Spying scandal hits US tech companies in China
Mainland sales of big IT firms may suffer amid fallout from American surveillance revelations
US technology companies including Cisco Systems, International Business Machines and Microsoft may face new challenges selling their goods and services in China as fallout from the US spying scandal starts to take a toll.
Cisco shares tumbled 11 per cent on Thursday, a day after it warned that revenue would drop 10 per cent this quarter, and continue to contract through the middle of next year, in part due to a backlash in China against revelations about US government surveillance programs.
“All the big US IT companies are concerned,” said Jim Lewis, a senior fellow with the Centre for Strategic Studies in Washington, who is an expert on China and technology. “But so far Cisco is bearing the brunt of it.”
Lewis said Beijing may be targeting Cisco in particular as retaliation for Washington’s refusal to buy goods from China’s Huawei Technologies, a telecommunications equipment maker that the United States claims is a threat to its national security because of links to the Chinese military.
“We hope and demand that relevant foreign companies respect China’s laws,” Foreign Ministry spokesman Qin Gang said on Thursday, when asked about Cisco’s woes.
“At the same time, as the Chinese government, we of course have an obligation, a responsibility, to protect the country’s security.”