China Seeks `Fair' Market in India for Phone Equipment, Calls for Talks

China said India shouldn’t discriminate against Chinese telecommunication products, and called for talks between the governments after Indian regulators tightened screening of imported phone-equipment.

“Any rule should be fairly applicable to all companies including Indian, Chinese and western companies,” Chinese Ministry of Commerce spokesman Yao Jian said at a regular briefing in Beijing today. “India should provide an open, fair and transparent environment.”

Tension between Asia’s second-and third-biggest economies escalated after Indian carriers were ordered to obtain security clearance for equipment purchases. Contracts for products from China’s Huawei Technologies Co. and ZTE Corp. were vetoed by the Indian government on national security concerns, two people with knowledge of the matter said last month.

“We hope the two nations increase consultations and cooperation to address problems,” Yao said. Existing contracts won by Chinese companies in India should be allowed to proceed, he said.

Huawei, China’s biggest phone-equipment maker, won’t comment on the ministry’s remarks, the company said in an e- mailed response today. The Shenzhen, south China-based company, which had orders of $1.7 billion in India in 2008, supplies “secure” products to India, it said on May 5.

Comply With Law

ZTE, the second-biggest Chinese phone-equipment vendor, fell 8 percent to close at HK$25.85 in Hong Kong trading today, compared with a 2.1 percent decline by the city’s benchmark Hang Seng Index. Products sold by the company, also based in Shenzhen, adhere “strictly” to Indian law, ZTE said on May 4.

The Chinese equipment vendor’s sales in India were expected to exceed $1 billion last year, Vice President Zhang Jianguo said in September.

India ordered ZTE and Huawei to disclose full details of their ownership within a month, on concern the equipment makers have spying technology embedded in their products, the Wall Street Journal said today, without saying where it got the information.

ZTE has submitted its shareholding information to Indian agencies, and is preparing to file additional data, the Chinese company said in an e-mailed statement today.

Huawei is continuing to speak to “relevant authorities,” according to a separate e-mailed statement, which didn’t say whether the closely held company will disclose its stockholding.

New Rules

Phone carriers in India must get government security clearance before importing equipment under rules introduced in December, Nomura Holdings Inc. analyst Sachin Gupta wrote in a May 4 report. The restrictions have prompted operators to turn to local suppliers, Sanjeev Aga, managing director at Idea Cellular Ltd., said this month.

Trade between China and India may reach $60 billion this year, and ties between the nations “have a bright future,” Chinese Foreign Ministry spokeswoman Jiang Yu said on May 6.

Ben Roome, spokesman at equipment vendor Nokia Siemens Networks, said this month the Indian requirements on imports apply to “everyone.” Minako Nakatsuma Olofzon, a spokeswoman at Ericsson AB, the world’s biggest telecommunications-equipment vendor, this month declined to comment on the restrictions.

--Mark Lee, Yanping Li, Diana Ben-Aaron. Editors: Jonathan Annells, Josh Fellman

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

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