Archive for August 8th, 2007

The Rise Of Chinese Telecom Equipment Makers

Published by Babar Bhatti on August 8, 2007 under Broadband Internet, China, Competitive Trends, Infrastructure, Telecommunications, Wireless

Of the many multinational companies doing business in Pakistan, ztecisco.jpgthe Chinese telecom equipment makers Huawei and ZTE are among the best known in Pakistan because of their mega deals with Pakistani telecom companies. In recent years these Chinese telecom gear firms have become a major force to reckon with on the global scale. See our previous coverage of Chinese telecom equipment companies here and here. 

As Herald Tribuneputs it: “The Chinese equipment companies have grown by cutting prices and winning contracts in developing countries outside of China, then reinvesting the profits in new technologies. ZTE’s development spending increased 45 percent in 2006. Huawei said this month that it plans to double the number of engineers at a center in Shanghai.”

A recent Business Week reporttalks about how Huawei and ZTE continue their global expansion and in particular their inroads to the US market, directly competing with the likes of Cisco and Nortel. An excerpt:

For China’s high-flying manufacturers of telecom equipment, the U.S. market has always been a no-go zone. The Chinese government wants its companies to go global, but for Huawei Technologies and ZTE, that has meant heading to the developing world.

Customers in Southeast Asia, the Middle East, sub-Saharan Africa, and Latin America have all been receptive to Chinese-made equipment that performs almost as well and costs far less than comparable gear from Cisco (CSCO), Nortel (NT), and Alcatel-Lucent (ALU). And while the Chinese made some forays into Western Europe they stayed clear of the U.S. after an embarrassing legal challenge by Cisco in 2002 cast an unflattering light on Huawei for alleged copying.

That timidity is now starting to fade. Both Huawei and ZTE have been boosting their sales and marketing teams in the U.S. and becoming more aggressive in trying to land deals with American carriers. Huawei last month inked a deal with Cricket Communications, a subsidiary of Nasdaq-listed Leap Wireless International (LEAP), to supply its latest-generation CDMA multiplexing technology to the San Diego wireless carrier.

The full article is available here - the coverage includes:

  • A Flurry of Deals for ZTE
  • Drop in Domestic Demand
  • Quality Essential for U.S. Acceptance
  • No Exploding Cell Phones
  • ZTE Discounts Backlash Factor