Huawei and ZTE hit by US security threat claims
9 October 2012 Last updated at 01:58 BST
The Hong Kong-listed shares of ZTE slumped by 6% on Monday after a US report alleging links between the technology company and the state.
It stated that Huawei and ZTE posed a potential security threat to the United States and should be restricted from doing business there.
Both Huawei and ZTE have denied the allegations from Washington but are clearly concerned about the damage that could be done to their global image.
And as John Sudworth reports from Shanghai, there are likely to be a lot more hurdles for Chinese companies to enter the US market in the run up to this November's presidential elections.