HP Seeks Local Buyer For Chinese Networking Business

hp logo on Moonshot kit Grenoble 2014 Peter Judge

HP considers disposing of H3C Technologies as Chinese tech market becomes increasingly hostile to Western vendors

HP is reportedly seeking a buyer for the majority stake in its Chinese networking business as the mutual mistrust between the US and China continues to make it difficult for technology firms from the two countries to do business with each other.

The company acquired H3C Technologies, a major supplier of networking gear in China, in the takeover of 3com for $2.7 billion in 2010 and has started the process of identifying potential suitors.

According to The Wall Street Journal, HP may only sell a 51 percent stake in H3C and it is believed to favour a local buyer as it is believed this is the only way any takeover deal will receive approval from the Chinese authorities.

HP H3C takeover

HP Logo on server rack door Peter JudgeThe US has effectively frozen out Huawei from American public sector deals because it fears the company is spying for the Chinese government, but in recent months, China has started exclusing Western firms for government procurement lists because of security concerns.

IBM, Cisco and Symantec have all been affected by this purge, while Windows 8 has been banned from government computers. Microsoft and Qualcomm have also been targeted by anti-trust investigations. Public sector organisations and firms in sensitive industries such as finance have been urged to switch to local providers, such as Huawei, ZTE and Lenovo.

Apple products have also been banned from Chinese government use, but the company is desperate to continue its ongoing push into the market and has made a number of special provisions. It has agreed a deal with China Telecom to store Chinese users’ iCloud data locally, while it has also hired a local manager in the country to deal with data requests on users from the government.

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