Costco Wholesale Corp. and security-equipment seller Resideo Technologies Inc. have been requested by a congressional committee to provide an explanation regarding their sale of products associated with two Chinese companies that are under sanctions. The committee expressed concerns over the potential risk of espionage and information breaches, as Chinese-made equipment is believed to be vulnerable to hacking and Chinese intelligence agencies. The letter was addressed to Rob Aarnes, president of Resideo's ADI Global Distribution, and an additional letter was sent to Costco inquiring about the sales of Lorex brand security products that utilize Chinese components.
According to the Congressional-Executive Commission on China, ADI has been selling products from sanctioned Chinese companies, namely Hangzhou Hikvision Digital Technology Co. and Dahua Technology Co. In the case of Costco, the committee stated that the company sold products using Dahua parts. The letters shed light on the ongoing friction between US authorities and China regarding technology, with US officials persistently asserting that Chinese telecommunications companies pose security risks, while China vehemently denies these allegations. This situation has recently led to restrictions on advanced semiconductor exports and chipmaking equipment to China, a move which China has criticized as part of a containment strategy.
Among the allegations made by the congressional committee, it was mentioned that a Resideo website listed Dahua and Hikvision cameras as compliant with a regulation that prohibits certain sales to US military sites. The committee raised concerns over Resideo apparently marketing to those individuals or entities covered by the ban. Resideo, a global distributor of security products based in Scottsdale, Arizona, offers well-known brands such as Honeywell Home, ADI, and Genesis.
The committee's letter to Costco specifically focused on the Lorex security products, branding them as a known security risk. The recent sale of Lorex to Taiwanese company Skywatch Inc. did not allay concerns, as Dahua continues to supply all the component parts for Lorex cameras and other surveillance equipment, according to the panel's letter. Costco, renowned for its warehouse stores, was also questioned about research indicating that its seafood may have originated from Chinese fishing vessels employing forced labor. The committee emphasized that American consumers should not be supporting human rights abuses, be it by Chinese security or seafood companies, and urged Costco to address these concerns.
At the time of writing, neither Resideo nor Costco had responded to requests for comments regarding the letters. Likewise, Dahua and Hikvision had not responded to emails seeking clarification. The committee, which monitors China's adherence to human rights standards, has prompted further examination of the sourcing practices and potential risks associated with Chinese companies among US retailers and suppliers.