March 10,2009

Huawei Determined to Grow at Competitors' Expense

By CSC staff, Shanghai
30% growth or more and $30 billion in contract sales is the 2009 target for Huawei, China’s number one telecoms equipment maker. Ambitious, one might say, as 2008 annual sales for Ericsson, the leader in the global telecoms equipment market, totaled about $27 billion. 
 
Huawei is promoting this enterprising plan despite the global financial hurly-burly and the downturn in the global telecoms equipment market.
 
Huawei’s contract sales in 2008 totaled $23.3 billion, declared Huawei COO Xu Wenwei recently. Xu added that Huawei had confidence it would wrest market share from its rivals including Ericsson, Nokia-Siemens, and Alcatel-Lucent and maintain rapid growth.  
 
Earlier Nokia-Siemens and Alcatel-Lucent both predicted a decline in the telecoms equipment market this year, judging from operational income.  
 
Huawei’s confidence comes partly from the launch of China’s 3G market this year. China’s three operators are all expanding their networks. As a domestic supplier, Huawei is holding a big advantage.     According to a Societe Generale analyst, Huawei’s market share in the global trade for basic mobile facilities grew from 7.2% in 2007 to 15.5% in 2008, next only to Ericsson and Nokia-Siemens. 75% of Huawei’s $23 billion total sales in 2008 came from overseas markets.   "$30 billion won’t be easy for Huawei," says Zhang Yu, analyst for BDA, an advisory firm. Zhang believes Huawei will see a significant growth in the domestic market, but may have difficulty overseas. Huawei counters that due to the financial crisis, operators will tend to choose less expensive products. The question is to what extent Huawei will enjoy its price advantage.  "Huawei’s sales price in Europe is as much as 30% under mainstream overseas producers," says Zhang Yu. Since that price difference may not be significant enough to matter, whether Huawei will be able to replace mainstream makers is a problem. But there are analysts who believe Huawei’s performance in developing countries has laid a solid basis for its entry into European and US markets, and that its share in these markets may well continue to grow.

 

 

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