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Cisco Systems might think it's a simple lawsuit that it filed against a Chinese company for patent protection, but Chinese industry experts deemed it as a signal that the U.S. giant is becoming upset about the rising threat from its Chinese rivals.
The U.S.-based telecommunications equipment maker filed a lawsuit against Huawei Technologies Co. Ltd. last Thursday in Texas, accusing the Chinese company of copying some of its operating codes, routers and switches without permission as well as violating at least five of its patents.
Officials with Huawei were cautious of making any comment on the issue, but a statement released on its Website claimed that it respects the intellectual property rights and it's now looking into the matter.
"Cisco has sensed the threat coming from its rivals in China, since growing companies like Huawei are gradually nibbling at the market, which used to be dominated by Cisco several years ago," said Lu Guoying, a senior analyst with CCID Consulting Co. Ltd. in Beijing.
"In the days before 2000, Cisco was overwhelmingly dominant in China's data transmission equipment market, taking away more than 90 percent of all the local sales," said Lu.
Huawei is not alone. Other Chinese makers like ZTE Corporation and Digital China are also growing rapidly.
In fact, the fire burns not only inside China, but on overseas markets like India, another traditional territory for Cisco where it suddenly finds itself facing off with competitors like Huawei.
"Huawei is attracting customers with its low prices, since Cisco is still too big a player to compete with if Huawei sells products at the same price," said an industry insider who preferred anonymity.
Actually, the technology gap between domestic makers and foreign giants is also becoming smaller.
"Especially in middle- and low-end markets, domestic players are offering products with almost the same quality as their foreign counterparts," said Lu. "Generally speaking, of course, they're still lagging behind in technology."
Headquartered in the southern Chinese financial center of Shenzhen, Huawei was founded in 1988 and soon grew into one of China's largest telecommunications equipment producers.
Ren Zhengfei, a former army officer who founded the company, was ranked as China's third-richest businessman by Forbes in 2000.
The company previously explored other developing markets like Russia and India by setting up branches in more than 40 countries worldwide. Recently it's heading toward Europe and North America.
(Shanghai Daily January 31, 2003)
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