The European Union (EU) trade commissioner is to sound out EU states about launching an investigation into whether Chinese vendors Huawei and ZTE are using illegal state subsidies to undercut European firms.
According to Reuters, Karel De Gucht will make the unusual step of broaching the subject at a meeting of EU trade ministers in Ireland this week.
EU investigations are normally prompted by a company complaint, but major European suppliers – such as Alcatel-Lucent, Ericsson and NSN – have reportedly been unwilling to cooperate on the grounds it may jeopardise their chances of making inroads into the rapidly growing Chinese market.
Rather than let the matter drop, however, De Gucht – who supports a tough trading stance with China – wants to rally support elsewhere for an investigation.
In December, the European Commission (EC) – the EU’s executive arm – claimed that Huawei and ZTE were selling wireless network equipment for at least 35 percent below what it deems fair market prices.
The following month, De Gucht reportedly angered Chinese officials when he requested that European suppliers be given a 30 per cent share of China’s telecoms market and that Huawei and ZTE raise the price of their exported goods by 29 per cent. If these requests were granted, said the reports, the subsidy investigation would be dropped.
An internal EU report last year, reports Reuters, also recommended that the EU should take action against Chinese suppliers since their growing dominance in mobile made them a threat to security as well.
Whether or not De Gucht will get widespread backing from colleagues across Europe is less than clear, particularly in the Netherlands and the UK where Huawei has invested heavily and created jobs.
Last September, Huawei pledged to invest £1.24 billion ($2 billion) over the next five years in its UK operations and procurement. The firm’s UK workforce should nearly double to around 1,500 employees by 2017.
For their part, Chinese suppliers deny state subsidies. They point to low-cost operations as to why they can price equipment aggressively.