Spurned in the US, Huawei focuses on Europe

PUBLISHED : Wednesday, 24 April, 2013, 5:18pm
UPDATED : Thursday, 29 August, 2013, 4:13am

Huawei, China's largest maker of telecommunications equipment, is poised to focus its expansion in Europe as a way to increase its presence in developing markets and to offset hurdles in the US.

Despite the economic stagnation that has crippled the region, there was "a strong business case to be made in Europe", Li Sanqi, the chief technology officer of Huawei's flagship carrier network division said at the company's annual analysts' summit in Shenzhen on Tuesday.

For Li, a leading role in Europe meant leading where "business transformation was more ahead than elsewhere" and would allow Huawei's carrier network to expand more easily in the developing world.

The carrier division accounts for almost three quarters of Huawei's revenue.

The Shenzhen-based company's consumer device division is focussing on Europe with the same rationale. "It is a way we can touch more and more people," said Shao Yang, chief marketing officer for the division. "They can influence other regions and have networks in so many countries."

Shao said that Huawei was overcoming scepticism by European customers over the company's move to sell its products under its own brand. "In the first half of [last] year, we lost 90 per cent of our customers," he said. "This year our customers are coming back."

Shao said he expected the company to double smartphones sales globally from 32 million last year to 60 million in 2013, adding that China would still remain the largest market.

Over the next three years, Huawei was shifting its focus in developing devices from hardware to software, he said. 

Last week, chief executive officer and deputy chairman Ken Hu said the company was hiring 5,500 new staff in Europe, thus raising its head count in the continent to 13,000, while European competitors, Ericsson, Nokia Siemens and others, are letting go thousands of staff. 

The company has become more vocal in its frustration with US regulators and their accusations of espionage by the Chinese company founded by a former People's Liberation Army officer.

"We are not interested in the US market anymore, Huawei's executive vice president Eric Xu said at the conference in Shenzhen.

Even though a White House review cleared Huawei of accusations of spying last year, a Congressional report slammed Huawei's alleged unwillingness to explain its ties with the Chinese government.

Last month, Softbank and Sprint Nextel, two telecommunication companies, pledged not to use Huawei equipment in Sprint's US network if the companies were cleared to merge.

"We are currently, for whatever geopolitical reasons, not focussing on the US market," said carrier division CTO Li, a former professor of electrical and computer engineering at the University of Texas, Austin. "Today we face reality and we focus on the rest of the world."

Huawei might, however, soon find itself confronted with similar obstacles in Europe. The European Commission has been collecting evidence for a possible case against Huawei over alleged Chinese state subsidies that help the company undercut European competitors, Reuters reported last week.