mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Will EC Let Telecom Equipment Industry Fall To China?

Is it time to do for the European telecoms infrastructure equipment industry what was done for the European car industry in the 1980s?

 

In the 1980s it looked as if the European car industry was going to be swamped by the Japanese car industry. Japanese cars came with more features for the price than European cars, they were more reliable, they were better fitted out and they lasted longer.

 

The governments of Europe got together and kept the Japanese at bay. Now Europe has the world’s largest car industry and the most technologically advanced.

 

Now it’s the telecoms infrastructure industry – long a European strength – which is under threat – not from Japan but from China.

 

The Wall Street Journal reports that Chinese companies, led by Huawei and ZTE, have got 31% of the EMEA wireless infrastructure equipment industry, according to the EMF union which represents workers in the industry. In 2008 the Chinese had only 12% market share.

 

Yet Huawei and ZTE have been getting unfair government subsidies, says the EMF,

 

For instance, last year, the China Development approved massive funding lines to the two companies which would not have been granted on normal commercial criteria.

 

Huawei – a $22 billion revenue company – got $30 billion from the bank and ZTE – with revenue of $8.4 billion – got $15 billion.

 

Both loans are interest-free for the first three years.

 

The Big Three European equipment suppliers, Ericsson, Nokia-Siemens Networks and Alcatel-Lucent are not currently making any complaints to the EC about their loss of market share for one simple reason – they all operate in China and want to keep operating there.

 

With their employers reluctant to complain, EMF members are not going for a straightforward trade complaint to the EC, instead they are asking that the EU tell the network operators to take workers’ rights and environmental practices of the manufacturers into account when ordering infrastructure equipment.

 

So, whether Europe retains one of its areas of industrial excellence, or not, now almost certainly depends on political will.

 

Either the EU does to the telecoms industry what it did to the car industry 20 years ago, or it lets a strategic industry fall to the Chinese.

Tags: commercial criteria, huawei, japanese car, nokia siemens networks, telecoms infrastructure

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