Chinese telecom equipment manufacturers are having a hard time worldwide, after the US Government’s crackdown on Huawei. Australia has already banned Huawei from its national broadband network project, and recently, Canada banned Huawei from its Government network setup. Huawei is the largest telecom equipment manufacturer in the world, and it has taken a hit from all the bad press. However, another Chinese firm ZTE has also been the subject of investigations along with Huawei.
After Huawei, now ZTE is facing the heat, as it was involved in banned sales of computer equipment from Cisco to Iran’s telecom companies. ZTE is Cisco’s sales partner, and Iran is in the list of Cisco’s embargoed countries. The incident first surfaced back in March and Cisco was quick to launch a probe into the matter. There have been intermittent reports of both Huawei and ZTE facing trouble since around the same time. Cisco found that ZTE was indeed guilty, and this sparked a series of investigations by the US Government, with FBI launching a criminal probe as well. With this, the five-year-old ZTE Cisco partnership comes to an end.
Steve Stecklow at Reuters Canada writes,
The stories sparked internal probes by the companies involved, as well as investigations by the U.S. Commerce Department, a congressional committee, and the Federal Bureau of Investigation. ZTE’s general counsel at its Texas-based subsidiary alleged that the parent company plotted a cover-up, including possibly shredding documents, after the first Reuters story broke.
The Cisco-ZTE partnership was made for the sole purpose of competing with Huawei. However, ZTE and Cisco teams never got together. While ZTE was successful in selling Cisco equipment in China, Cisco was not too keen on selling ZTE equipment in the US.