ABB’s China operations under investigation by US Congress

By John Revill

ZURICH (Reuters) – Swiss engineering group ABB’s operations in China are being scrutinised by two U.S. Congress committees dedicated to investigating security threats and risks posed by Beijing, documents showed on Friday.

The committees from the House of Representatives sent a letter this week to ABB inviting executives to public hearings to clarify the company’s relationship with a Chinese state-owned company that they said raised “significant concerns”.

Although ABB had provided documents to answer requests last year, many important questions remained unanswered, the letter said, and it had not responded in good faith.

ABB shares fell 3% on Friday morning after Sweden’s Sverige Radio reported on the investigations by the Committee of Homeland Security and the Select Committee on the Strategic Competition between the U.S. and the Chinese Communist Party.

ABB said on Friday it sold its control and electrification equipment to many crane manufacturers, including Chinese companies, which in turn sold the cranes directly to U.S. ports.

Still, the Swiss company said it was taking the committee’s request for further information “seriously”.

The letter sent to ABB Chief Executive Bjorn Rosengren raised concerns about the installation of ABB equipment by Shanghai Zhenhua Heavy Industries (ZPMC), a state-owned Chinese company, onto U.S.-bound ship-to-shore cranes.

The committees wanted to probe potential “cybersecurity risks, foreign intelligence threats, and supply chain vulnerabilities at seaports in the United States,” read the letter, which was posted by news website Politico.

The Chinese government and ZPMC could not immediately be reached for comment.

ZPMC, which is listed on the Shanghai stock exchange, is one of the largest port machinery manufacturers in the world and owns a fleet of more than 20 transportation vessels, according to its website.

“It is vital … that ABB explains its relationships with PRC (People’s Republic of China) state-owned enterprises, and whether ABB should be trusted to continue working on behalf of U.S. government agencies while simultaneously engaging with entities owned, controlled, subsidized, or influenced by the PRC,” the committees said in the letter.

“Allowing ZPMC to install ABB equipment and technology in China onto cranes bound for the United States is unacceptable and must be remedied without any further delay.”

China is ABB’s second largest market, with 16% of its annual sales after the United States where it generates 24% of its revenue.

(Reporting by John Revill, additional reporting by Liz Lee in Beijing; Editing by Andrew Heavens and Elaine Hardcastle)