The European Union has failed to protect Europe’s wireless telecommunication equipment makers from Chinese rivals Huawei and ZTE, who practise dumping to increase their growth. Dumping is the name of a pricing policy, in which the manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.
The EU was ready to tackle this problem in 2014 when it reached an agreement with China. Brussels agreed to drop plans of introducing import tariffs on Chinese telecommunication gear made by Huawei and ZTE in exchange for a “free-market” for Nokia and Ericsson in China. The EU was set to form a commission that would monitor the telecommunications market and stop dumping practices by Chinese companies. Till this day, the commission is not formed, and Huwei and ZTE are rapidly growing, while Nokia and Ericsson struggle.
Nokia and Ericsson together hold more than 50% of the global wireless telecom equipment market. In 2007 they had a 70% market share. According to EU and industry officials, Chine isn’t abiding the terms of the 2014 pact with the EU, and the consequences can be seen in the Q2 2016 reports of Nokia and Ericsson.
Even though Ericsson and Nokia are both against import tariffs on Chinese companies, because they want to operate ‘freely as possible’ in China, EU must do something to protect one of its strongest industries.