ReutersMay 23, 2019 09:01:01 IST
The US administration is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision, media reports show, deepening worries that trade friction between the world's top two economies could be further inflamed.
The restrictions would limit Hikvision's ability to buy US technology and American companies may have to obtain government approval to supply components to the Chinese firm, the New York Times reported on Tuesday.
The United States stuck Huawei Technologies on a trade blacklist last week, effectively banning US firms from doing business with the world's largest telecom network gear maker, in a major escalation in the trade war.
The United States has accused Huawei of activities contrary to national security, a charge Huawei denies. However, this week the Trump administration granted the firm a licence to buy US goods until 19 Aug to minimise disruption for customers.
Huawei says it can ensure a steady components supply chain without US help. A Hikvision executive echoed the sentiment.
"Even if the US stops selling them to us we can remedy this through other suppliers," a Hikvision executive said on condition of anonymity given the sensitivity of the matter.
"The chips Hikvision uses are very commercial and most of the suppliers are actually in China," she said but added the company had not been informed of any possible US blacklisting.
The White House did not respond to a request for comment.
Bloomberg, citing people familiar with the matter, reported the US government was deliberating whether to add Hikvision, security equipment maker Zhejiang Dahua Technology and several other unidentified firms to a blacklist. A Dahua investment department employee declined to comment.
Hikvision, with a market value of more than $37 billion, calls itself the world's largest video surveillance gear maker. Its products are used in public places in China, from Beijing to Xinjiang. Headquartered in high-tech Hangzhou, one of China's richest cities, it sells close-circuit TV products, traffic and thermal cameras, and unmanned aerial vehicles.
China's foreign ministry on Wednesday urged the United States to provide a fair environment for Chinese firms, in the wake of reports Hikvision could be blacklisted.
"Recently we have repeatedly expressed China's position of opposing the United States' abuse of national power to wilfully smear and suppress other countries' companies, including Chinese companies," ministry spokesman Lu Kang said at a briefing.
China requires its companies to abide by international norms when investing abroad, but "at the same time we always demand that other countries give Chinese enterprises fair and non-discriminatory treatment", he added.
Shares in Hikvision, 42 percent held by state-owned firms, opened 10 percent lower on Wednesday. It later pared some losses to trade down 6 percent. Dahua shares slumped as much as 9.2 percent.
Jefferies analyst Rex Wu downplayed the impact of a possible ban on Hikvision, saying the United States accounted for roughly 5 percent of the company's sales.
"Most AI solutions are sold to the government, public and enterprise sectors in China. Hikvision may be able to acquire GPU (graphics processing unit) via local distributors," Wu said.
Hikvision and Dahua were specifically cited in a letter to US President Donald Trump's top advisers last month, signed by more than 40 lawmakers, which called for tighter US export controls over China's treatment of Muslim minority.
China has faced growing global condemnation for setting up facilities in its western region of Xinjiang that UN experts describe as mass detention centres holding more than 1 million ethnic Uighurs and other Muslims.
Beijing has said its measures in Xinjiang, which reportedly also include widespread surveillance, are aimed at stemming the threat of Islamist militancy. The camps that have opened are vocational training centres, it has said.
In a separate email on Wednesday, a Hikvision spokeswoman said the firm took these concerns seriously and had since last October been engaging with the US government on the subject.
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