China has just made a move to Check Western corporations in the high stakes chess game of 3G telecom.  Motorola, Lucent, Nortel and Ericsson all stand to lose out if China proceeds down the path of promoting 3G networks through home grown Huawei Technologies and ZTE Corporation.

Both Huawei and ZTE have benefited from various types of partnerships with some of the same Western firms.  China looks at it like their fledgling companies are growing up.  However, many view this as a significant indication that the business culture in China is dodgy enough to take the knowledge and Western Wisdom and employ it internally to the detriment of the firms, corporations and governments that have invested huge amounts of money in the potential of a Chinese economy, which has thus far only paid off with cheaper manufacturing but has not provided a larger contribution to the global economy of consumers.

Chinese Protectionism: Don’t kid yourself about a market that is not Free

Despite the fact that Huawei and ZTE’s home grow technology has not been proven and is not in fact ready for deployment, China appears to be stalling in its decision to license 3G technology to carriers.  This delaying tactic is proving to be further evidence that China is protecting its state sponsored corporations over private firms from abroad, despite the investment of money, knowledge, and time made by those same firms.

Chinese Politicians Shooting their Own Economy in the Foot

China walks a dangerous tightrope with these tactics.  If they continue to thwart efforts to make the Chinese market a free market then foreign investment and partnerships will dry up rather quickly, which could stunt the Chinese economy significantly.  Many firms are deeply invested and committed to China, however history has proven many times that these same companies will pull anchor and move to a new cheaper harbor of labor and resources at either the first sign of trouble or at the first indication that a better deal is available elsewhere.