Huawei Eyes Western Smartphone Markets

Electronics manufacturer Huawei plans to increase revenues fourfold to $100 billion over the next ten years. However, potential customers abroad may be put off by the firm’s government links, including its founder’s former role as director of the PLA’s telecoms research arm. From The Guardian:

“I cannot predict if Huawei has the makings to be Asia’s next Samsung, but I would definitely not count it out,” said Matt Walker, principal analyst at research firm Ovum.

Huawei now hopes to double its cell phone shipments to 60m this year, including 15m smartphones. “We hope to become the world’s No 3 in cell phone shipments and the world’s No 5 in terms of revenues within five years,” Victor Xu, chief marketing officer of Huawei Devices, said as he played around with a Huawei IDEOS smartphone.

Under Huawei’s previous direction, consumers weren’t “able to see our brand on the things we make,” Xu added, occasionally slipping into his pocket to grab his personal phone – an iPhone – when it rang. “But now we’re changing our strategy.”

Yet some questions linger over Huawei among western strategists: principally, can a company so closely tied to China and its government be completely trusted? The US government has vetoed the use of Huawei equipment in some sensitive systems, especially telecoms systems, and in February forced it to reverse out of the $2m acquisition of a US startup company, server technology business 3Leaf Technologies. Similarly, in February 2008 its bid to buy network equipment company 3Com stalled in the face of US political opposition.

Forbes reports on Huawei’s attempts to improve its image in the US:

The initiative has included an April event celebrating 10 years of business in the U.S., a candid “open letter” on its website in mid-February and the disclosure (for the first time) of the members of its Board of Directors.

Next up: the company’s first U.S. advertising campaign and the planned hiring of at least 500 employees in the U.S.

Huawei says the ad campaign is partly a reflection of its growing presence in the U.S. mobile devices market. Though the Shenzhen-based company has yet to notch a contract with the so-called “tier one” U.S. operators (AT&T, Sprint Nextel, T-Mobile USA and Verizon Wireless), it sells phones and USB modems at smaller carriers like MetroPCS and Cricket Wireless. Huawei says more than half of its U.S. revenues in 2010 came from device sales.

The new hires are more a sign of Huawei’s stateside growth, but should also improve the company’s image amongst Americans. Plummer says Huawei already employs 1,100 people in the U.S. and expects to bring on 500 more before the end of the year. About half of the recruits will work in research and development. Huawei operates seven R&D centers in the U.S., including a large facility in Santa Clara, Calif.


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