Monday, August 11, 2008

Huawei attacks the European market

Huawei Technologies, the China telecommunications equipment maker, is to step up sales efforts in Europe in a move that will raise pressure on western rivals.

Zhou Ming Cheng, Huawei's European marketing director, told the Financial Times the group had achieved sales of $2bn (£1bn) in Europe in 2007, up from $770m in 2006.

Mr Zhou said Huawei aimed to lift European sales this year, implying it was seeking to raise market share at the expense of rivals Alcatel-Lucent, Ericsson and Nokia Siemens Networks.

Huawei's aggressive overseas drive is putting pressure on Alcatel-Lucent and Nokia Siemens, which reported losses last year, and Ericsson, which saw net income fall.

"I do believe that in the coming few years we are still growing very fast here," Mr Zhou said.

"The European market is one of the biggest in the world - very strategic to the company. So we put more investment in and we believe we will have a better and better position here."

He claimed that the 2006 merger between Alcatel and Lucent and the joint venture between Nokia and Siemens had given Huawei sales opportunities because fixed-line phone and mobile operators did not want to be dependent on a restricted range of equipment suppliers.

During the past two years, Huawei has been winning wireless infrastructure contracts with European mobile operators by edging out Alcatel-Lucent, Eric-sson and Nokia Siemens.

Vincent Rech, an analyst at Société Générale, pointed to contracts won by Huawei in 2007 with Vodafone in Greece, Romania and Spain; France Telecom in Belgium and France; and Telefónica in Germany. The contracts underline how Huawei is moving beyond China and other emerging markets.

But while it is enjoying growing success in Europe, Huawei has made limited progress in the US. Mr Zhou said sales of $100m were achieved in the US in 2007.

The 2007 annual report of Huawei, which is not a public company, said it generated revenue of $12.6bn and net income of $673.5m.

Mr Zhou played down suggestions by rivals that it was aggressive in its pricing of contracts so as to win orders.

He described Huawei as a private company and denied it received financial support from the Chinese government.

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