US Authorities Respond To Lenovo Ban

The storm has not yet subsided, and the stalemate is still continuing.

Letter From America

In this email, Larry Waterzel explained that the reason why the purchase of Lenovo computers might endanger American national security is because, as far as I know, Lenovo acknowledges that the Chinese Academy of Sciences has at least 27% of its shares.

The Chinese Academy of Sciences is an organ of the Chinese government.

In April this year, at the signing ceremony of Lenovo and Microsoft Corp, Yang Yuanqing declared that Lenovo was founded in 1984 by the Institute of computer science of Chinese Academy of Sciences.

At present, the Chinese Academy of Sciences has 27% of Lenovo's shares. The remaining shareholders are public shareholders, staff, IBM companies and 3 private investment firm. 5 of the directors of Lenovo's 12 are American. After purchasing the IBM personal computer department, Lenovo has pformed into an international company.

Larry Waterzel also admitted that Lenovo had told the media and the US economic security review committee about the ownership of the shares, but said they were operating independently.

However, this did not affect his judgement.

"The US government does not own a company," he said.

Larry Waterzel, chairman of the US China Economic Security Review Committee (Larry Wortzel) is one of the leading characters in Lenovo's murder case.

In March 20th this year, Lenovo's partner -CDW Government Inc. (CDW-G) announced that the US Department of state had orders worth more than US $13 million through an open bidding process and will provide 16 thousand Lenovo ThinkCenter M51 desktop computers and related equipment.

After the announcement, Michael Wessel, a member of the US China Economic Security Review Committee (Michael Wessel), suggested that the use of Lenovo computers by the US State Department might pose a risk of national security to the United States. The US China Economic Security Commission (USCC) sent a letter to Frank Wolf, the chairman of the US Council of representatives of the house of Representatives (Frank Wolf), requesting the latter to conduct an investigation. He then sent a letter to the Secretary of state to the State Council for explanation.

In May 18th, the US State Department Assistant Secretary of state for foreign affairs, Richard Griffin, wrote to Frank Wolf, saying that because of the change in ownership of the IT equipment supplier, the State Council will revise the procurement process. Richard Griffin,

The Lenovo computers purchased by the State Council will only be used for non confidential systems, and more rigorous reviews will be made of the computer systems purchased in the future.

The foreign security department will also inform the US government departments to request the same measures.

At a joint press conference held on the same day, Larry Waterzel said that despite this, he was worried that similar cases would not occur between other departments of the US government and the Ministry of defense.

In response to our questions, Larry Waterzel said that China and the United States share common interests in many areas and cooperate with them.

"I think Chinese manufacturers can be engaged in production in the United States and have been very successful."

But he said, "but if their goal is to provide products for the US government's confidential information system, they will have much more trouble."

Larry Waterzel's high vigilance on national security and "great concern" for Chinese enterprises are closely related to his personal experience.

The official website of the US China economic security review board shows that it has a 32 year career in the military field, and 25 of them are in the military technology department.

In the 90s of last century, he served as the military attache of the US embassy in China.

As an expert on security and military strategy in China and Asian countries, he has written the Chinese stratum: a class formation without class society, the international meaning of China's military modernization, and the Chinese army in twenty-first Century.

He also regularly publishes articles on Asian security matters.

The US China Economic Security Review Committee was established jointly by the democratic and Republican parties in the United States. It aims to monitor and investigate issues related to national security in trade between the United States and China, and submit annual reports to the Congress.

Lenovo strategy

On the evening of May 25th, Yang Yuanqing, chairman of Lenovo Group's board of directors, told this newspaper that the amount of procurement involved in the incident was about $more than 100 million, which accounted for only 1% of the total turnover of Lenovo. However, this way of borrowing Lenovo's exclusion is not only affecting Lenovo's orders in the US government, but, more importantly, this attitude has also seriously affected the corporate reputation of Lenovo, and may also affect the future purchase of commercial customers by Lenovo.

According to Yang Yuanqing's description, Lenovo is communicating with many US government officials and congressmen to find out their deeper understanding, understanding and support for Lenovo.

Yang Yuanqing himself has also met with Vice Minister of Commerce.

At the same time, Lenovo also tried to introduce to the Americans through overseas media what kind of company Lenovo is, and how Lenovo does business in the US.

"We certainly hope that a fair and open policy will remain the main theme of the United States."

Yang Yuanqing said, "we want to call on the US government departments to treat the competition from all over the world fairly and fairly, just as the Chinese government gives the fair environment to American enterprises."

At the same time, Lenovo is also seeking the Chinese government to provide more support and help to Chinese enterprises to go out to help Chinese enterprises create a fair and just competition environment in overseas markets.

"Our government and the Ministry of Commerce, especially the Ministry of Commerce, have responded positively to our request," he said.

Although the situation is not clear at the moment, for Lenovo's US market, Lenovo will not only quit, but will further expand. It will continue to promote Lenovo brand, spend more efforts to expand channels and launch new products, hoping to gain more growth opportunities in small and medium-sized enterprises and emerging markets.

Yang Yuanqing said.

On the evening of 25, Lenovo announced the fourth quarter and full year results of the 05/06 fiscal year, and the fourth quarter's losses were higher than expected. However, in the 2005/06 fiscal year, Lenovo's total turnover increased by 359% compared to the same period last year, reaching HK $103 billion 600 million.

Lenovo personal computer sales increased by 11% over the same period last year.

Yang Yuanqing said: "in fact, different departments of the US government may represent different interest groups.

Congress is often the mouthpiece of some enterprises.

The New York Times reported on April 9th that Michael Wessel, a member of the US China Economic Security Review Committee, said in an interview that "there is no way to explain how Chinese spies will have access to Lenovo computer in the process of assembly," and "before he publicly expressed his concern about the acquisition of Lenovo computers, he did not ask the State Council to provide information on the experimental reports" Michael Wessel.

"The United States flaunted itself as a legal system. If some American officials fail to produce evidence, it is considered illegal to install spyware in the computers they sell."

Xiao Lian, director of the American Center for economic research at the Institute of world economics and politics, Chinese Academy of Social Sciences, said.

One month before Lenovo's murder case, Lenovo and Microsoft signed a large order of up to US $1 billion 600 million in Seattle, USA, and purchased its genuine software.

Before that, China launched a large-scale online software campaign in its government departments and large enterprises.

As we all know, the popularity of Microsoft's software products in Chinese government agencies is the highest.

It is precisely because of this, the United States government's practice, the Chinese community has generally questioned.

Yang Yuanqing, chairman of Lenovo's board of directors, said in an interview with the newspaper on the evening of 25, "the attitude of the US government is unfair to Lenovo. Lenovo is the product of China's economic reform and is a fully market-oriented enterprise." Zhang Yan Sheng, director of the Foreign Economic Research Institute of the national development and Reform Commission, also said, "if we treat the US IT business in the same way, it is bound to have a great negative impact on Sino US economic and trade relations."

Larry Waterzel obviously disagreed with this view.

In the mail sent to this newspaper, he gave the explanation: "Microsoft is not owned by the US government or any government agency, Microsoft is a purely private enterprise."

"This is a warning to China's Lenovo," Zhang Yansheng said. To become a successful multinational company, first of all, we must do a good job in the public relations strategy of the mainstream market. As Mao Zedong said, "we need to establish the most extensive united front in the United States."

In June 23, 2005, CNOOC spent $18 billion 500 million to bid for the United States enoco oil company.

The biggest overseas bid in China's history has failed because the US side believes that CNOOC's takeover action has been supported by its parent company and the Chinese government, which is aimed at controlling the US energy in line with the national strategy.

In July 20th of the same year, Haier joint venture invested $1 billion 200 million to bid for Maytag, the second largest electrical appliance company in the United States.

Observers here believe that the experience of Lenovo is in the same vein of CNOOC's bid for Unocal's defeat and Haier's bid for it.

"Politicizing economic issues is very unfavorable for the development of Sino US economic and trade relations."

Zhang Yansheng said.

However, he believes that it is impossible for the US government, enterprises and people to want products without Chinese products. This is the biggest problem.

"Most of China's products are inexpensive, and consumers, whether government or individual, will buy it out of reason."