An ad for Cisco in Shanghai. (Photo/Xinhua)
China Unicom, one of China's three main state-owned telecoms, is replacing hardware supplied by Cisco Systems, a move seen as retaliation after the US government branded Chinese companies Huawei and ZTE as security threats, reports our sister newspaper China Times.
The replacement targets "China 169," a backbone network router node in Wuxi in China's eastern province of Jiangsu which adopted devices made by the US company, based on security concerns over product vulnerability and backdoor flaws.
About 80% of the internet in China is operated by two backbone networks: "China 163" from China Telecom and "China 169" from China Unicom. China Unicom says it will no longer use Cisco's products in the future.
Cisco has been a major provider of China's principal internet equipment, accounting for 70% of the hardware in the China 163 network and 80% of the China 169 network, as well as other related network devices widely used by the finance, government, railway, civil aviation and medical sectors as well as the police and the military.
China is an important market for Cisco, which had global revenue of US$40 billion last year. China accounted for only a 4% share of its revenue but created profit returns of 30%.
A committee set up by the US House of Representatives released a report on Oct. 8 after months of investigation which recommended Washington view with suspicion the penetration of the US telecom market by Chinese companies, referring to Huawei and ZTE.
Earlier rumors said Cisco Systems, the world's largest maker of networking equipment, had been promoting suspicions about its Chinese rivals behind the scenes. Experts said the latest move by China Unicom suggests trade tensions between China and the US are spreading and may escalate further.
China Unicom 中國聯通