Firm's success comes from innovation, not subsidies, says a top executive

Huawei Technologies Co Ltd, China's biggest telecommunication equipment company, has denied receiving government subsidies and has warned the European Union against being judgmental of Chinese companies.

The EU said this week it may investigate claims that Huawei and rival Chinese telecom company ZTE Corp had been paid unfair subsidies, allowing them to flood markets with cheap equipment.

But Huawei's top executive in Western Europe told China Daily the company will take strong action if the EU starts an investigation.

Tao Jingwen, the president of Hawei Technologies Co Ltd West Europe Region, also said that the EU should work to improve its dialogue and communication with the industry, rather than simply decide to go down the route of imposing sanctions against companies.

Karel De Gucht, the European commissioner for trade, said earlier the EU may start to levy trade duties on the Chinese telecommunications equipment providers.

Huawei has denied receiving unfair subsidies from the government, and insisted that its price advantages come from its technology innovation.

"We hope the EU listens to our customers. Our low prices alone cannot win market share. It is only quality products and services which conform with the laws and regulations that are acceptable to our clients," said Tao.

Huawei entered the European market a decade ago, and since 2011 Europe has been its largest market outside of China.

It earned $400 million from the region in 2011, about 13 percent of its total global revenue.

Some reports have suggested that Huawei has a significant market share in Europe, but Tao said it has just 7 percent, "which isn't very big".

Huawei started its European operation in 2002, at a time when companies there were keen to attract international partners.

The company now has around 7,000 employees in Europe, 70 percent of whom are local workers.

"In the next two years, we plan to recruit another 4,000 local employees, and reduce the number of our Chinese employees," Tao added.

He also underlined that the company's price advantages come from its technological innovation.

"Some European companies have blamed Chinese companies for their losses, but sometimes they were caused by their own laziness," he added.

Tao said an example of the kind of technical innovation being used by Huawei is its popular "SingleRAN" telecom solution, a technology that allows wireless carriers to use a single system across multiple frequencies.

"We noticed a problem existed in Europe transferring second-generation networks to third-generation," Tao said.

"But we saw an opportunity. There is very limited space in many European cities for putting both 2G and 3G equipment, and maintaining a service for different equipment can be very expensive."

So the company launched the SingleRAN to combine 2G and 3G equipment into one product, "and now we have about 6,000 stations in Germany using this new tech, which allow energy savings of around 60 percent".

"We have never felt that our European clients offer Huawei any preferential treatment," he said.