(WALL STREET JOURNAL) HONG KONG—A damning U.S. congressional report represents one of the biggest threats to plans by China’s Huawei Technologies Co. and ZTE Corp. 000063.SZ +2.60%to expand into developed markets, not only by tainting public perceptions of the companies but also potentially prompting further investigations into their businesses, analysts say.
The U.S. is one of few major markets where Huawei, the world’s second-largest telecommunications equipment supplier after Sweden’s L.M. Ericsson Telephone Co.,ERIC-B.SK -0.75% hasn’t been able to expand. Whether Huawei can penetrate the critical U.S. market—a major market for Ericsson and Nokia Siemens Networks—will determine the rate of the Chinese technology giant’s overall growth.
In a report released Monday, the U.S. House intelligence committee said Huawei and Chinese telecom-equipment supplier ZTE pose security risks and that the U.S. government should avoid using the two companies’ equipment.