ABB’s China operations under investigation by US Congress

ABB is a global technology company specialising in electrification and automation. Keystone / Jens Schlueter

Swiss-Swedish engineering group ABB's operations in China are being examined by two US Congress committees dedicated to investigating security threats and risks posed by Beijing. US legislators say the group is not sufficiently addressing security concerns about China-made cranes that use ABB technology.

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”.

The Zurich-based group confirmed on Friday that it had been in contact since July with the Committee of Homeland Security and the Select Committee on the Strategic Competition between the United States and the Chinese Communist Party. ABB’s confirmation followed a report by the Bloomberg agency, which is likely to have caused ABB shares to fall sharply on the Swiss stock exchange.

“We are examining the letter and intend to respond appropriately. We are taking the matter very seriously,” said ABB management. The group also stated that it was acting in compliance with all US regulations.

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The allegations concern automation software supplied by the Zurich-based multinational to a Chinese crane manufacturer.

On its website, the Republican-dominated subcommittee says it is concerned about the risk to national security posed by ship-to-shore cranes installed in US ports. The majority of these machines – 80% – are supplied by a state-owned Chinese company, Shanghai Zhenhua Heavy Industries (ZPMC), to which ABB supplies the automation software.

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In a commentary, the Vontobel bank explained that the US parliamentarians suspect these cranes are equipped with software “backdoors” that could be used to collect data on goods traffic and deliver it to the Chinese government, or even sabotage civilian or military ports in the US.

ABB’s head of US operations, Michael Gray, is due to appear before Congress by 23 January, the sub-committee said.

The crane automation business accounts for a tiny proportion of ABB’s sales, estimated by Vontobel at less than 0.5% of group revenues. The group could therefore abandon this area, without which it would risk being placed on a blacklist by the US government.

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