Aux Group Sues MII Over Handset Manufacturing
Licenses
The Aux Group of Ningbo has sued the Ministry of Information
Industry (MII) for not allowing it to manufacture its
own-branded mobile handsets, and forcing it to borrow
a license from a current manufacturer.
This unprecedented move is the first time that MII has
been sued by a local electronics manufacturer. The MII
has played a powerful regulatory role in the information
industry, deciding standards and players in China's quickly
growing information industry. By setting standards by
decree, MII has been instrumental in insuring that Chinese
users have access to the latest technology.
On the regulatory side, MII has also decided which companies
are allowed to manufacture certain lines of products.
The reason for this is to insure that a limited number
of Chinese makers can recoup their investments. Aux
Group has sued the MII, claiming that it was arbitrarily
denied a license to manufacture mobile handsets under
its own brand.
Until this July, companies which were denied licenses
had no legal recourse. For Chinese manufacturers, the
downside of infuriating MII outweighed any benefits.The
Aux Group is arguing that by showing preference for certain
makers, MII is acting in violation of WTO rules. The company
claims that it has taken the unprecedented legal action
only after making multiple entreaties to MII to appeal
their decision. MII's position is that the market needs
to be regulated if Chinese makers are to hold their own
against foreign brands such as Nokia and Motorola.
While Nokia
and Motorola
were suffering from falling market share in China earlier
this year, both have aggressively stepped up their marketing
efforts in China, and have had improved sales in the second
half.
It is not yet known if the First Intermediate Peoples'
Court in Beijing will hear the case. Normally, the court
has seven days to decide if it will hear a case, but in
the case of especially touchy cases, it can take longer.
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