U.S. Congressional investigators have decided that Chinese tech companies Huawei and ZTE (HKG:0763; SHE:000063) pose a threat to American telecommunications security, recommending that “American firms avoid using equipment from the Chinese firms for tasks that involve large amounts of sensitive data.” Now ZTE has fired back in a press release, stressing that it’s a safe partner or vendor for American firms. David Dai Shu, ZTE’s director of global public affairs, says:
It is noteworthy that, after a year-long investigation, the Committee rests its conclusions on a finding that ZTE may not be ‘free of state influence.’ This finding would apply to any company operating in China. The Committee has not challenged ZTE’s fitness to serve the US market based on any pattern of unethical or illegal behavior.
The ZTE announcement then points out that the telecoms and gadget maker has a “Trusted Delivery Model” which passes “hardware, software, firmware, and other structural equipment elements to an independent third-party threat assessment laboratory with US government agency oversight.” ZTE suggests that the Committee probe was flawed in the way it assessed companies, stating:
ZTE is disappointed that the Committee chose to narrowly focus its review on just the two largest Chinese companies and to exclude Western telecom vendors and their Chinese joint venture partners. Given that virtually all US telecom equipment is produced in China, in some measure, the Committee’s narrow focus addresses the overall issue of risk to US telecom infrastructure so narrowly that it omits from the Committee’s inquiry the suppliers of the vast majority of equipment used in the US market. ZTE is a relatively small US telecom infrastructure equipment supplier in comparison with most of the Western vendors. Sales of ZTE’s telecom infrastructure equipment in the US comprised less than $30 million in revenue last year. Two Western vendors, alone, last year provided the US market with $14 billion worth of equipment.
ZTE’s David Dai Shu stresses this narrow focus by adding:
Particularly given the severity of the Committee’s recommendations, ZTE recommends that the Committee’s investigation be extended to include every company making equipment in China, including the Western vendors. That is the only way to truly protect US equipment and US national security. National security experts agree that a Trusted Delivery Model will strengthen national security. In fact, major US carriers are increasingly requiring Trusted Delivery Model in their contracts.
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