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Europe

EC Circles Huawei, ZTE

2:00 PM -- The European Commission (EC) has circulated a document to the national governments of the European Union member states that highlights concerns about unfair state aid for Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) as they compete in the European marketplace, reports Dow Jones.

The EC has been delving into the business practices of Huawei and ZTE following complaints of uncompetitive practices leveled at the Chinese vendors last year. The original complaints from Belgian wireless modem vendor Option were withdrawn after it struck a deal with Huawei, but the EC continued along its course and issued a report of its findings, according to the report. (See Option Drops Complaints Against Huawei.)

And the document specifies concerns about "significant state interference" in the form of financial support for Huawei and ZTE's endeavors in the form of credit facilities from Chinese banks that are used for vendor financing deals.

These are the credit facilities that Huawei and ZTE have been brazenly open about, and which have been publicized and reported widely. (See Huawei's Lucky Number: 30B, ZTE Bags Another $10B in Credit and ZTE Secures $15B, Highlights R&D.)

Isn't this a case of shutting the barn door after the horse has bolted? If this was a matter for the EC, shouldn't these concerns have been raised in 2009 when Huawei and ZTE were brazenly parading their credit lines and offering financing opportunities to all-comers?

Now, it seems, the document is to be discussed by a group of trade experts later this month. It's hard to imagine that this will come to anything. Expect it to linger for a few months and then fizzle out when everyone balks at the prospect of igniting a trade dispute with China.

— Ray Le Maistre, International Managing Editor, Light Reading

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