Ever since I realized that Huawei doesn’t just make cheap phones, I’ve found them to be a fascinating company. They certainly have PR and political problems, but they’re one of the only Chinese tech companies that’s competitive globally. And what they’ve been doing with telecoms equipment, they’re now looking to do with smartphones.*

Thus far, they’ve been selling cheaper models, ranging from 200 RMB to 3000 RMB, targeting a less visible but huge market of lower- to middle-class Chinese consumers. Now, they’re set to challenge the big boys of smartphones.

At the Consumer Electronics Show in Las Vegas, they announced on Monday two of what will be the world’s largest smartphones, weighing in at 6.1 inches. There’s a big “but” coming… they’re only going to be sold in China, with plans for the Ascend D2 to be sold in Japan later this year.

6.1 inches is huge. By my unscientific estimation, it’s about the size of my hand, maybe bigger. Huawei is also positioning it not only as a big’un, but also a bad’un, with specs on the Ascend Mate coming close to other high-end phones: 1.5 Ghz quadcore processor, 8-megapixel back-facing camera, and a poo-poo’ed 1280 x 720 resolution.**

Who would buy such a phone, I hear you ask. To that I answer: it doesn’t matter how big your hands are. One would think that in a city of over 20 million people there would be a tendency toward smaller cars given every decreasing parking spaces, but in Beijing SUVs, and even Hummers, are quite popular. Chinese people, like Americans, enjoy big things.

When Samsung debuted its Galaxy Note (at 5.1 inches) and subsequent Galaxy Note II (at 5.5), there was justified skepticism: “It’s too big to be a phone. It’s too small to be a tablet.” However, as we’ve seen since, the Galaxy Note has gone on to be one of Samsung’s most successful products. And one of their largest markets is China.

In markets such as Beijing, where sometimes commutes can be three hours one way, a handheld entertainment center is a lifesaver. Add in a little traditional Chinese frugality*** and BAM! you have the phablet’s target market: big enough to watch movies and play games, small enough to use Weixin.

With the Ascend Mate and Ascend D2, Huawei is showing that they’d like their phones to be taken a bit more seriously, even if their bread and butter will still be base stations and cheap phones.

*They also make tablets, but from what I’ve seen in person, they’re really terrible.

**For comparison:

iPad mini: 1024 x 768
iPad: 2048 x 536
Nexus 7: 1280 × 800
Galaxy Note 2: 1280 × 720

That means the pixels per inch (PPI) will be higher than the iPad mini, but lower than the Galaxy Note 2

***One would think with so many cheap smartphone options out there, PSP sightings would be a rarity. The opposite is in fact true. Almost every time I take the subway (twice M-F), I see at least one fellow passenger using one.

John Artman has been China watching and covering tech since 2010. Follow him @KnowsNothing.

Well that didn’t take long. It was in our 6 am post today that we said Huawei and/or ZTE would quickly become election fodder, and now we know how quick. The first blow comes via the Obama campaign, accusing Mitt Romney, then CEO of Bain Capital, of “putting profits from China ahead of security for America.”

“This whole xenophobia about Chinese companies isn’t healthy or necessarily beneficial for the World Economy,” comments Alicia – and since when did American politicians care about that?

Anyway, now that Huawei is no longer the company “you’ve never heard of,” as 60 Minutes put it in its Sunday telecast, you can expect to be hearing about it more than you want. At least until mid-November, anyway, when Americans can resume not caring. Youku video for those in China after the jump.

(H/T @davesgonechina)

Fear-mongering or justified skepticism? How do we begin to parse the US House Intelligence Committee report, released Monday after 11 months in the works, that claims China’s two biggest telecommunications makers “pose a security threat to the United States,” and that the US “should view with suspicion the continued penetration of the U.S. telecommunications market by Chinese telecommunications companies”? As the Associated Press bluntly tells it:

The panel says U.S. regulators should block mergers and acquisitions in this country by Huawei Technologies Ltd. and ZTE Corp, among the world’s leading suppliers of telecommunications gear and mobile phones.

Reflecting U.S. concern over cyber-attacks traced to China, the report also recommends that U.S. government computer systems not include any components from the two firms because that could pose an espionage risk.

“China has the means, opportunity, and motive to use telecommunications companies for malicious purposes,” the report says.

That doesn’t sound very nice. And while the tone is slightly paranoid, America takes its security way too seriously to care about offending a couple of Chinese companies — or, for that matter, China.

How would Huawei and ZTE potentially do harm? As The Verge puts it:

Presumably, the fear is that Huawei and ZTE will could somehow build backdoors into their routers and switches, leaking sensitive information to Chinese government and industry. The report also found “credible” reports of immigration violations, bribery, and corruption at the two companies, reports Bloomberg.

Obviously Huawei and ZTE are denying and dismissing. According to The Verge again, “ZTE points out that its US sales are so small ($30 million) as to be insignificant from a security standpoint, and argues that the Committee should broaden the scope of its investigation to include ‘larger Western vendors.’”

Of course, they’ll have a difficult if not downright impossible time convincing anyone. And judging by the report, it seems their major sin was simply not trying hard enough to be convincing:

Despite hours of interviews, extensive and repeated document requests, a review of open-source information, and an open hearing with witnesses from both companies, the Committee remains unsatisfied with the level of cooperation and candor provided by each company. Neither company was willing to provide sufficient evidence to ameliorate the Committee’s concerns. Neither company was forthcoming with detailed information about its formal relationships or regulatory interaction with Chinese authorities. Neither company provided specific details about the precise role of each company’s Chinese Communist Party Committee. Furthermore, neither company provided detailed information about its operations in the United States. Huawei, in particular, failed to provide thorough information about its corporate structure, history, ownership, operations, financial arrangements, or management. Most importantly, neither company provided sufficient internal documentation or other evidence to support the limited answers they did provide to Committee investigators.

So now we wait: for the analysis, the fallout, and the use of the report as election fodder. In the meantime, check out Sunday’s episode of 60 Minutes (transcript here), which attempts to explain, in simple and reductive news magazine terms, what all this means to the American public:

Steve Kroft: How did they get so big and so cheap, so quickly?

Jim Lewis: Two answers. First, steady, extensive support from the Chinese government. If you’re willing to funnel hundreds of millions, maybe even billions of dollars to a company, they’re going to be able to grow. The second reason is industrial espionage. And Huawei was famous in their developing years for taking other people’s technology.

Steve Kroft: You mean stealing?