The US Intelligence Committee report pointed out that Huawei and ZTE poses threats to national security. Huawei and ZTE are China’s top technology companies, and the world’s leading telecommunications network gear suppliers and mobile phone manufacturers. The panel suggested the government body to avoid cooperation, block any merger and acquisition acts, and exclude supplies in government systems and private firms by the two companies; in addition to an investigation into the companies’ financial relations with the Chinese government. However, there lacked definite evidence to support these claims.

This showcased the role of politics and effects of political relations in business. The report hindered Huawei and ZTE’s ability to gain market share in America, as well as in rest of the world, where the Australian government have banned Huawei to bid for supplying to the National Broadband Network due to similar concerns. For their competitors, America’s Cisco and Sweden’s Ericsson, it’s a good opportunity to take on during others’ crises to expand and replace. As the Economist suggested, the industry’s supply chain have become global, and most companies now manufacture all or part of their telecoms equipment and components in China. Thus, “an international effort to develop standards governing the integrity and security of telecoms networks” is the route to tackle security issues.

Articles: http://www.economist.com/blogs/schumpeter/2012/10/chinese-telecoms-firms-america

 http://www.guardian.co.uk/technology/2012/oct/08/china-huawei-zte-security-threat

http://www.vancouversun.com/business/Huawei+pose+security+risk+says/7361528/story.html