Advertisement
Advertisement
ZTE is threatening to sue Huawei for violating two camera technology patents used in ZTE's smartphones, an accusation Huawei has denied. Photo: Reuters
Opinion
Mr. Shangkong
by George Chen
Mr. Shangkong
by George Chen

Why a ZTE-Huawei lawsuit could be a good thing for Chinese tech innovation

A court case would act as a reminder of the importance of protection of intellectual property

Many Chinese technology companies have a mixed reputation on the world stage, frequently being accused by foreign competitors of copying technological solutions and product designs. However, up to now it has been rare to hear mainland tech firms level these types of accusations at each other.

The war of words between China's two most successful technology firms - Huawei and ZTE - comes as a surprise to many of their peers. ZTE is threatening to sue Huawei for violating two camera technology patents used in ZTE's smartphones, an accusation Huawei has denied.

Traditionally, Chinese tech firms have been united in the face of foreign accusations and have joined forces to win bids for big international projects.

Both Huawei and ZTE have strong ties with the Chinese government, especially Huawei with the military. From a political perspective, firms like Huawei and ZTE fighting with each other is the last thing that Beijing wants to see.

Some industry watchers doubt ZTE and Huawei will meet in court as conventional wisdom suggests the government will intervene to help settle the case quickly. However, a lawsuit could be a good thing for China.

On the one hand, Beijing is keen to promote its home-grown technology globally. On the other hand, competition among domestic players is on the rise, fuelled in part by a desire for recognition and to impress the country's leaders.

From an economic perspective, competition is a good thing as consumers will eventually benefit from better - and most likely also cheaper - products and services.

To be fair, China's technology sector is no longer what it used to be a decade ago. Many tech firms have emerged as market leaders and are devoted to shedding formerly held negative reputations and are now striving to promote cutting-edge innovation.

Today, Huawei and ZTE are ranked among the world's largest telecoms equipment makers together with Ericsson and Alcatel-Lucent, which is merging with Nokia. Even when it comes to the highly competitive smartphone business, both Huawei and ZTE have won praise from consumers globally amid tough competition from America's Apple and South Korea's Samsung.

The legal battle between Huawei and ZTE may have short-term negative consequences but it is the right thing to do in the long run and acts as a timely reminder for the rest of the domestic tech industry that nothing is more important than protection of intellectual property.

If Chinese tech firms don't learn this lesson at home today, they will be challenged sooner or later by foreign competitors on the world stage.

 

This article appeared in the South China Morning Post print edition as: The upside of a ZTE-Huawei lawsuit
Post