Huawei applauds as EU drops probe

Decision comes after trade meet between China, Europe officials

Huawei Technologies Co said on Saturday that it welcomes the decision by the EU to drop its anti-subsidy probe against the Chinese mobile telecommunications network equipment maker.

Huawei always advocates free trade and open competition and believes that a market environment featuring openness and fair competition is the foundation of industrial growth and will ultimately benefit consumers, news portal xinhuanet.com reported, citing the company's statement.

The case was settled as China and the EU reached a consensus over the matter at a trade officials' meeting on Saturday in Brussels co-chaired by Chinese Minister of Commerce Gao Hucheng and the EU Trade Commissioner Karel De Gucht.

China and the EU are important trading partners but as China's manufacturing moves up along the value chain, more Chinese companies are coming into competition with European firms.

Previous trade rows between the two partners have included wine, solar panels and steel.

Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said the EU's decision should be able to improve relations between the two sides.

"The trade relations between the EU and China will begin to enjoy a peaceful ride for some time, but in the long run there is a high likelihood that other trade disputes will emerge along the way," Bai said Sunday.

Early media reports suggested that the EU would only drop its investigation if China made some concessions such as limiting the quota for export credits and setting up a monitoring mechanism on companies' market share in China and the EU.

However, no details over what actual terms the two sides agreed upon to allow the case to be settled were provided.

The EU Commission believed -Chinese companies' rapid rise in the European telecom equipment market came from a price advantage as Huawei and ZTE products are as much as 18 percent cheaper than those of European peers, Reuters reported, citing an EU document.

Analysts pointed out that limiting export credit will mean the Chinese exporters of these equipment will face rising costs for financing and fewer channels to secure ample cash supply.

Fu Liang, a Beijing-based independent telecom analyst, told the Global Times that this price advantage won't be hampered even if the policies proposed by the EU are executed.

"A lot of the cost for telecom equipment firms goes to R&D, and the human capital cost of hiring engineers. Chinese engineers earn salaries that are no more than one-fourth of their overseas peers," Fu said Sunday.

This is further secured by the fact that more and more technologies and patents were now developed and owned by Chinese firms, Fu noted.

The monitoring system that was revealed in earlier reports is aimed at better gauging the China market share of European firms like Ericsson and Nokia Siemens Networks, according to media reports.

Experts said in order to succeed in today's highly competitive, globalized economy, companies can rely only on their core competitiveness.

"China has the largest mobile phone user group in the world and, unlike the European market crowded with mobile carriers, has just three telecom operators, so China is a big pie that every industry player values," Fu said.

Although China promises to offer a more open and fair market to European firms, European firms will still have to be able to offer competitive products to succeed in China, Bai said.

The long-term fight will still be focused around core competence, Fu said.

In May 2013, the EU planned to start an anti-dumping and anti-subsidy investigation against Chinese telecom equipment imports but did not launch the probe immediately while continuing its talks with Beijing for a solution.

In March, the EU dropped the anti-dumping investigation against Chinese companies.