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We reported yesterday on a U.S. Congressional report suggesting that ZTE and Huawei should be blocked from operating within the U.S. for national security reasons. The report singled out both companies with allegations of corruption, bribery and possible influence by the Chinese government. Hot off the press this morning ZTE has hit back with a statement in its defense.

In its statement, ZTE notes its status as a "Trusted Delivery Partner" for 140 other governments, and says it's "China’s most transparent, independent, globally focused, publicly traded telecom company." The company also points out that the vast majority of U.S. telecommunications equipment currently in use is manufactured in China. 

We expect this one to go back and forth before any final outcome is reached. For ZTE's full statement, check past the break. To read more about exactly what they and Huawei are alleged to have done, see our report from yesterday.

WASHINGTON, D.C. – October 9, 2012 – ZTE today reiterated its support for its Trusted Delivery Model and renewed its commitment to work with the House Permanent Select Committee on Intelligence (Committee), government agencies, and the private sector to address all cyber security concerns.

ZTE has set an unprecedented standard for cooperation by any Chinese company with a US congressional inquiry. ZTE has presented the Committee with ample facts that demonstrate ZTE is China’s most transparent, independent, globally focused, publicly traded telecom company. ZTE is listed on the Hong Kong and Shenzhen Stock Exchanges. The company already is recognised as a Trusted Delivery Partner by 140 governments and 500 network carriers.

ZTE’s equipment is safe for US telecom infrastructure. In its Fourth Recommendation, the Committee encourages companies to offer “more consistent review by independent third-party evaluators of their cyber security processes.”  The Committee has credited ZTE with advocating a solution, based on a Trusted Delivery Model, in which the telecom vendor transfers hardware, software, firmware, and other structural equipment elements to an independent third-party threat assessment laboratory with US government agency oversight.

The Committee has raised technical questions regarding the effectiveness of Trusted Delivery Systems, but the Committee recommends continuing efforts to identify effective mitigation solutions. David Dai Shu, ZTE’s director of global public affairs, said “ZTE appreciates the Committee’s recognition that ZTE has offered US carriers a Trusted Delivery Model solution. ZTE will work with the Committee, US government agencies, and ZTE’s US customers to identify and deploy the most effective equipment cyber-security measures possible. ZTE is committed to assuring US carriers and US government agencies its equipment is safe.”

Dai Shu said, “It is noteworthy that, after a year-long investigation, the Committee rests its conclusions on a finding that ZTE may not be ‘free of state influence.’  This finding would apply to any company operating in China. The Committee has not challenged ZTE’s fitness to serve the US market based on any pattern of unethical or illegal behavior.”

According to the Committee, ZTE was included in this investigation simply because it is one of “the top two Chinese telecommunications equipment manufacturers.” Virtually all of the telecom infrastructure equipment now sold in the US and throughout the world contains components made, in whole or in part, in China. That includes the equipment manufactured and sold by every Western vendor in the United States, much of which is made by Chinese joint venture partners and suppliers.

Dai Shu said, “Particularly given the severity of the Committee’s recommendations,  ZTE recommends that the Committee’s investigation be extended to include every company making equipment  in China, including the Western vendors. That is the only way to truly protect US equipment and US national security. National security experts agree that a Trusted Delivery Model will strengthen national security. In fact, major US carriers are increasingly requiring Trusted Delivery Model in their contracts.”

ZTE has presented the Committee with the following facts:

·         ZTE is China’s most transparent, independent, globally focused, publicly traded telecom company. Every business decision and action taken within ZTE serves the Company’s 140,000 public shareholders on the Shenzhen and Hong Kong Stock Exchanges, including many of the world’s leading institutional investors. As ZTE’s Independent Director, an American citizen, has confirmed in a sworn affidavit: ZTE’s business decisions and actions are not directed or influenced by China’s government.

·         ZTE has an unbroken history as a commercial telecom technology innovator for three decades. The company is a leader in international equipment standards-setting organisations, and it is recognised as a Trusted Delivery partner by over 500 network carriers in 140 countries.  ZTE was the pioneer among Chinese companies entering into technology licensing agreements with US suppliers, with its first licensing agreement with Qualcomm in 1999. In recent years, ZTE has spent over $14 billion on US chip sets and other US equipment, and has created over 20,000 direct and indirect US jobs. ZTE will continue as a major customer of US telecom equipment suppliers for years to come.

·         To assure US supply chain security, ZTE offers US carriers its Trusted Delivery Model, a fully transparent and comprehensive review and monitoring system conducted by a highly respected independent US threat assessment laboratory. ZTE’s Trusted Delivery Model provides for a thorough end-to-end security evaluation of ZTE’s software, firmware and hardware throughout the equipment life cycle. The Trusted Delivery Model also makes audits available for US Government agency review to facilitate additional assurance and oversight.

·         Given ZTE’s cooperation and the facts ZTE has presented to the Committee, ZTE is disappointed that the Committee chose to narrowly focus its review on just the two largest Chinese companies and to exclude Western telecom vendors and their Chinese joint venture partners. Given that virtually all US telecom equipment is produced in China, in some measure, the Committee’s narrow focus addresses the overall issue of risk to US telecom infrastructure so narrowly that it omits from the Committee’s inquiry the suppliers of the vast majority of equipment used in the US market. ZTE is a relatively small US telecom infrastructure equipment supplier in comparison with most of the Western vendors. Sales of ZTE’s telecom infrastructure equipment in the US comprised less than $30 million in revenue last year. Two Western vendors, alone, last year provided the US market with $14 billion worth of equipment.

·         US carriers and the US Government have come to rely upon the Trusted Delivery Model as the best protection for telecom infrastructure equipment. A Trusted Delivery Model is vendor-neutral. US carriers can trust the equipment and that is the best protection of US national security.

“ZTE recognises and fully respects the Committee’s obligation to protect US national security,” said Dai Shu. “ZTE believes the Committee focused its examination too narrowly on vendor locations not on equipment security. The Committee omitted the Western vendors and their Chinese manufacturing partners, which provide most of the US equipment now in use. The Committee also overlooked the opportunity to advance universal application of the Trusted Delivery Model which protects critical telecom networks on a vendor-neutral basis.”


Reader comments

ZTE says its equipment is safe, poses no threat to U.S. national security


ZTE makes some valid points that I think congress will have trouble dealing with. I think it's quite ridiculous - it's as if they have to be a terrorist/spy umbrella simply because they're based in China.

Would you trust a communications company who's government has almost complete control over communications? China also has the most active hacking community aimed other communications companies like Google. Not me.

People are very naive about this. It's not some political ploy. Huawei has bragged in the past about compromising US Telecommuncations. There is also evidence both companies sell devices with back door root access. Combine this with the fact that we know the Chinese have well funded and by no means secret operations to infiltrate US information systems and they use Chinese corporations as part of that.

Read the stories instead of the PR releases before making up your mind on this. A commenter was kind enough to post links in yesterday's article. I certainly hope the government uses caution instead of ignoring the warning signs as so many people here seem to think they should. I applaud them for doing something right for a change.

I concur. It's on every individual to do their own research. If you even keep up with the news, you would know what China is and has been doing, therefore the fears are warranted.


Michael Corleone just released a statement that
his "family" has no ties to the so-called mafia.

President Clinton's new memoir indicated that
he never had extramarital "sexual relations"
with anybody during his time in the White House.

Iranian president said Iran never had any plans
to develop nuclear weapons.

Israeli government denies that Israel possesses
nuclear weapons.

North Korean's current leader is the skinniest
person in the country.

Much could be said about a majority of members of congress in the US as well. Many who are always on the take with bribes aka "campaign contributions" to push laws and agendas. Not to mention the fact we owe China $1-$2 Trillion. Why do the folks in DC continue to piss off the Chinese government? It makes no sense. What would America do if suddenly 300 Million Chinese decided they wanted to invade America with the help of their Communist government? Could we stop them with something other than a nuke? NO. We have a pathetic military right now that is broken. 11 years and 3 wars will do that to a nation. Wars my fellow AC commentators, bankrupt nations. Why is America the only nation that is $14 Trillion in debt and still trying to start wars around this globe, makes no sense to me.

@ plmn, most people don't understand and just listen to the talking heads on national tv who say this, that and the other. China is a terrible nation all around from human rights abuses, child labor, etc. We continue to do business with them because Americans like cheap, disposable items. From cellphones to tvs, to whatever.. We also like cheap and fast food here at home.. So hence our love for things like Starsucks Coffee. Crapdonalds, Choke-Fil-A, etc. We are a nation that forgot how to sit and relax and enjoy dinner at home with the family. We are moving faster each day, never slowing down to enjoy life. Always on the go. Hell, I see female drivers putting on make-up in their cars on their way to where they are headed. I see people scarfing down b-fast while driving. It's scary.. America is becoming a 3rd world nation faster each day. We don't have any pride in what we make here at home. The fantwinks, love their big fruity company, but hardly anything they gobble down is produced in America, mostly China and at forced labor sites.

ZTE shouldn't have made such a statement. They should challenge
anyone to come up with solid proof that ZTE devices pose security
risks. If they really have nothing to hide, they can set aside
one million dollars as reward for anyone who can come up with
proof. The proof has to be verified by independent third-party,
of course.

IMHO, Google, Inc. poses a much bigger national security threat
than any other company at the moment. They collect trillions of
bits of information on everything they can get their hands on.
I'm sure Google does NOT intentionally misuse such data, but
what if the data gets into the wrong hands?

I think it's a little bit of the pot calling the kettle black talking down about China.

It's a little naive to think the country that has 50% of the military spending of the entire planet doesn't have at least a few skeletons in its closet - just ask Julian Assange.

Methinks the US is probably going to stage some kind of anti-china hack/smear campaign - so it can get out of paying interest on it's massive debt, and raise interest rates to get this economy pumping again...

Follow the money, you'll find out why people do what.

starting another war is good business for the defense industry
and all the people in the military. (for both China and the US)

(sad but true)

Wait until Congress hears that any network connected computer can be used for espionage and cyber attacks, not just those made in a (dun dun dun!) communist country.