Stuart Corner
Thursday, 09 July 2009 05:34
IT Industry -
Strategy
Page 1 of 2
Chinese telecoms equipment maker Huawei has posted spectacular growth in recent years and the widely held view is that it has achieved this growth through significantly undercutting the prices of its major competitors but it claims this is not the case.
Charles Huang, the company's president of
global marketing, told iTWire: "We never position ourselves and
we never see ourselves as a company that wins any contract only on low
price... I have been working in Europe for three years and in many
contracts I have been involved in other suppliers prices have been
lower."
Only last week the CFO of Nokia Siemens Networks, Luca Maestri, was
reported in Canada's Globe and Mail saying: "It is quite obvious to us
that we cannot compete on cost with the Chinese. Where we believe we
have a really strong story is on services."
Huang countered this by saying: "In May in a media interview in China
the CMO of Nokia Siemens said that Huawei is not a low cost supplier
and he admitted that in many cases NSN prices are lower than
Huawei's...We know that in many markets we are not the lowest priced
provider."
While analysts still cite the undercutting of competitors as one of the
keys to Huawei's success, they do note that low cost pricing will not
be a sustainable strategy for Huawei, According to Ovum, rising costs
and a stronger Chinese currency have chipped away at this edge and
competitors have responded by shifting R&D and production to the
same low cost countries.
Commenting on the company's prospects in the LTE market, Gartner said:
"We expect the economic downturn to hasten Huawei's ascent as it
maintains an aggressive pricing strategy, so its percentage share of
the LTE market is likely to be even greater than it has achieved with
earlier technologies."
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