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When a young company's headquarters resemble a small city, chances are it has big plans.
Huawei Technologies, China's largest telecoms equipment maker, boasts a sprawling, 11.3-square-kilometer complex in Shenzhen, where more than half its 24,000 staff toil to propel the brand onto the world stage.
Huawei's soaring sales and recent deals have attracted the attention of would-be investors eager for it to list on the stock market and competitors wary of low-cost Chinese manufacturers staking claims in Western markets. Last month, it won its first major European contract, pipping Sweden's Ericsson for a deal worth up to 400 million euros (US$308 million) to build a third-generation mobile network for Telfort of the Netherlands.
"The next two years will be very good for us in Western Europe. We started from emerging markets because there is less competition," said Huawei spokesman Richard Lee.
Driven by business in markets such as Russia, the Middle East and Africa, Huawei's international sales climbed 117 percent to US$2.28 billion last year, while revenue in the saturated domestic market rose 18 percent to US$3.3 billion.
Huawei said exports could grow to as much as US$4 billion this year as it focused on battling the likes of Motorola, Ericsson and Nokia in Western Europe and North America.
Huawei's rivals acknowledge the pressure. "Where they compete is on price," said Richard Wright, a Hong Kong-based spokesman for Lucent Technologies. "Competitors such as this one force us to be better for our customers."
While Chinese companies excel at making things cheaply, most of them have struggled to build their brands overseas. Last month, top Chinese PC maker Lenovo Group agreed to buy the personal computer business of IBM for US$1.25 billion. Appliance maker Haier and TV and mobile phone manufacturer TCL Corp. have also made inroads abroad.
Low-cost Huawei exerted an outsized influence, analysts said.
"Huawei may still make less revenue than major players like Alcatel and Siemens, but its growth rate is much higher, so its impact on the markets is much greater than its actual size," said Gartner analyst Bertrand Bidaud.
"Their next step will be to clinch a deal with a major international player. They are clearly negotiating with several major operators, which will give them more credibility."
Huawei's lack of brand resonance would be the biggest challenge to breaking into top-tier markets, Lee said. "We will do an IPO, but we don't have a timetable. We do aim to be a transparent public company ... It will help us improve our brand," he said.
The company was not under financial pressure to list, Lee said, after securing a US$10 billion line of credit from China Development Bank last month.
But Bidaud argued that the bigger Huawei got, the more urgently it would have to think about going public. "At some point, Huawei's potential tier-one customers will demand a higher level of transparency, which will force the company to go public," Bidaud said. "Going public is not only a financial question, but also a strategic one."
(Shenzhen Daily January 27, 2005)
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