US probe of Huawei, ZTE casts harsh light on Chinese telecoms equipment manufacturers

China’s massive telecommunications equipment manufacturing sector appears to have been put under a microscope by Washington, after industry giant Huawei Technologies was queried about its possible breach of longstanding trade sanctions on countries like Iran and North Korea.

The inquiry made by the United States Department of Commerce followed the agency’s investigation of Hong Kong-listed ZTE earlier this year over the alleged sale of telecommunications equipment containing US hi-tech components to Iran in 2011.

The Commerce Department has requested that Huawei executives at the company’s US headquarters in the city of Plano, Texas, turn over all information regarding the shipment of telecommunications equipment with American technology to nations like Iran, North Korea, Syria and Cuba which are under rigid US export controls, according to the New York Times, which first reported the story.

The agency sent Huawei an administrative subpoena, which means that the company has not been accused of any wrongdoing. It is a process that other Chinese telecommunications gear makers could face.

“Presumably, the subpoena is the first step before more serious action by the US,” said Paul Haswell, a partner at international law firm Pinsent Masons in Hong Kong. “It’s a final chance for Huawei to confess to any wrongdoing before such action is taken, although we have seen no evidence that the company is in breach.”

Shenzhen-based Huawei, China’s largest telecommunications equipment manufacturer, had no comment on the reported US investigation.