Huawei and ZTE refute the US Congress report as "baseless" (Photo)

Huawei and ZTE refute the US Congress report as "baseless" (Photo) The House Intelligence Committee issued a report on Monday (October 8) saying that Chinese communications company Huawei...

The House Intelligence Committee issued a report on Monday (October 8) saying that Chinese communications companies Huawei and ZTE pose a threat to the national security of the United States. Huawei and ZTE issued statements one after another on Monday, refuting the report's accusations against the two companies, describing the report as completely inconsistent with the facts, purely groundless and baseless.

Huawei Senior Vice President Ding Shaohua testified before the U.S. Congress on September 13, denying that the company set spy codes in telecommunications equipment and insisting that it would not pose a threat to U.S. security in its entry into the U.S. market. (Network map)

According to the New York Times, the House Intelligence Committee reported that the committee obtained internal documents from former employees of Huawei, showing that it provides services for the People's Liberation Army's "cyber warfare." The report was issued by Republican Representative Rodgers, chairman of the Intelligence Committee.

The New York Times stated that the report highlighted the sensitive areas that the United States and China have to go through when trying to establish commercial relations. These efforts have also become a key point in political dialogue in the weeks leading up to the general election. Both candidates have said that the U.S.-China relationship is important and have pledged to take a tough stance against China on the yuan exchange rate and trade issues.

The British Broadcasting Corporation (BBC) said that the two Chinese companies have become important competitors in the international market and have been hoping to eliminate the suspicions of U.S. lawmakers and expand their business in the United States.

However, after an 11-month investigation, the U.S. House of Representatives Intelligence Committee concluded that it threatened its national security and recommended that U.S. companies not do business with these two companies. .

The so-called threat is "baseless"

Huawei said that the report was full of rumors and failed to provide clear information to prove that the committee's concerns were reasonable. The purpose was to prevent Chinese companies from entering the US market and hinder competition.

ZTE stated that the company will not pose any security threat to the US market, and stated that the top priority for relevant US agencies and personnel is to "expand their horizons and examine the entire telecommunications industry supply chain."

Huawei is the world's second largest manufacturer of routers, switches and other telecommunications equipment after Sweden's Ericsson, and ZTE ranks fifth.

Political hype on campaign topics

Analysts pointed out that the latest report of the U.S. House of Representatives Intelligence Committee will hinder the business development of Huawei and ZTE in the United States and may lead to further tensions between China and the United States.

U.S. House of Representatives Intelligence Committee Chairman Rogers said when releasing the report that the Intelligence Committee did not urge the United States to boycott mobile phones and other handheld devices produced by Huawei and ZTE, and the relevant warning was limited to equipment that processes data on a large scale.

Analysts pointed out that the release of this report by the House Intelligence Committee at a time when the U.S. presidential election is intensifying will prompt Obama and Romney to use this as a basis to launch attacks on China to win the support of American voters.

Previous reports said: China's two major telecommunications companies Huawei and ZTE refuted an upcoming report by the US Congress on Monday (October 8), saying that their products are safe to use in the United States.

According to CNNMoney, the House Intelligence Committee’s recent report to be released focuses on the business models of Huawei and ZTE. Both Chinese companies hope to expand their business in the United States.

The committee's formal report has not yet been published, but a draft began circulating Monday. The report claims that "the equipment provided by Huawei and ZTE for U.S. critical infrastructure carries risks that may undermine core interests of U.S. national security." The report is particularly critical for Huawei because the Intelligence Committee's report claimed that Huawei provided evasive, non-responsive and incomplete answers to relevant security questions.

CNNMoeny said that both Huawei and ZTE are among the world's largest telecommunications companies, providing routers and other Internet equipment. Both companies have tried to expand their markets in the West, but have faced resistance citing security concerns.

Huawei on Monday called the claims in the US report "unfounded." Company spokesman William Plummer issued a statement saying that any claim that Huawei products are particularly vulnerable to cyberattacks ignores technical and commercial realities, recklessly threatens American jobs and innovation, does nothing to protect national security, and is a dangerous political diversion of legitimate public-private projects that should be exposed.

ZTE said in a statement that the company's products are safe and it provides unprecedented standards for Chinese companies to cooperate with congressional investigations.

ZTE also provided a copy of its final communication to the congressional intelligence committee, saying it deeply disagrees with any suggestion that it is a Chinese government-controlled enterprise.

Both companies said they would comment further once they have reviewed the report.

For Huawei, the North American market has always been its most critical market but has been unable to conquer it for a long time. Especially in the overall weak environment of the global telecommunications equipment market, the North American market is particularly important to Huawei.

In the first half of 2012, affected by the global economic downturn, the growth of the telecommunications equipment market and other factors, the performance of the world's five largest telecommunications equipment manufacturers, including Huawei, declined to varying degrees. Although Huawei did not announce its specific performance in the telecom operator market in its semi-annual report, last year's annual report data showed that Huawei's growth in this market was only 3%.

Under this circumstance, entering the North American market has become a key step for Huawei's growth in the telecommunications equipment market. However, the main reason why Huawei has failed to enter the North American market is not product quality or bidding price, but some non-commercial factors. Some U.S. politicians have always believed that Huawei has a "military background." And under this so-called background, if Huawei is allowed to deploy networks in the U.S. market, it will "threaten U.S. national security."

Due to pressure from the US government, Huawei has been hoping to enter the North American market through bidding and mergers and acquisitions, but has never been able to do so. In 2008, Huawei and Bain Capital jointly bid for 3COM, but failed due to obstruction by the U.S. government. In 2011, Huawei was forced to accept the recommendation of the Committee on Foreign Investment in the United States and withdraw its application to acquire 3Leaf's special assets. Also in 2011, the U.S. Department of Commerce blocked Huawei from participating in the national emergency network project bidding.

"In Huawei's global strategic layout, the only difficulty is the North American market." Huawei President Ren Zhengfei's previous remarks not only revealed the importance of the North American market to Huawei, but also revealed the difficulty for Huawei to enter this market.

At a hearing held by the U.S. House of Representatives Intelligence Committee in the second half of 2012 on the issue of Huawei and ZTE "possibly threatening the security of U.S. network infrastructure," Huawei Senior Vice President Ding Shaohua denied that the company had set spy codes in telecommunications equipment and insisted that it would not pose a threat to U.S. security in its entry into the U.S. market.

Huawei has made similar statements many times, including its willingness to disclose its source code to be reviewed by the US government. However, despite these efforts, Huawei has never been able to obtain a "pass" for the North American market.

The United States determines that Huawei and ZTE may endanger its country

According to an advance report from the Global Times, the U.S. House of Representatives Intelligence Committee will release the results of an investigation into two Chinese communications companies, Huawei and ZTE, that "may pose a security threat to the United States" on the 8th local time. However, the result is no longer in doubt. In a program broadcast on CBS on the 7th, Mike Jess, chairman of the committee, has labeled Huawei: "If I were an American company and people were looking at Huawei's business, if I really cared about my intellectual property rights, the privacy of my customers, and the national security of the United States of America, I would choose another supplier."

The committee’s investigation into the two Chinese companies’ products “suspected of facilitating Chinese espionage activities” took nearly a year. In mid-September, executives from Huawei and ZTE were asked to provide testimony at hearings in the U.S. House of Representatives. According to Reuters, the US CBS TV station's "60 Minutes" program will air an interview with committee chairman and former FBI agent Mike Jess on the evening of the 7th to discuss "the dangers of Chinese companies competing in the US telecommunications market." The trailer released by the program group on the 5th shows that the committee believes that "Huawei poses a threat to U.S. security." The trailer doesn't say what the committee thinks of ZTE. U.S. Representative Lopsberg said: "The main purpose of our investigation is to educate people in the American business community and communications field."

"Chinese companies are preparing to confront the espionage accusations in the U.S. Congressional report." The U.S. "Capitol Hill" website published an article with this title on the 6th. Rogers said that the report released on the 8th will explain "why we have such concerns." In this regard, Huawei US spokesman Bramer told the website, "There is a hypothesis that Huawei has a conspiracy to embed certain equipment in its products in order to obey the orders of a country's government - is it true? Hundreds of people are required to complete this conspiracy." He said that Huawei is a company established in China, but it conducts international business, just like many Western companies. Expelling Huawei from the United States is "entirely political" and means "fewer jobs, less foreign investment, less innovation and competition, higher broadband prices, and more tense trade disputes." Bramer said that the safety of Huawei's products has been proven around the world. "This is a fact today and in the future, except when facing accusations involving political agendas."

"To dispel doubts, Huawei is considering listing in the United States." This news from the Wall Street Journal on the 5th attracted much attention. According to the report, Huawei executives and board members have debated whether to conduct a public offering for more than a year, concluding that a public offering would help make Huawei's operations transparent and "more like a Western company." In this regard, Bramer said that Huawei will not comment on "market rumors", but "if such a thing does happen, it is purely for commercial purposes."