From Asia Times:

Huawei Technologies, one of the country's leading technology companies and with an increasing worldwide influence, was ordered by China's Labor Ministry recently to halt its practice of encouraging some 7,000 of its permanent employees who had worked for more than eight years to resign then be re-employed on contract. The company claimed it was a bold strategic move to boost employees' morale.

The abrupt change in employment terms, though not new in the short history of Shenzhen-based Huawei, is seen by some observers as an attempt to evade its responsibilities before the new Labor Contract Law takes effect. Under the law, employers have to sign open-ended labor contracts with employees who have worked for the same company for 10 or more successive years.

I'm not a big fan of that 10-year provision, since I am used to at-will jurisdictions, but this does seem a bit heavy-handed. Like the McDonald's labor "scandal" earlier this year, the biggest problem is the PR damage. Getting slapped down by the Labor Ministry looks bad, and saying that the move was somehow related to employees' morale — well, that's silly.

Remember that this is a company with a pending U.S. deal for part of 3Com's equity, a deal that was having some troubles already. You think that the politicos in the U.S. that are shouting about Huawei's military ties aren't going to use something like this to portray the company as a "bad actor" in the business community? Think again.