Huawei and ZTE:when without tax refund

3/10/2007, In last July's Heavy Reading report, "Remade in China: Huawei and the Future of the Global Telecom Market," The report’s author, Heavy Reading chief analyst Scott Clavenna pointed out that low pricing was the key factor for Huawei's success in overseas market.
Behind this low pricing, tax refund policy of Chinese government played a very important role. In year 2005, ZTE's profit befor tax is 1.5billion RMB, 30% of it came from tax refund.
Because of China’s growing trade deficit, the country’s international trading partners and the World Trade Organization (WTO) have been pressuring it to reform tax refund policies that have benefited Huawei and other Chinese companies. From January 1st, China adopted new tax policy. Under this policy, ZTE's first quarter net profit plummted 86% comparted to 1st quarter in year 2004, Huwei then refused to announce their profit. In year 2005, Huawei accquired nearly 3billion RMB tax refund from government.
In China's No. 11 five year plan, the government has promised to further reform its tax refund policy. It is predicted Huawei and ZTE will face further profit presser in the future.
People begun to ask, without tax refund, How will Huawei and ZTE develope? If compare profit margin, they have no difference with those traditional industries.