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July 27, 2017

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Huawei denies using subsidies to grab more business

ST PETERSBURG, Russia -- Huawei Technologies Co. Ltd., the world's No. 2 telecom gear maker, has denied using Chinese subsidies to gain global market share after it was accused by U.S. lawmakers and EU officials of unfair competition.

Huawei and crosstown rival ZTE Corp. have come under close scrutiny by U.S. lawmakers and the European Commission, which say both are able to use subsidies to bid for contracts at lower prices than Western competitors.

Both companies rose to prominence rapidly over the past few years, clinching contracts with major telecom carriers and sometimes edging out European rivals Ericsson, Alcatel Lucent SA and Nokia Siemens Networks.

"It's not true that Huawei uses subsidies to gain market share," Chen Lifang, Huawei's global board director, told Reuters in an interview on the sidelines of a business event at St. Petersburg in Russia.

"We receive legal subsidies. Like European countries, China also gives out subsidies for R&D-related activities. Huawei has taken part in such European and Chinese schemes," said Chen, a member of Huawei's 13-person board.

Huawei, together with the world No. 5 telecom equipment maker ZTE, denied accepting illegal subsidies earlier this year, but this is the first time a Huawei board member has commented about the issue.

The head of the U.S. House of Representatives' Intelligence Committee this week said apart from the investigation on subsidies, legislation could be proposed to deal with any related national-security threats.

In May, EU diplomats said the trade bloc would like to take action against Huawei and ZTE on the grounds that they receive illegal state subsidies that allow them to sell equipment at lower prices.

Analysts said Chinese telecoms equipment makers had also the support from policy banks, such as China Development Bank, which provided low interest rate loans for network infrastructure projects in emerging economies.

Chen brushed off rumors that Huawei did not need to pay back such loans.

"Our competitors even spread rumors that we needn't repay these loans. This is impossible and untrue," she said late on Friday.

She said Huawei usually worked with Chinese and foreign banks in project financing and loans, and was transparent in the process.

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