Huawei and 3Com

Posted on February 13, 2008 by Brian Kennan

Bain Capital is looking to buy 83.5% of 3Com, the networking equipment provider. Chinese telecom equipment maker Huawei is looking to snap up the other 16.5%.

But some in the U.S. Government are concerned, according to the FT, since "3Com supplies intrusion prevention technology to the US defense department, designed to protect the Pentagon against cyber attack."

The FT asked Xu Zhijun, Chief Marketing Officer for Huawei, for comment and he didn't hold back:

Asked about concerns that the deal could endanger US national security, Mr Xu said through an interpreter: "That would be bullshit."

Continuing with the barnyard theme, Mr. Xu also suggested that what's good for the goose is good for the gander:

Mr Xu said Cisco, the leading US network equipment maker, supplied products to Chinese telecoms companies: "Cisco's equipment is everywhere in China." he said. "If the US government is concerned about Huawei, if some of the lawmakers are concerned about Huawei, Cisco is everywhere within China. Who should be more concerned?"

The Committee on Foreign Investment apparently will finish vetting the deal by the end of February.

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Mice Love Rice

Posted on February 7, 2008 by Brian Kennan

This week's issue of The Economist has some interesting numbers on Internet usage in China. The most intriguing statistic, at least to me, is that the ringtone of the song "Mice Love Rice" brought in $10 million in 2005. Who knew?

Anyway, here are the other staggering stats:

  • The number of internet users in China is currently 210 million. (That's more than three times as many users as in India.)
  • Internet penetration is only about 16%. (Read: lots of room for growth.)
  • "Leading" Chinese Internet firms have operating margins of 28%. (Compare that with the 15% that comparable American companies earn.)
  • China has 500 million mobile phones.

Much more here.

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