Huawei – Symantec, broken join venture and the fear on chinese firms

Pierluigi Paganini March 27, 2012

Huawei – Symantec joint venture is ended because the US firm feared business repercussion for the collaboration with the Chinese giant

It’s official, the joint venture between Symantec and Huawei Technologies is ended because the American IT security firms feared that the collaboration with the Chinese telecommunications producer could have a sensible impact on its business. In particular the US Government could not give to Symantec access to its classified information cyber threats. The joint venture, called Huawei – Symantec Technologies, was established in 2007 with the purpose to develop and distribute security appliances to telecommunications carriers. Symantec would sell its quote of 49% to Huawei for US$530 million.

Huawei - Symantec

Symantec CEO and President Enrique Salem has declared:

“Symantec achieved the objectives we set four years ago and exit the joint venture with a good return on our investment, increased penetration into China, and a growing appliance business.”

Confronted with 10 million cyber attacks per day, the U.S. Defense Department is changing its approach to the problem, placing greater emphasis on its relations to those which are the main providers of services and equipment.

Groups of cyber criminals are aware of the huge demand for information about military sectors, for this reason they continuously try to acquire and sell information about each country’s militia and intelligence agencies through several techniques, espionage, phishing, extortions, cyber attacks, hacking of major government contractors.

The risks are really serious, this information could be used by hostile government in cyber attacks and cyber espionage activities in the short term. While, on the domestic front the US Government, aware of its vulnerability, is moving defining and implementing cyber strategies aimed at strengthening its systems, the events of recent months have shown that relationships with contractors are the weakest link in the chain safety. The contractors with governmental exchange sensitive information and therefore it is expected that the government seeks assurances regarding arrangements employed in the management of information.

The decision of the U.S. Is shared and is in line with the stringent requirements of Government on cyber security.

The Cyber espionage is one of the most common forms of cybercrime in this period of great concern to the world of private industry and military, a growing number of companies are victims of computer attacks with purposes of cyber espionage to steal corporate secrets and intellectual property with the intent to benefit in economic terms.

The information acquired may in fact be resold by criminals to competitor companies and governments interested to the strategic know-how. The line between cyber crime and cyber warfare is thin, we have understood that one of the main strategies pursued by governments around the world is to make intelligence operations through technology to gather sensitive information relating to private industry and military sectors that somehow represent the backbone of the nation victims of attacks.

The cyber espionage is a terrible cyber threat can have devastating effects on the social fabric of a nation as well as on the actions of every private company, is sneaky and silent, and for this reason, unlike other crimes may be conducted for years without the victim being aware of it with serious consequences, as happened in the case of Notartel company.

The biggest threat in term of cyber-espionage against American business are China and Russia engaged in efforts to obtain sensitive business and technology information as well. The report projects that China and Russia will “remain aggressive and capable collectors of sensitive US economic information and technologies, particularly in cyberspace.”

The New York Times reported on Monday that Symantec’s decision came as a political move to coincide with the US government’s efforts in the fight against cyber threat. The sources have not been declared because it was not authorized to speak. A business relationship with Huawei could have practical implications for the American company.

Huawei (Officially Huawei Technologies Co. Ltd.) is a Chinese multinational networking and telecommunications equipment and services company. It is the second-largest supplier of mobile telecommunications infrastructure equipment in the world (after Ericsson).

The Chinese company has always been a disputed too close to the Chinese government policy and the Chinese People’s Liberation Army. Do not forget that the government of Bejing has always been accused of meddling in the private choices of the national companies, we can imagine the interference in the circumstances. Many point to the company as under a full government control, pointing out that Ren Zhengfei, the founder of the company, served as an engineer in the Chinese People’s Liberation Army in the early 1980s.

The Chinese company has received numerous allegations in the past, to name a few we think of its proximity to the government and the company has provided support in the implementation of systems of censorship. Also at Huawei has been questioned in the past have supported numerous operations of cyber espionage and cyber attacks such as the operation GhostNet.

According to The New York Times report Huawei is leaving US due of increased American government oversight.

The news comes at a historic moment where the majority of Western states, while interested in working with Chinese companies, fearing the impact on their business from different points of view. China is accused of being responsible for the majority of attacks against foreign companies and agencies, and many experts believe that these attacks are directly sponsored by Beijing.
Huawei is not the only company to be damaged by such a protectionist policy, the U.S. Government initiated an investigation in November to assess national security threats China’s presence from the networking vendors in the country, including other companies such as ZTE.
Complicating the situation are the same Chinese companies with the collaboration of governments considered hostile like Iran, the US Government has started an investigation on Chinese companies for supplying sensitive technology to Iran and violating international agreements. In 2011, United Against Nuclear Iran (UANI), an independent agency, requested to Huawei to its business with the Iranian Government. UANI alleges that Huawei provides Iranian regime surveillance systems for cellular and electronic technology to spy on its citizens, and track down human rights activists and dissidents.

The distrust of Chinese companies is high despite the desirable Asian market and this shows the overall awareness in the cyber threats and of the possible damage related. Huawei is still facing similar problems in telecom markets in India and Australia, in this last case the federal government has banned the company from participating in multibillion- dollar tenders to supply equipment to the broadband network.

While I understand the defensive approach that I believe such behavior could have serious repercussions on the global market. Chinese companies are those that have the biggest capital at the time and close the door permanently is not the right approach. The real problem is the inability to cope with the threat to date opting for the escape.
I think that in terms of security little will change by breaking these strategic alliances. The attacks will continue, will increase in frequency and efficiency, so the only way out is to prepare to face them.
Stop profitable relationships so I think it is a serious mistake.

Pierluigi Paganini

(Security Affairs – Cyber espionage, Huawei – Symantec)

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