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Huawei 'not interested' in US anymore, shifts focus to Europe

Chinese telecom equipment maker is moving its focus from U.S. to Europe, seeing a stronger business case for the continent which it sees as a way to increase its presence in developing markets.
Written by Ellyne Phneah, Contributor

Huawei has decided to focus on expanding in Europe to pave its way into developing markets after experiencing difficulties in the U.S. market, and also has no intention of listing in the near future.

"We are not interested in the U.S. market anymore," the company's executive vice president Eric Xu, said at the company's annual analyst summit in Shenzhen, China on Tuesday, South China Morning Post (SCMP) reported.

"Today we face reality and we focus on the rest of the world," Li Sanqi, CTO of Huawei's carrier network division, which accounts for almost three quarters of Huawei's revenue, said at the summit.


Even though a White House review cleared Huawei of accusations of spying last year, a Congressional report slammed Huawei's alleged unwillingness to explain its ties with the Chinese government.

According to Pranabesh Nath, ICT Practice research manager at Frost & Sullivan Asia-Pacific, this is an "interesting reaction" from Huawei. Since the U.S. government has erected roadblocks more than once on Chinese technology companies trying to gain a foothold in the U.S. market, Huawei may not have much of a choice in the matter, Nath explained.

"This may indicate it is toning down its ambitions to grab significant market share in the U.S., but I wouldn't expect the company to stop lobbying. This could also be a change in strategy by keeping a lower profile--the US market is just too lucrative to pass up without fight--and lots of them have to be fought and won," he told ZDNet.

Shifting focus to Europe

Huawei will instead, shift its focus to Europe, despite the economic stagnation that has crippled the continent, as there was "a strong business case to be made in Europe", Li noted.

For Li, a leading role in Europe would allow Huawei's carrier network to expand more easily in the developing world.
The Shenzhen-based company's consumer device division is focusing on Europe with the same rationale. "It is a way we can touch more and more people," Shao Yang, CMO for the carrier network division, said. "They can influence other regions and have networks in so many countries."

"In the first half of [last] year, we lost 90 percent of our customers [but] this year our customers are coming back," Shao Yang, CMO for the carrier network division, Huawei.

Shao also acknowledged Huawei had been overcoming skepticism by European customers over the company's move to sell its products under its own brand. "In the first half of [last] year, we lost 90 percent of our customers [but] this year our customers are coming back," he said.

However, Huawei may find similar obstacles in Europe.
The European Commission has been collecting evidence for a possible case against Huawei over alleged Chinese state subsidies which help the company undercut European competitors, a Reuters report noted.

Bryan Wang, vice president and country manager for Forrester Research China, also told ZDNet Asia the European governments are "more positive" toward Huawei's presence compared to the U.S..

One of Huawei's key value propositions for its carrier and enterprise product lines is the total cost of ownership (TCO) advantage, which is at least 20-25 percent cheaper than its closest large competitors, Wang explained. Its solution could be more appealing to European customers considering the budget issue they are currently facing, he said. 

With Huawei's announcing its investment in U.K. last year, the U.K. government has been "quite positive" with its presence and investment in the country--we do see similar things in other EU countries, he added.

No plans for listing

Huawei too, no has intention of being listed in the near future, a separate report on China.org.cn, noted.  The firm has grown organically over the past 25 years and moving forward, will continue to rely mainly on organic growth, he said.

Huawei is not a listed company and it does not intend to become one, so it does not have enough cash to purchase large companies, Xu noted.

"However, we do not rule out the possibility of buying smaller companies for technologies, or for markets, which will help improve our competitiveness," Xu added.

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