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Tuesday, October 16, 2012

Largest Chinese Tech Giants Not Allowed into US

According to the American House of Representatives’ Intelligence Committee, they must shut Huawei out of the domestic market due to potential Chinese state influence on the companies, which may pose a security threat.

The position the United States has taken is the opposite of that in the United Kingdom, where Huawei cooperates with the UK intelligence agencies. The panel leaders of the United States have carried out an 11-month investigation of both entities due to the fears that China might spy on them.

Tech companies Huawei and ZTE are looking forward to expanding in the US, but the American government is telling their citizens that they may pose an espionage threat. Local media reveal that Huawei is considering an IPO in order to try and overcome the suspicions of the United States. However, the company’s spokesperson claimed that there was no truth to the committee’s suggestions.

Huawei insists that baseless suggestions saying that the company is somehow vulnerable to cyber mischief don’t fit into current technical and commercial realities. As for ZTE, the company has released a copy of the letter it had sent to the committee, where it wrote it profoundly disagreed with the claim it might be controlled by the government. This tech company is listed in Hong Kong and such news caused its shares fall. ZTE is working with Verizon, Sprint and T-Mobile, and if its partners start listening to politicians, both Chinese tech giants would face problems in the United States.

According to the panel’s draft report, both Huawei and ZTE failed to satisfy its requests for papers to allay the abovementioned concerns. The committee was asking for the detailed information about formal relationships of the companies with local authorities.

The report presented to the government says that American companies should look for another vendor if they respect intellectual property, clients’ privacy, and the national security of the country.

CBS News’ “60 Minutes” were considered to have received allegations from a number of industry observers and Huawei employees. They were suggesting that Huawei might be guilty of bribery, discrimination, and copyright violation. In respond, the committee referred these allegations to the Justice Department and Department of Homeland Security.

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