The chances of the two big Chinese telecoms equipment manufacturers, Huawei and ZTE, ever being able to gain a substantial foothold in the US market will be reduced to close to zero later on today when a report by the House of Representatives Intelligence Committee is published. Martyn Warwick reports.
The report will conclude that both Chinese companies pose a potential threat to the national security of the US - mainly because of the tangled skein of secretive links both companies have and maintain with the Chinese government and some of its shadowy agencies.
The committee, which is majority-led by members of the Republican-party, will recommend that American companies should refrain from doing business with either Huawei or ZTE and that the FCC and other regulatory bodies should act to forestall any mergers or acquisitions the Chinese companies might attempt to make in the US. The report is "advisory" but it is expected that it will have some very real and far-reaching effects on, and implications for, Huawei and ZTE in North America.
Huawei, now the world's second-biggest manufacturer of telecoms equipment is, ostensibly at least, a private company while ZTE, the world's fourth largest maker of mobile telecoms kit, is under suspicion in America for having sold computer equipment and technology to Iran in contravention of US-sanctions against the country.
Indeed, the FBI is conducting a full-scale investigation into allegations that ZTE deliberately and systematically obstructed the US Commerce Department as it sought to clarify whether or not sanctions have been breached.
In a classic case of being hoist with its own petard, ZTE, whilst claiming to be an autonomous company with no contact with the Chinese government, refused to provide any documentation on its alleged links to Iran on the grounds that to do so would be against China's state-secrecy legislation!
The committee's report also draws attention to number of ongoing cyber-attacks being mounted against the US that have been traced back to China.
There are worries that Huawei and ZTE equipment could be used to further a massive "back-door" cyber assault via kit installed in the US itself.
The publication of the report is the culmination of an investigation that has lasted for over a year and a draft of it was made available to the media in advance, subject to the proviso that no reference should be made to its contents prior to last night's edition of the prestigious CBS "60 Minutes" current affairs programme on US television which showcased Huawei's business activities in the US and elsewhere around the world.
In the CBS programme the chairman of the House of Representatives Intelligence Committee, Mike Rogers, told US companies intending to buy equipment from Huawei to, "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."
Meanwhile, the report itself says, "China has the means, opportunity, and motive to use telecommunications companies for malicious purposes and Huawei and ZTE have failed to assuage the committee's significant security concerns presented by their continued expansion into the US".
But, although ZTE comes in for some heavy criticism, it is Huawei that is regarded with the greatest suspicion. The report reveals that the committee took testimony from several former Huawei employees that indicates Huawei has long been violating US laws. Immigration, bribery and corruption are mention, as is the "pattern and practice" of Huawei routinely using pirated software in its US operations.
Most damning though is the allegation that Huawei provides "special network services" to a secret cyberwarfare unit of the People's Liberation Army.
In response, Huawei's vice-president of external affairs in the US, Bill Plummer. called the report "politically motivated" and said Huawei is, "a globally trusted and respected company."
Meanwhile ZTE "profoundly disagrees" with the committee's conclusions and says it "should not be a focus of this investigation to the exclusion of the much larger western vendors."
In a section of the "60 Minutes" TV programme, a reporter asks Huawei's Bill Plummer to comment on just why, given that camera crews and reporters were allowed into the company's Shenzhen headquarters, they were not allowed to talk to anyone from Huawei.
His response was this: "The goal of the visit to Shenzhen was to give a really rich and visual impression of the company. It is a company that has experienced a history of not fully balanced treatment by the media. And that's created a sense of wariness."
Well, Mr. Plummer, there's an even larger and more acute sense of wariness in the US legislature and and Huawei and ZTE are soon going to get a "really rich" experience of it.
please sign in to rate this article