Fueled by mutual mistrust, the relationship between China and the United States has turned sour in the past few years, so much so that it's adversely affecting the ability of companies to do business in each others' markets. The latest example of this is HP's efforts to sell part of its Chinese networking business, according to a Wall Street Journal report.
HP is on the lookout for a buyer to sell a majority 51% stake in its China-based H3C Technologies, a deal that could net the computer giant billions of dollars in cash. However, in order to obtain regulatory approval from the Chinese government, the buyer would likely have to be local, the report said.
H3C Technologies, which sells networking equipment including routers, Ethernet switches, wireless LAN as well as software products, was formed as a joint partnership between Huawei Technologies and 3Com back in 2003 -- the “H” in H3C stands for Huawei, while the “3C” represents 3Com.
But in 2006, 3Com, which had a 51% stake in the joint venture, bought out Huawei's stake in the company for $882 million. Four years later, HP scooped up H3C when it acquired 3Com for $2.7 billion. With over 5000 employees worldwide, H3C's business is valued at around $5 billion.
HP is said to be in talks with private equity firms, although the possibility of a Chinese technology company acquiring its enterprise networking business cannot be ruled out. It isn't yet clear whether Huawei is a possible buyer.
The news comes just a few weeks after HP announced that it is breaking up into two public companies: one focusing on cloud computing services and other tools for businesses, with the other handling consumer PCs and printers.