March 5, 2015 / 5:39 AM / 3 years ago

Huawei, Intel expand tie-up amid China's rising scrutiny of U.S. tech firms

Journalists attend the presentation of the Huawei's new smartphone, the Ascend P7, launched by China's Huawei Technologies in Paris, May 7, 2014. REUTERS/Philippe Wojazer

BEIJING (Reuters) - China’s Huawei Technologies Co Ltd [HWT.UL] and Intel Corp are expanding an existing alliance to provide cloud computing to global telecoms carriers, as U.S. tech firms vie for Chinese tie-ups to retain access to a tough mainland market.

The partnership, announced by Huawei in a statement, comes as U.S and other Western tech firms’ scramble to burnish their bona fides with China, which has become increasingly wary of foreign technology.

Joining hands with Chinese companies, including technology transfers and adopting Chinese partners’ branding, can make these products more palatable to local buyers and authorities in the world’s second-largest economy.

“How do you stay in this market and do the least damage to your core business - that’s the puzzle everybody is focusing on now,” said James McGregor, chairman for advisory firm APCO China.

China’s government has been openly pushing for the use of more Chinese and less foreign-made technology, both to grow its own tech sector and as a response to former U.S. National Security Agency contractor Edward Snowden’s leaks about widespread U.S. cyber surveillance.

These policies have become a source of considerable friction in foreign relations.

Earlier this week, U.S. President Barack Obama warned of a proposed anti-terrorism law’s impact on technology firms and international business, and demanded amendments.

Other U.S. enterprise tech firms adopting a partnership strategy include IBM Corp, Dell Inc [DI.UL], Cisco Systems Inc, Hewlett-Packard Co and Juniper Networks Inc.

The cloud computing industry is a focus area for China, with Premier Li Keqiang saying in his government work report delivered to parliament on Thursday that the government would support its development.

Intel and Huawei have collaborated previously, including a server and cloud product team-up in 2012 and an agreement to cooperate on data storage last April.

Additional reporting by Gerry Shih; Editing by Muralikumar Anantharaman

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