Trade barriers are a bad idea...
...but Huawei and ZTE both use low cost pricing options.
There was a multi-million dollar optical network in Eastern Europe earlier this year that was decided on an electronic auction. Basically all the bidders drop their prices until there is only one left.
The "normal" companies all dropped out when it dropped to their floor prices, leaving Huawei and ZTE competing with each other.
Huwaei bid one cent (I think the auction was priced in US Dollars or Euros), and ZTE went crazy trying to enter a zero bid - but the system kept saying it was an error.
ZTE legally challenged the Huawei win because they said they would have bid lower if the system would have allowed it. In fact they would have bid a negative number if the system would allow it.
Why do these companies do this crazy stuff? Three reasons:
- Several years ago the bank of China gave billions of dollars in loans for Huawei and ZTE to "Go out and win international business". http://www.bloomberg.com/news/2011-04-25/huawei-counts-on-30-billion-china-credit-to-open-doors-in-brazil-mexico.html
- Huawei and ZTE are trying to obtain dominant market positions becaus they think in the long term - whereas US companies think 90 days at a time. They are prepared to take short term losses in order to make long term gains.
- Once a customer is locked into a Huawei or ZTE network they often find that long term costs are prohibitive. These include expensive service contracts and higher prices on capital equipment after the frame contract has expired. By then it's too late and the decision-makers in the customer don't dare to say anything because they will look really stupid. In the case of BT and Matt Bross it was even better - he went from being the guy at BT who awarded Huawei the 21CN contract to being a CTO at Huawei itself. Nothing unethical there, surely!
So trade barriers are a bad idea. But allowing Chinese companies to dump products in this way is an even worse idea.
Alcatel is paying the price partly because they have chosen to take on Huawei and ZTE in their sweet-spot markets - especially mobile (for Huawei) and local loop (for Huawei and ZTE). Low margin, high volume markets are perfect for heavily subsidised businesses.