Chinese manufacturers face growing challenges abroad

Chinese manufacturers have entered a decade of innovation and upgrading. But at the same time they are encountering a growing number of problems abroad, especially for those enterprises that are performing well.

China's Huawei and ZTE are respectively the world's second and fifth largest telecom equipment makers. Their combined exports account for a quarter of the market share in the European telecom equipment market. They now face a possible EU dumping investigation, although the commission hasn't so far received a complaint from any European company.

In the US, the Chinese manufacturers face even bigger obstacles. Government agencies such as NASA are banned from buying IT systems made by any entity that has connection with China, unless they receive approval from the FBI. US Congress has not presented concrete evidence that either Huawei or ZTE has actually stolen US data, but says US national security interests could be undermined with such companies providing for its infrastructure projects.

"Cyber security has become a bigger issue in Sino-US relations since March this year," said Fan Jishe, a researcher at the Chinese Academy of Social Sciences. "The US is more sensitive about IT products from China, leading to a growing number of investigations. But on the other hand, as Huawei and ZTE are getting much stronger and posing bigger threats for domestic manufacturers in the US, the Congress ban has also in a sense shown trade protectionism."

China has urged the US to drop the ban, saying the US government is intervening the country's commercial sector, and that such moves will hinder trust and trade relations. Experts say as Chinese enterprises make their growing presence felt on the global stage, they will be noticed and challenged.

"Such investigations have been on the rise in recent years. When the business involves a country's core asset, technology or energy, it will attract more attention," Fan Jishe said.

Fan says China's offshore oil companies, heavy machinery industry as well as IT companies have all experienced similar problems. "On one hand the companies can improve their transparency to reduce others' worries, but also China should consider if counter measures are necessary when the demands get unreasonable," he said.