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Chinese business deals may be more complex than you thought

On Behalf of | Feb 8, 2019 | Uncategorized

For many companies, “business as usual” includes an occasional dispute. Whether it relates to a contractual matter, personal injury or copyright infringement allegation, most companies face legal trouble at some point. However, when those issues become a matter of international law, they immediately grow in complexity. But what does that have to do with a cellular company?

Consider cellular carriers

Many people only consider their cellular plan insomuch as it relates to their ability to provide clear communication with friends and family. Shopping for a plan often includes looking for good coverage and affordable rates. But for the major players in the cellular industry, much more is at stake as billions of dollars in deals hang in the balance.

Considering the pending merger between Sprint Corp and T-Mobile US Inc, United States government officials have allegedly pressured the German carrier, Deutsch Telekom AG, to put an end to using equipment produced by the Chinese telecommunications manufacturer, Huawei. While neither T-Mobile nor Sprint use Huawei’s equipment, both Deutsch Telekom and Japan’s SoftBank Group Ltd make use of some of Huawei’s gear overseas.

Why is Huawei significant?

In light of the pending merger, you may wonder what a Chinese phone manufacturer has to do with anything. Considering the $4.8 million T-Mobile recovered in damages from Huawei in 2017 for alleged attempts to steal information, you might agree it is fair to say the companies have a sordid history, not to mention long-standing conflict between the United States and Chinese governments.

Accompanied by high-tech advancements, there remains an underlying fear of problems related to national security. And those concerns do not only apply throughout the U.S. There is also apprehension in the United Kingdom, Australia and New Zealand. Meanwhile, Huawei denies ties with the Chinese government.

Consider the additional levels of complexity

In order to finalize the merger, both the Federal Communications Commission (FCC) and Justice Department will need to approve. Meanwhile, Deutsche Telekom and SoftBank are exploring other options than Huawei.

But while many businesses engage in transactions with Chinese-owned companies, not all become as internationally complex. However, if you want to start a business in China or involve yourself with a Chinese company, you might do well to consider the additional complexities involved in negotiating deals overseas.