Huawei, ZTE reject subsidy allegations

Chinese telecom companies on Wednesday denied an accusation by the EU that they receive government subsidies that allow them to gain cost advantages over rival firms in the EU, and said that they comply with international laws.

In a statement sent to the Global Times Wednesday, Huawei Technologies denied receiving State subsidies or dumping products in EU markets and said it would oppose any countervailing investigations or anti-dumping measures by the EU.

"The globalization of the telecommunications industry needs a fair and open business environment as well as more investment and innovation, which will promote economic development and benefit consumers in the EU and worldwide," it said.

ZTE Corporation said in a statement sent to the Global Times Wednesday that it had achieved global success through its "technological innovation, highly customized products and quality service" rather than low prices.

"The company is committed to transparent operations and being in full conformity with the trading regulations of the WTO and local markets," it said.

EU Trade Commissioner Karel De Gucht will seek to investigate Huawei, the world's second-largest telecommunications equipment maker, and ZTE, the fifth-largest, for undercutting European firms by receiving government subsidies, Reuters reported Tuesday, citing anonymous EU diplomats.

De Gucht will initiate the investigation even though there have not been complaints from European firms, as European manufacturers Ericsson, Alcatel-Lucent and Nokia Siemens Networks refused to cooperate with the European Commission for fear of retaliation from China, the report said, citing sources familiar with the matter.

EU Spokesperson for Trade John Clancy declined to comment on the report when reached by the Global Times Wednesday.

Media reports earlier this year said that the European Commission was investigating allegations that Huawei and ZTE have been receiving government subsidies, thereby allowing them to sell their products at lower prices in Europe.

In February, the European Commission confirmed with the Global Times that it had been holding talks with its Chinese counterparts for more than six months in an ongoing effort to resolve a potential trade case against Huawei and ZTE.

The two companies are also dealing with concerns over cyber-security expressed by authorities in the US.

In March, the US passed a spending bill that banned government agencies from buying IT products from firms thought to be "owned, operated or subsidized" by China, due to concerns over cyber-attacks that the US said they traced to China.

Last October, a congressional panel in the US said that Huawei and ZTE pose a security threat to the US and should be barred from mergers and acquisitions there.

China's Ministry of Commerce (MOFCOM) and both companies denied the charges.

"Tall trees catch more wind. It's normal that Huawei and ZTE are facing more complaints as the two companies are rising to become leading global telecom equipment providers," Fu Liang, an independent IT analyst in Beijing, told the Global Times Wednesday.

MOFCOM did not reply to Global Times queries about the possible EU probe by press time.