TELECOM EQUIPMENT VENDORS Huawei and ZTE could be facing a European Union investigation into whether the firms have benefited from subsidies by the Chinese government.
Huawei and ZTE have been making considerable inroads into the telecom equipment market, winning major contracts due in large part to the competitive pricing the two firms put forward. Now Reuters reports that the European Union will launch a trade case against Huawei and ZTE claiming that the two firms have received illegal government subsidies.
According to sources, the European Union has told member states that it has been gathering evidence against Huawei and ZTE, claiming the two firms have been receiving government subsidies that allowed them to sell products below cost. The European Union has been considering new ways to combat what is known as dumping and subsidies by countries such as China.
Huawei has long had to fend off accusations of links with the Chinese military, and has been barred from bidding for telecom infrastructure contracts in Australia and the US. In Europe however, Huawei has done well against established telecom equipment vendors such as Ericsson and Nokia-Siemens, which has helped the firm become the second largest telecom equipment vendor.
The European Union faces a tricky balancing act because China is one of its biggest trading partners and could impose tit-for-tat trade sanctions against European firms trying to tap into one of the world's fastest growing markets. µ