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Huawei, ZTE Get Grilled in US

Ray Le Maistre
9/14/2012

4:20 AM -- Representatives from Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) appeared before a U.S. congressional hearing Thursday to defend their companies against a number of accusations linked to security concerns.

The documents from the House Permanent Select Committee on Intelligence (HPSCI) proceedings, which can all be found at the Permanent Select Committee on Intelligence (HPSCI) website, are worth a look.

Chairman Mike Rogers laid out the concerns at the heart of the "investigation into the threat posed to the United States by telecommunications equipment manufactured by companies with believed ties to the Chinese government."

You can read his opening statement here.

He was followed by Congressman Dutch Ruppersberger, who helped set the tone: "The fact that both companies, Huawei and ZTE, were created and headquartered in China, a country known to aggressively conducts [sic] cyber espionage, raises issues."

You can read his opening gambit here.

Charles Ding, Corporate Senior Vice President, spoke on behalf of Huawei, while Zhu Jinyun, Senior Vice President for North America and Europe, represented ZTE.

As you'd expect, both companies argued that they are not doing anything that anyone need worry about. Here are a few extracts from Huawei's testimony, which you can read in full here:

    "Huawei is entirely owned by its employees. No third party -- including government institutions -- has any ownership interest in Huawei. Huawei’s success has not been based on favoritism or subsidization by the Chinese government… As a global company that earns a large part of its revenue from markets outside of China, we know that any improper behavior would blemish our reputation, would have an adverse effect in the global market, and ultimately would strike a fatal blow to the company’s business operations. Our customers throughout the world trust Huawei. We will never do anything that undermines that trust. It would be immensely foolish for Huawei to risk involvement in national security or economic espionage. Let me be clear -- Huawei has not and will not jeopardize our global commercial success nor the integrity of our customers’ networks for any third party, government or otherwise. Ever.

    "Although we want to expand our presence in the U.S. and thus create more employment and growth opportunities, we have been hindered by unsubstantiated, non-specific concerns that Huawei poses a security threat. We have respectfully asked HPSCI to provide us with any allegations it has that Huawei has engaged in national security or economic espionage. HPSCI has not responded to this request. If HPSCI has specific allegations that Huawei has engaged in cyber espionage, we ask it again to tell us, so that we will have the opportunity to respond and specifically address any concerns the Committee may have."


And here are some extracts from ZTE's presentation, which you can read in full here. One could argue that it's a little over-enthusiastic at some points…

    "Because most of ZTE’s business is mostly international, ZTE must comply with laws in countries throughout the world. While ZTE appreciates its position in China’s expanding telecom market, ZTE is focused on its success as a multinational company. ZTE is not an SOE [state-owned-enterprise] or government controlled. Indeed, ZTE is China’s most independent, transparent, globally focused, publicly traded telecom company.

    "Being a global publicly traded company naturally imposes a set of broadly recognized responsibilities and business norms. ZTE’s cooperation with this Committee’s investigation is one example. In our view, ZTE has set a new precedent for cooperation by any Chinese company with a US congressional investigation. "ZTE’s ultimate success depends on our ability to serve as a trusted partner for US telecom carriers. No company has a greater stake in promoting effective US cyber security than ZTE."


I think that last sentence might attract some challenges…

See this BusinessWeek article for coverage of the hearing, including what appears to be a highly inappropriate intervention by a member of the U.S. House Intelligence Committee.

For more on this topic and coverage of events leading up to the hearing, see:



— Ray Le Maistre, International Managing Editor, Light Reading

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telecomm_consulting
telecomm_consulting
12/5/2012 | 5:21:00 PM
re: Huawei, ZTE Get Grilled in US


I wonder when these honorable members of "the best Congress money can buy" will open an investigation into Comverse, another company with strong ties to a foreign intelligence service, and which has actually been caught spying on US citizens:


http://www.wired.com/threatlevel/2012/04/shady-companies-nsa/all/


Sadly, no sane person would bet on this Congress ever initiating this particular investigation.

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