ZTE Cuts Business In Iran After Spy Kit Embarassment

ZTE has promised to reduce trade with Iran following the revelation that the Chinese phone manufacturer provided powerful surveillance equipment to the Middle Eastern nation.

A report from Reuters last week revealed that in December 2010, ZTE signed an agreement with the state-owned Telecommunication Co of Iran (TCI) worth €98.6 million (£82.3m) to provide telecoms equipment, including the ZXMT system, which used ‘deep packet inspection’ to monitor phone and internet communications.

Damage control

Additionally, and potentially more harmfully to ZTE’s international standing, the report showed that it sold devices from a “Packing List” which included products made by HP, Dell, Microsoft and Oracle among others. These partners companies are banned from direct trade with Iran and many had imposed an agreement with ZTE to ensure their products did not end up in the country. Shortly after the claims were made, HP said it would investigate the alleged breach of contract.

“We are going to curtail our business in Iran,” David Shu, a ZTE spokesman, told Reuters on Friday. Though the response came very quickly after the report, it lacked details and served more as damage control for investors and partners. Shu mentioned the decision to “shrink” trade had been made some time ago, but specifics had yet to be determined.

A statement this week said: “ZTE has provided standard communications and network solutions to Iran on a small scale. However, due to local issues in Iran and its complicated relationship with the international community, ZTE has restricted its business practices in the country since 2011.

“ZTE no longer seeks new customers in Iran and limits business activities with existing customers.”

ZTE added today that it did not expect this move to significantly impact overall sales, with company president Shi Lirong re-emphasising that trade in Iran was small scale.