts believe. In 2010, American companies invested more than 60 billion U.S. dollars in China, while the investment of Chinese companies was only 4 billion dollars in the United States, according to figures released by the China Council for the Promotion of the International Trade.

In late January, the China-U.S. Joint Statement issued during Chinese President Hu Jintao's visit to the United States clarified that the two countries had recognized the importance of open trade and investment in fostering economic growth, job creation, innovation, prosperity, and affirmed their commitment to take further steps to liberalize global trade and investment and to oppose trade and investment protectionism.

Experts said the Huawei case was a signpost, through which Chinese companies might predict what the U.S. government's attitude was towards investment from China, and the experts said the United States should keep its promise as stated in the joint statement.

Huawei's attitude was supported by other Chinese companies.

"The U.S. government needs to help build a fair and free business environment, instead of intervening in it," said Wei Zaisheng, chief finance officer of ZTE Corporation, another major telecommunications company in China.

Yao Jian, spokesman for China's Ministry of Commerce, on Thursday expected the United States to make its security review process for foreign investment more transparent and treat Chinese companies fairly.

"We hope U.S. security examination laws and regulations treat Chinese companies fairly, regardless of whether they are publicly traded, state-owned or private, and we hope transparent and predictable reviews can be carried out," Yao said.

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