With stunning prescience, Jim Rohwer, former Asia Correspondent and Executive Editor of The Economist, managed to produce a book entitled Asia Rising: The Economic Miracle in East and South East Asia and Why the West Will Profit, seemingly minutes before the collapse of Thailand's currency, the Thai Baht, in 1997. The subsequent domino effect in the region, the effects of which are still painfully apparent, dutifully followed, as did the sudden end of talk of the superiority of "Asian values".

And yet, as many a South Korean can attest (images linger from this time of ordinary South Koreans handing over their gold to the state in an effort to ease the nation's indebtedness), some people simply fail to stay down as expected when faced with appalling bad fortune - whether or not it is of their own making. Much the same can be said of Chinese network vendor Huawei Technologies, which has recently been hit by allegations that it copied designs and documentation from a competitor, Cisco Systems.

Huawei, which has a roster of customers that includes major Chinese carriers as well as a smattering of mainly Asian operators, states that it is engaged in the development of products and solutions for switching, SDH/DWDM transmission, optical access, mobile and wireless, ATM, data communications, intelligent networks, support networks, power supply and environment monitoring, videoconferencing and CATV, which it supplies around the world.

The company has established 32 branch offices worldwide, as well as several research institutes including sites in Dallas (USA), Bangalore (India), Stockholm (Sweden), Moscow (Russia), and Beijing and Shanghai in China. Huawei's products are in application in over 40 countries, including Germany, Spain, Russia, Brazil, Thailand, Singapore, Egypt and South Korea.

Certainly Huawei's distributor in the UK, SPOT, is taking a bullish line - one no doubt emboldened by the private and public responses of Huawei itself to the accusations. Indeed, a statement on SPOT's website from a company director asserts that, "Spot Distribution has no case to answer", adding, "We hope this attempt to prevent the distribution of Huawei products is not just the result of a major manufacturer running scared of the competition." SPOT also adds that it is unable to state the claimant manufacturer's name "as it is a trade mark and we have been forbidden to use it".

Now it appears that SPOT, which was almost certainly picked on due to its small size and relative inability to defend itself against the Cisco behemoth, rather than wilting and backing away from any possible confrontation with Cisco is actually shipping Huawei routers and switches, having established eight partners in the venture, entirely as it had planned before Cisco's intervention. Despite receiving a "cease and desist" letter from Cisco, a spokesperson for the company told Optical Keyhole that shipments of Huawei products started earlier in March and that "There is no legal ruling to say we can't do this. The allegation (from Cisco) is not correct." While SPOT is still in discussions with Cisco's solicitors, the distributor feels that the allegations have already been adequately addressed.

In recent documents detailing the company's defence and counter claims, Huawei's legal team makes allegations of its own, stating:

"Fearing competition from Huawei, a respected world leader in the development of telecommunications and network equipment, plaintiffs has engaged in a campaign of misinformation, including the dissemination of patently false and misleading statements regarding defendants' business practices and products. This campaign is consistent with plaintiffs' past and continuing efforts to erect barriers to entry into the router market. Because of its dominance, new entrants in the router market must produce products that are compatible and can work with plaintiff's products. Plaintiffs have sought to stymie new entrants by hampering compatibility through such methods as deviating from international standard protocols. This suit is a continuation of plaintiffs efforts to secure for themselves a lock on the router market, free from having to provide customers with the price and quality benefits that would flow from competition."

On the issue of the supposedly copied Cisco manuals, SPOT has said all along, and now reasserts, that at no time has it noticed any similarity at all between the relevant Cisco and Huawei documentation.

Although logic - not to mention commercial good sense - tends to strongly suggest that Cisco would not make such claims without very good reason (indeed, the damage to Cisco's reputation and standing would be very much greater than that to Huawei if it was found to have been crying wolf), SPOT also points to the recently announced joint venture agreement between 3Com and Huawei as evidence that the Chinese vendor is not guilty - after all, it is implied, why, if Huawei had acted illegally, would 3Com risk association with such a company?

At the end of March, however, came the admission from Huawei that it had, in fact, used some of Cisco's source code in its routers, albeit, the company says, inadvertently and to a far lesser degree than is claimed. Huawei also stated that the offending code had been removed. Huawei added that an employee had inadvertently used a tiny amount of Cisco code - which had been provided by "someone other than a Cisco or Huawei employee" - inside Huawei's VRP line of routers. Huawei asserts that this code was on a disk passed from one Huawei employee to another, who then incorporated the code into his work.

Huawei is particularly keen to stress its R&D credentials, claiming that, of its 22,000 employees, 48% are engaged in R&D and that the company invests "no less than 10%" of its sales revenue into R&D. (While these numbers come from the company itself, and indeed still appear on the corporate section of its global web site at the time of writing, it appears that they are somewhat misleading and that, rather than referring to those employees directly engaged in R&D, Huawei has broadened the definition of R&D to encompass a wider category, that of "product development").

The most obvious point that springs to mind upon reading such assertions is perhaps "Why then, if the company is so strong in R&D, would Huawei find it necessary to engage in the illegal copying of a competitor's product?" And while of course the answer to this question might perfectly well be that it has not (indeed, that is the vigorous assertion of the company and its principal UK distributor), nonetheless Huawei's actions seem to belie the company's strength.

First came the news that Santa Clara-based 3Com Corp and Huawei are to form a joint venture domiciled in Hong Kong with principal operations in Hangzhou, China. The 3Com/Huawei joint venture has apparently been established in part to deliver a high-end extension to 3Com's existing products, allowing complete solutions to be offered to customers. Clearly, Cisco is envisaged as the principal competitor to this joint venture, a fact that must have lead to a number of smiles on Huawei faces given that 3Com is already Cisco's major competitor in many important markets.

It was announced that Huawei's contribution to the joint venture would include enterprise networking business assets - including LAN switches, routers, engineering, sales/marketing resources and personnel - as well as licenses to its related intellectual property. At the same time, it was revealed that 3Com would contribute $160 million in cash, assets related to its operations in China and Japan, and licenses to its related intellectual property. Curiously it was not stated if Huawei would invest any cash in the venture, an omission that tends to suggest the company is not on the back foot nearly to the degree that is popularly supposed. It was furthermore agreed that Huawei would initially own 51% and 3Com 49% of the joint venture.

Also under the agreement, 3Com has the right to sell the joint venture's products under the 3Com brand in all territories except China and Japan, where the products will be sold under the joint venture's 3Com-Huawei/Huawei-3Com brand. In effect, Huawei has, at a stroke, vastly improved its global distribution channel while retaining control of its home turf and benefiting from the solid and well-known 3Com name.

In the Chinese and Japanese markets, it was agreed that the venture would sell both the former Huawei networking product line, which will be transferred into the joint venture, as well as the existing 3Com product line based on an OEM agreement between the venture and 3Com. Outside China and Japan, it was stated that 3Com would leverage its distribution channel of more than 41,000 partners, extending the reach of the joint venture's developed products while providing resellers access to the full line of combined networking products with "attractive margins".

Perhaps in recompense for its apparent lack of direct financial investment in the joint venture, more than 1,000 Huawei employees are slated to join the combined company, while 3Com - having seemingly contributed its share in he form of cash - will contribute just 50 employees. The joint venture's product line is intended to complement and enhance 3Com's position in stackable products by providing modular layer 2 and 3, 10/100/1000 Mbit/s switches, while, at the same time, providing 3Com with a full line of Huawei and joint venture-derived enterprise routers.

Huawei was contracted to build the DWDM national transmission backbone network despite the fact that LDCom's existing network employs Cisco metro Ethernet switches and routers, which provide Ethernet VPN services to business customers. While the terms are not entirely clear this might reasonably be described as a coup for the Chinese company, particularly given its recent poor publicity.

The LDCom announcement, like that concerning the 3Com joint venture, goes a very long way to dealing with what has been Huawei's biggest problem to date - lack of credibility with potential international customers.

While almost 20% of the company's business is international, Huawei is relatively new on the international scene with the result being that, although it has the sales, the company has yet to build up an appropriate and corresponding image. Also, the company has negligible penetration in the key U.S. market and is relatively marginal in Europe (its substantial foreign sales have been in markets that have little resonance at the global level - $100 million contracts in Romania, for example, which clearly do not have the impact that a smaller sale to a better known account in the U.S. might have).

There is also the feeling that Huawei has generally taken market share based on price rather than technology, the latter element obviously having the greater market resonance. In addition, Huawei is one of a very small number of companies in the $500 million to $5 billion band, an odd and somewhat limited group without much of a collective identity. Consequently, Huawei tends to be compared with the top companies, for example Nortel, Lucent, Alcatel and Ericsson, which might be seen as unfair.