Chinese vendor Huawei is denying allegations that it has had a leg up in the infrastructure business because of $30-billion in export credits from the Chinese Development Bank (CDB). The U.S. Export-Import Bank President Fred Hochberg made the allegations in a speech.
"This backing allows Huawei to significantly reduce its cost of capital and to offer financing to their buyers at rates and terms that are better than their competitors," Hochberg said. "The reality is opaque state-directed capital allows foreign governments to target their financing at specific sectors and companies, while aggressively grabbing market share in an attempt to dominate a market."
While Huawei admitted in response that it has the line of export credits, the vendor said the actual amount used by customers is only a small fraction of the company's total sales.
Bill Plummer, Huawei's vice president of external affairs, told Reuters that indeed its customers have attempted to use $4.25 billion of CDB export credits to finance some 35 projects globally since 2005, he said only $3 billion was approved and that the export credits only extend to potential Huawei customers, not the vendor itself.
"Only $2.99 billion of the $4.25 billion was actually extended. Over the same period of time, from 2005 until now, our global sales have exceeded $110 billion. It is a minuscule fraction of our business that has actually benefited from a customer getting credit from the China Development Bank," Plummer said. "The suggestion that there's some $30 billion credit line to Huawei that has driven our global growth is fundamentally incorrect."
A spokeswoman for the U.S. Eximbank said Hochberg will not rescind his comments.
"Chairman Hochberg stands by his assertion that a $30 billion line of credit from the Chinese Development Bank--used as buyer financing--has undoubtedly contributed to Huawei's growth. Financial backing of this magnitude creates options and opportunities that may not otherwise exist," Eximbank Vice President Maura Policelli said.
This kind of charge has long been claimed by Huawei's competitors, which are losing market share to the vendor, and Huawei has hit resistance entrenching itself in the U.S. market as lawmakers have voiced their fears over national security.
For more:
- see this Reuters article
Related articles:
Huawei, ZTE shine with strong 2010 revenue growth
Report: U.S. regulators weighing responses to Huawei's entrance
Sprint and the Chinese vendors: It's about politics, not business