ZTE, Huawei Keep Heads Down at CES; Other Chinese Companies Less Constrained
LAS VEGAS -- Chinese telecom companies have a lower profile this CES than past years, but China remains a big player at the show, CTA said. Industry officials said given concerns from the U.S. government, it’s no surprise some are keeping their heads down. China came under fire from NSA's general counsel Monday (see 1901070065).
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ZTE isn’t displaying on the floor, though it has representatives at the conference. Huawei's CEO delivered a keynote in 2018, but no representatives of the Chinese companies are speaking this year. The companies didn't comment.
Nevertheless, “China remains a top international market at CES, with many Chinese companies exhibiting at the show to build their brand and forge partnerships,” a CTA spokesperson said. Huawei maintains a large booth on the floor. Chinese exhibit space is 13-14 percent of total show floor space, roughly equal to 2018, the spokesperson said.
“We have seen notable growth from large Chinese companies such as Alibaba, Baidu, Changhong, BYTON, DJI, Haier, Hisense, JD.com, Konka, Lenovo, Suning, and TCL looking to build brand awareness and form global partnerships at CES,” the spokesperson emailed. “This innovative spirit in Asia is one of the reasons we decided to start CES Asia in Shanghai five years ago, and the show continues to grow.”
A series of events, “from the introduction of bi-partisan legislation to combat technology threats from China, to the criticism of former Sen. Joe Lieberman for working with ZTE, to a potential executive order barring all American companies from using equipment made by ZTE and Huawei, suggests that Chinese equipment will not be allowed in networks operated by telecommunications operators in the U.S.,” said New Street Research's Blair Levin, among the analysts we spoke with. “This is unlikely to affect the major players, who either did not have such equipment or are in the process of removing it.” The trend has bigger implications for smaller, rural players “who have used such equipment largely because it was cheaper, creating tension between the national security imperative and the bipartisan desire to bridge the rural-urban digital divide,” Levin said.
“Opportunities for Chinese vendors have gotten decidedly more challenging this year as the focus intensifies on the risk of spying and IP theft, let alone the trade war,” said BTIG’s Walter Piecyk.
“With crucial trade negotiations going on in Beijing, and the Chinese trying to find a path to a deal, it is not surprising that controversial tech companies like Huawei and ZTE are keeping a lower profile at CES,” said Thomas Duesterberg, a trade expert at the Hudson Institute.
“The bubble popped but there’s still plenty of fire in China’s tech sector,” especially in artificial intelligence, said Richard Bennett, network architect. “The global market for smartphones is slowing down, as we can see from both Apple’s and Samsung’s numbers. Welcome to the new normal.”
The Asian entrepreneurial spirit remains strong, said Robert McDowell of Cooley. “The trade bonds between the Asian and American economies, especially when it comes to the tech sector, are too strong to be permanently undermined by the headlines,” he said. “Both sides need each other’s markets and will find ways to overcome obstacles.”
Last year was tough for Huawei and ZTE, said Doug Brake, director-broadband and spectrum policy at the Information Technology and Innovation Foundation. “I don’t think there is an awful lot to take away from it other than they don’t want to draw too much attention,” he said. “These companies are patient and I’m sure they’ll be back next year.”