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Huawei still eyes developed markets from outside

Owen Fletcher | Oct. 23, 2009
Huawei's surging growth has come mainly in developing countries

Huawei's chance to break into mature markets could come as operators there start buying more 4G equipment, said Fang Meiqin, associate director at Beijing research house BDA. Huawei has invested heavily in development of LTE (Long Term Evolution) technology and will have level footing with its rivals as it competes for 4G contracts, she said. By contrast, Huawei was a latecomer providing 3G network equipment and could gain little ground in a market full of established partnerships.

Huawei will still face a crowded market for 4G contracts. The company lost "miserably" in a recent Verizon Wireless tender for LTE network equipment, said Tian of Gartner.

Huawei has made more inroads to Western Europe than the U.S. through ties with operators like Vodafone and Telefonica. In the U.S., its most notable deal is perhaps with wireless broadband provider Clearwire for WiMax radio access network equipment.

Huawei, whose president, Ren Zhengfei, was a Chinese military officer before founding the company, has been hurt in the U.S. by suspicions that the company may hold ties with the People's Liberation Army. National security concerns in the U.S. two years ago derailed an acquisition of network equipment vendor 3Com that would have given Huawei a stake in the company.

But Huawei's low prices are still attractive for operators and may have placed pressure on Western rivals to sell their products for less as well. Some European operators see accepting tender bids from Huawei and ZTE, another Chinese network supplier, as a way of forcing other bidders to lower their prices, said Fang of BDA.

Huawei is still expected to grow and overtake some rivals. BDA predicts that the company will become the world's number two provider of network equipment for operators within five years.

The main obstacle for Huawei, as for many Chinese companies seeking to expand abroad, may be "plain and simple marketing," said David Wolf, CEO of Wolf Group Asia, a Beijing-based technology consultancy. Huawei suffers from a veil of secrecy around its operations, said Wolf.

"Huawei has never made a significant effort to make people feel comfortable with them," he said. "It has to be much more transparent."

Huawei still has strong potential. It has not lived up to some analyst forecasts largely because their time frame was too short, Wolf said.

"I remain bullish about Huawei's prospects long-term, but... its journey to leadership is going to take longer than most of us realize," he said.


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