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US launches new probe on Huawei, ZTE

By Shen Jingting (China Daily)

09:39, February 02, 2013

The United States International Trade Commission said on Thursday it launched a patent probe into Huawei Technologies Co Ltd and ZTE Corp — the second investigation into Chinese telecom equipment makers since August.

The investigation will focus on certain wireless devices with 3G and 4G capabilities and components, according to a statement posted on the commission's website.

Four companies — Samsung Electronics Co Ltd, Nokia Corp, Huawei and ZTE — are involved in the investigation, it said.

The products being investigated include smartphones, tablets and laptops, the statement said. In August, the two Chinese telecom companies faced a similar investigation launched by the commission, but the case has yet to reach its final decision.

If Huawei and ZTE are found guilty of patent violations, the products being investigated will be banned from the US market.

"ZTE is aware of this investigation and we are preparing to respond to the suit," ZTE said in an e-mail. "We hope to seek reasonable solutions based on the rules of mutual respect and mutual benefits."

Zhou Shijian, a senior trade expert at Tsinghua University, said Chinese companies should learn to protect themselves from potential trade conflicts.

"We have seen that more and more US investigations now happen in the high-tech and green-energy sectors," Zhou said.

"This demonstrates that Chinese high-tech companies are moving closer to their US peers and have started to impose pressure on them," Zhou said, adding that similar investigations from the US are inevitable, as it hopes to protect its own interests.

Huawei and ZTE should try to prove that they did not violate patent rights, he said.

"In the long run, Chinese companies have to pay more attention to innovation in order to gain an advantage."

US authorities have launched a series of investigations and issued bans on Huawei and ZTE products in recent years.

Founded in Shenzhen, Guangdong province, in the 1980s, Huawei and ZTE have become leading telecom equipment suppliers competing in the world's top league and rivaling major companies such as Telefon AB LM Ericsson, Alcatel-Lucent and Nokia Siemens Networks.

The two companies have also emerged as global top-level mobile phone makers.

The latest investigation may pose a significant challenge to Huawei and ZTE, which rely heavily on their terminal businesses in the US, analysts said.

Yang Haifeng, a telecom expert who is also chief editor of Communications World Weekly, said the US market is one of the world's biggest consumer electronics markets.

"Because of political concerns, the US government has restricted Huawei and ZTE from entering the telecom infrastructure market, so their terminal businesses have gradually played a more important role for the companies," Yang said.

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