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Monday, October 06, 2003

The Huawei threat 

I have had an interest in Chinese telecom major Huawei since the time they first set foot in Bangalore, the only major Chinese software operation in India. By March this year, Huawei had about 600 employees in Bangalore office and were planning to expand staff strength to 1,500. So, it was interesting for me to read the New York Times story on Huawei which suggests that the Chinese upstart might pose a challenge to equipment majors like Cisco and Nortel. Even assuming thats a bit of an exaggeration, if Huawei can simply capture 70%-80% of the Chinese telecom equipment market, it would probably become a major player. Of course, if it can capture some other major emerging markets like India (currently the fastest growing telecom market in the world) and Russia, they could in principle threaten the dominance of the North American majors.

In a tough market, its domestic sales grew by a third in the first half of the year, and analysts expect international sales to grow from $550 million last year to $1 billion this year and $1.4 billion next year.

Beginning in the late 1990's Huawei invested heavily in establishing sales networks in Asia, the Middle East and Russia; it now sells products in 40 countries, often at prices as much as a third lower than its rivals.