Huawei seeks to shake off cut-price supplier image

Stuart Corner
Thursday, 09 July 2009 05:34

IT Industry - Strategy

In the Globe and Mail interview, Maestri said that 40 percent of Nokia Siemens' revenue now came from services, such as integrating systems, hosting operations and designing networks and helping operators run their networks more efficiently and manage relationships with their customers more closely. He claimed: "That is a business that the Chinese today cannot replicate."

Huang concedes that Huawei faces barriers in moving up the value chain in markets outside China but claims that Huawei has a unique advantage over the other major players in the telco network equipment market. "We think Huawei is the only supplier that has the strong position in fixed mobile and IP. Other suppliers are either strong in mobile and weak in IP or strong in IP and weak in mobile."

The challenge it faces, he says is to overcome language and cultural barriers to understand overseas markets and help its operator customers succeed in those markets. "Software in telecoms is quite local, In China we understand what operators in China and can have very good communications with them without language or cultural barriers, but overseas it is very different."

Huang said that partnering with local players would be the key to overcoming these barriers, but said: "this is very difficult." He cited one early success in Latin America, delivering colour ring back tomes. "We provide the platform and the local providers provide the content."

According to Gartner, while Huawei has expanded from China to emerging markets in Asia, Eastern Europe and the Middle East and Africa and is now growing strongly in Western Europe, it still has not found a way to make a significant impact on the North American market.

However according to Huang, this growth pattern reflects Huawei's global expansion strategy and only now is it turning its attention in earnest to North America.

"Our international marketing strategy was in four phases: first countries near to China and the CIS. Phase two was the Middle East and South Africa, phase 3 Europe and phase 4 North America. We are now between phases three and four. We have been penetration a lot of tier one carriers in Europe, but in North America we have just started. We are now conducting discussions with large operators in the USA so they can understand more about us."

Stuart Corner travelled to Huawei's headquarters in Shenzhen as a guest of the company.