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Huawei Technologies, China’s largest telecommunications equipment maker, had explored selling significant parts of its business to foreign buyers as part of a broader strategic review, the Financial Times reported Tuesday, quoting people close to the company.
Among the business lines it has discussed selling are the optical and access divisions, which are believed to be less profitable than other operations. As a private company, Huawei does not disclose financial details about specific businesses.
The negotiations suggest Huawei, widely considered one of China’s best hopes for creating a global company, is weighing its options in the intensely competitive telecom gear market. Huawei hopes to increase its international sales from US$2.28 billion last year to US$10 billion by 2008 through an ambitious expansion plan.
“They are evaluating different business lines,” said Zhang Dongming, head of research at BDA China, a Beijing-based telecom consultancy. “It makes sense for them to drop a few non-core businesses and focus on higher-margin, higher-growth businesses.”
The move is also surprising because of the growing expectations, fueled by deals such as Lenovo Group Ltd.’s December acquisition of International Business Machines Corp.’s (IBM) personal computer business, that Chinese groups would be buying, not selling to, foreign companies.
On Monday, Huawei announced an alliance with Marconi Corp. of the Britain in which both companies would sell each others’ products to their respective customers. Huawei and Marconi are also discussing joint product development, they said in a statement.
Huawei also has joint ventures with 3Com Corp., Siemens AG, NEC Corp. and Matsushita Electric Industrial Co.
“We will not exclude any possibility of cooperating with other vendors,” Fu Jun, a Huawei spokesperson, said. He declined to comment further.
(Shenzhen Daily February 2, 2005)
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