Expansion hopes of China telecoms dashed by US reports

Huawei and ZTE will not do business with the US companies

Huawei and ZTE will not do business with US companies

According to a congressional report released on the 8th of October, two of the telecom equipment makers of China were stripped of their ambitions of doing business with US companies. Chinese telecom’s hopes dashed as a result of this report thereby raising fears that would also retaliate at some point of time.

The Report:

Chinese telecom companies Huawei and ZTE have since long been trying to make inroads in the US due to concerns related to national security, but the report released on the 8th of October further enhanced the dispute between the two parties. Incidentally, Huawei is the second largest and ZTE the fifth largest in the world as makers of variable telecom gears and routers. The US fears Chinese telecom equipments as they think that by using the equipments of these companies Beijing could not only spy but also threaten vital communications and systems via computerized links. The panel of the U.S. House of Representatives’ Intelligence Committee therefore made this decision that had the Chinese telecom’s hopes dashed and urged US companies to look for other network providers. According to Roger Entner, who is a telecoms analyst with the Recon Analytics, said that the decision was absolutely devastating. The report has also advised to put a block on any further business deals between US companies and the telecom companies Huawei and ZTE.

The situation:

The demand that had Chinese telecom’s hopes dashed came at a highly critical time for the relations between the US and China just before the US presidential and the congressional elections along with the power transition in China bringing in new leadership. There has been a series of other events as well that have mounted the tension between the two nations. By openly rejecting their business like this the US has had Chinese telecom’s hopes dashed and have raised high concerns of retaliation from them as well. According to the Chairman of the Committee, Mike Rogers, who used to be a FBI agent formerly, the US fears Chinese telecom equipments because of national security measures. US companies are prone to risks regarding national security from Chinese telecom companies Huawei and ZTE.

The probe of the document:

The document produced by the committee against the telecom companies Huawei and ZTE is based mainly on suspicion rather than on any type of solid evidence. A classified annexure along with the document gives even further information regarding the concerns of the committee and the fact that the US fears Chinese telecom equipments. According to Rogers, information arrived to the committee from some of the Huawei router users that huge amounts of unauthorized data are being passed on to China at late nights. According to reports, the panel committee has in most likelihood referred the matter to the Department of Homeland Security as well as the Justice Department that Huawei might well be involved in cases of corruption, bribery, copyright infringement and discriminatory behavior. The allegations brought about by the panel committee against the telecom companies Huawei and ZTE are quite serious and if it is proved that they are legitimate then the fact that the US fears Chinese telecom equipments will not be for no reason.

Aubrey Chang
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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