Lee Kai-Fu, Huawei Turn Up the Offense 李开复“军团”和华为开始反击
I lauded a group of Chinese Internet leaders earlier this week for finally taking a more offense-oriented approach to a prolonged series of short seller attacks against them, saying Chinese firms needed to be more aggressive when they found themselves being bullied by foreigners on the global stage. Now it seems that same group is turning up its attack a notch by demanding an apology from the short sellers; and in a similarly aggressive and offense-oriented move, telecoms equipment maker Huawei is indirectly expressing outrage and frustration at a steady stream of US allegations that its equipment contains deliberate security lapses designed for to enable spying by Beijing.
I continue to applaud these kinds of moves, as they show foreign rivals that Chinese companies won’t simply play the role of victim each time they come under attack. At the same time, I would also caution these Chinese business leaders that aggression has its price due to negative publicity, and to only use the approach in limited doses.
That said, let’s have a look at these latest 2 developments and what they mean. The first of those is seeing a group of Internet leaders headed by Lee Kai-Fu, a former head of Google (Nasdaq: GOOG) China, demanding an apology from Citron, a small US short-seller that has issued a number of reports attacking the credibility of US-listed Chinese firms. (Chinese article)
Lee and his group launched their offensive more than a week ago by acknowledging that some of the early short-seller attacks were based on valid problems with Chinese company accounting practices, but questioning Citron’s motivation for its repeated attacks more than a year later. Lee’s initial shot has resulted in a steady stream of accusations and demands from both sides, including this latest demand for an apology from Lee’s group.
In fact, Lee’s latest demand, posted on his microblog, isn’t completely offensive as it appears to come in response to Citron’s own demand that Chinese Internet executives apologize to investors who lost lots of money when some of the early accounting scandals were exposed. Still, this kind of demand for an apology for the harm done by Citron to many innocent companies during the crisis seems like a good counter offensive and one that should be well received by members of the public, many of whom see short sellers like Citron as more interested in making money than working the benefit of investors.
In Huawei’s case, meantime, the company has taken the unusual step of publishing a paper accusing US politicians of leveling a nonstop stream of accusations against it to keep it out of the lucrative American market. (English article) Huawei published the paper, which also accused the politicians of harming Sino-US economic ties, the day before company officials were set to make a rare appearance to testify at a US congressional hearing on the security issue. Interestingly, Huawei immediately distanced itself a bit from the report, saying the harsh words about the US accusations represented the view of a US expert quoted in the paper and not necessarily Huawei’s opinions.
From the perspective of an outside observer, I like the approaches both Lee Kai-Fu and Huawei are taking in each of their cases. My only observation might be that both Lee’s group and Huawei aren’t being forceful enough in their attacks, as both seem to be taking steps to avoid appearing too aggressive. But for now at least, these kinds of counter-attacks should at least be sending a signal that will make foreigners think twice before launching their next assaults on their Chinese rivals.
Bottom line: The latest offensive moves by Lee Kai-Fu against US short sellers and Huawei against US politicians send important signals that may help to reduce the number of attacks against Chinese firms.
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