EU curveball to test China market fairness

The European Union has thrown China a massive curveball.

EU Trade Commissioner Karel De Gucht is willing to drop his case against Chinese telecom subsidies if European firms win a big share of China Mobile's 4G tender, FT.com reports.

China Mobile’s tender for a 100-city TD-LTE rollout is the telecom industry’s biggest contract this year.

But Nokia Siemens surprised everyone by becoming the first non-Chinese vendor ever to undercut local players. It pitched a price of 33,000 yuan ($5,460) per carrier, compared with 35,000 yuan offered by both Huawei and ZTE.

Huawei and ZTE last year won the lion’s share of China Mobile’s 4G trial contracts, infuriating NSN and other foreign vendors.  Under China’s tender rules China Mobile is bound to award the biggest portion of the business to the lowest bidder.

The operator now has another reason to make sure that NSN gets the biggest piece of the pie.

Yet, as local website Sina Tech observed, this flies in the face of China’s practice of using fat domestic tenders to nurture the local industry:

“But for many years tenders by Chinese operators have tilted towards domestic suppliers, with Huawei and ZTE accounting for the lion’s share, [making it] impossible for foreign vendors to dominate.”

The FT story, published late Monday, has not been picked up by  China's usualy lively tech press, who will have been instructed to wait for the official Xinhua version. The tone of that statement, when it appears in the next 24 hours or so, may tell us a lot about China’s response.

It may report the story straight. Or, emboldened by their decisive win in the solar panel dumping case, Chinese officials may press home the advantage and complain strongly about EU blackmail.