ZTE USA's CEO is Actually Enjoying Washington's Probe

ZTE USA CEO Lixin Cheng told Engadget during an interview at Mobile World Congress 2013 that he welcomes an investigation brought on by the U.S. government. Even more, it should increase brand awareness and help bring more jobs to U.S. citizens through increased sales.

Back in October 2012, Congress submitted a report by the Intelligence Committee claiming that both ZTE and Huawei pose as a threat to national security. The allegations were due to their ties to the Chinese government, and their refusal to cooperate with U.S. investigators.

"[U.S. companies thinking about buying from Huawei should] find another vendor if you care about your intellectual property; if you care about your consumers' privacy and you care about the national security of the United States of America," panel chairman Mike Rogers said on the CBS News program "60 Minutes."

Huawei is the world's second largest maker of routers, switches and telecoms equipment whereas ZTE ranks fifth. However ZTE ranks as fourth in the global mobile phone sector while Huawei resides in the sixth position. ZTE's U.S. revenues only make up 2 to 3-percent of its overall global revenues while Huawei generates around 4-percent here in the States. Locally, ZTE ranks sixth in phone sales and Huawei eighth, trailing behind Apple, Samsung, HTC and Motorola.

At the time of the report, ZTE said that it "profoundly disagreed" with claims that it is influenced or controlled by the Chinese government. "ZTE should not be a focus of this investigation to the exclusion of the much larger Western vendors," the company stated.

In addition to the report, U.S.-based network equipment maker Cisco Systems added to the dark cloud hovering over ZTE, stating that it severed its longstanding sales relationship with the company. Cisco said an internal investigation revealed that the Chinese firm sold Cisco's equipment to Iran.

Now five months later, ZTE USA's CEO seems happy that an investigation is underway, and claims that the government's report really hasn't affected business in the States. "It actually helps us build the brand," said Cheng. "When the report came out, it was such a high profile news and everyone was talking about ZTE. Some of our handset consumers may call the hotline and say, 'Hey, I have a phone from ZTE, do I have security concerns?' And of course, most people would find out no, there are no security concerns."

He went on to tell Engadget that despite what the report claims, ZTE is offering full cooperation with authorities, and that the company will try to disclose anything it can without hurting its business interests. "We always respect the U.S. local laws, the U.S. government and the U.S. legislators' duties to protect the national interests of the U.S.," he added. The government's report stated that ZTE failed to satisfy requests for documents which included "detailed information about formal relationships or regulatory interaction with Chinese authorities."

ZTE is reportedly trying to get back into the smartphone game by restructuring to cut costs. The company saw an estimated net loss of at least $400 million in 2012, and is working to regain the trust of local carriers as well as the American government. The recent accusations against China regarding hacks into The Wall Street Journal and The New York Times isn't helping ZTE build its defense, but the company, strangely enough, sees the report as a way to increase brand awareness.

"We're taking this opportunity to tell our story to the consumers, so I think that's our strategy," said the CEO.

The full report can be accessed via Engadget here.

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