ZTE and Huawei, both leading telecommunication equipment manufacturers based in China are security threats to the U.S due to potential Chinese government influence over them and hence should be banned from the states, says a report prepared by House of Representatives’ Intelligence Committee, Reuters reports.
When compared to Apple Inc and South Korea’s Samsung Electronics, Huawei and ZTE’s presence in the United States might seem insignificant but both companies are growing fast globally and gaining market share in the U.S. While 4 percent of total revenue generated by Huawei came from the U.S, ZTE has marked an increase of 2-3 percent in total revenue generated from the U.S market.
Most of these numbers are from cellphone sales but globally both companies are among the top manufacturers of telecommunication equipments such as modems, routers, switches etc. Huawei currently stands at second position globally when it comes to these electronic equipments and ZTE comes in at fifth. However, when it comes to cell phones ZTE is the fourth highest selling brand globally and Huawei is sixth.
The research panel has conducted a 11-month long investigation on both companies and believes the companies pose an espionage threat to the country.
Warning U.S. companies that currently do business with Huawei and ZTE the panels chairman Mike Rogers said during an interview, “..find another vendor if you care about your intellectual property; if you care about your consumers’ privacy and you care about the national security of the United States of America.”
The panel has even claimed that both companies did not provided access to requested documents that contain information regarding the their formal relationship with the Chinese government.
Calling these charges baseless, both Huawei and ZTE condemned the panel.
Huawei spokesperson William Plummer said in a statement:
“Baseless suggestions otherwise or purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignore technical and commercial realities, recklessly threaten American jobs and innovation, do nothing to protect national security, and should be exposed as dangerous political distractions from legitimate public-private initiatives to address what are global and industry-wide cyber challenges,”
ZTE commented saying, it “profoundly disagrees” with the allegations made by the panel that states the company is controlled by the Chinese government. “ZTE should not be a focus of this investigation to the exclusion of the much larger Western vendors”
Meanwhile, Chinese foreign ministry issued a statement of its own wherein it stated, “We hope the U.S. Congress will set aside prejudices and respect the facts, and also do more that is beneficial to Sino-American economic and trade ties, rather than the contrary.”