Huawei, ZTE deny illegal subsidy claims

Dylan Bushell-Embling
30 May 2012

Huawei and ZTE have both firmly denied benefiting from illegal government subsidies, in response to reports the European Union is planning to take action against the alleged practice.

The Chinese vendors have both sent statements to Reuters rejecting claims they receive illegal or hidden state subsidies, and that they “dump” telecom equipment products into the European market.

The vendors also said they have not yet received notice from the EU that any action is planned.

Huawei and ZTE were reacting to reports that the EU was planning to take the unprecedented move of unilaterally preparing a major trade case against China, without first receiving a complaint from a European company.

The reports indicated that the vendors may face being hit with punitive tariffs on sales into the European Union.

But the prospect of the EC filing such a trade dispute is proving unpopular, even among at least one of the companies the action would presumably be designed to protect.

An Ericsson spokesperson told Reuters that the company does not support the rumored action, and cautioned the EU against targeting individual firms in a trade dispute.

Ericsson makes around as much in sales to China and northeast Asia than it does with sales within the EU.

Analysts have also warned that European vendors may face the prospect of retaliation from China if a case is initiated, risking being locked out of what is becoming a key market for telecom equipment makers.

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