US Congress blocks Chinese companies

English: Huawei Technologies D25HW 3G-WiFi Rou...

English: Huawei Technologies D25HW 3G-WiFi Router / USB modem 日本語: Huawei Technologies D25HW 3G-WiFiルーター / USBモデム (Photo credit: Wikipedia)

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September 15, 2012 — Updated September 14, 2012 11:23 HKT


A US Congressional hearing concerning possible national security threats posed by Chinese telecommunications equipment manufacturers Thursday demonstrates bias toward Chinese companies and tarnishes the US’s image as an open and free market.

Huawei Technologies Co. Ltd.,(SZ:002502) the world’s 2nd-largest telecommunications equipment maker, and ZTE Corp. (OTC PINK:ZTCOF), a smaller competitor, will face scheduled testimony at a hearing of the US House of Representatives’ Intelligence Committee on whether they pose threats to US national security.

Chinese telecom firms have encountered multiple stumbling blocks while expanding overseas, often related to national security threats. Huawei has been prevented from acquiring two foreign companies in recent years, as well as been subjected to accusations of espionage.

The measures used to block Chinese companies demonstrate the US government’s intent to protect its domestic industries, as well as reveal a lack of confidence possibly linked to the predicted expansion of the US telecoms equipment sector.

The sector is expected to be worth US$10.5-B by Y 2013. It is likely that the US government is making moves to allow its own companies to benefit from the sector’s profitability and squeeze out foreign competitors.

Politics may also be to blame. National security is an easy and convenient talking point for US politicians, especially at a time when the country’s president and many of its congressmen are facing elections.

Huawei claimed Wednesday that the company’s path into the US has been blocked by unsubstantiated allegations. ZTE, on the other hand, said it sees the hearing as an opportunity to respond to criticism and reassure US authorities.

Although their approaches differ, both companies will continue to face obstacles unless the US adopts a constructive and reasonable approach.

In contrast to the US, the British government recently approved a US$2-Binvestment and procurement plan from Huawei, as the company plans to double its UK workforce over the next 5 yrs.

“I welcome this and I want to see more companies invest in the UK as we work to achieve sustainable and balanced growth within our economy,” British Prime Minister David Cameron said while discussing the investment.

Huawei’s investment in the UK demonstrates the value of discarding bias in favor of pursuing a Win-Win situation. The US would do well to learn from Britain as it struggles to revive its own economy.

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