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Rumor: Huawei, ZTE, ASB to End Overseas Price Wars

C114, 1/28/08

An industry source says that telecom equipment suppliers ZTE (0763.HK; 000063.SZ), Huawei, and ASB will sign a provision for overseas markets that will keep the companies from engaging in price wars or in other forms of malicious competition targeting one another. Failure to abide by the rules of the agreement would result in a proportional cancellation of government financial support. Should a diplomatic incident be caused, special penalties will also be enacted. The provision has been submitted to the Ministry of Commerce and other relevant agencies, and will be announced if it is approved.

Since 2006, ZTE, Huawei, and ASB's overseas expansion has been marked by increasingly ferocious price wars and other moves intended to undercut the other companies. The competition has led to diplomatic incidents in some African, Asian, and Middle Eastern countries and seriously affected the image of China abroad, thus drawing concern from official quarters in China -- hence the pressure on relevant agencies here to rein in the companies.

Keywords: ZTE 0763.HK 000063.SZ wireless government support ASB Huawei Ministry of Commerce overseas telecom telecom equipment

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