Listen to this article
Huawei Technologies, China’s biggest telecoms equipment manufacturer, said on Tuesday its overseas sales this year would exceed those at home for the first time, a milestone in its effort to be an international operator.
A spokesman for Huawei in Shenzhen, the company’s southern China headquarters, said on Tuesday foreign sales of exports and products manufactured overseas would be about US$4bn, just ahead of expected domestic revenues.
Huawei’s surge in overseas sales is due partly to its long-established presence in emerging markets and to its more recent penetration of some developed countries, winning contracts with carriers such as BT in the UK.
“They have now clearly established themselves as a peer vendor [with western companies] in mid-tier and emerging markets,” said a China-based industry consultant.
Huawei is a privately-held company with no firm plans yet for an initial public offering, so a detailed breakdown of its revenues is not available.
But the US$4bn sales figure for 2005 is broadly consistent with industry estimates, the consultant and other analysts said.
Huawei’s success overseas has been matched to a large degree by ZTE, the country’s second-largest telecoms equipment vendor, which is also based in Shenzhen and is aggressively seeking contracts in Europe and the US.
Overseas sales have outpaced domestic revenues for another reason: the relative recent weakness of the local market this year and the failure of Huawei and other Chinese companies to grab much of the domestic second-generation mobile network market.
“One reason they have been so aggressive overseas is that they know better than anyone else about the difficulties at the moment in the home market,” said Duncan Clark of BDA (China), a Beijing consultancy.
In the first half of 2005, overseas sales accounted for just over 60 per cent of all revenues for Huawei, according to the company’s own figures, but this has been scaled back in recent months.
Mr Clark said he expected Huawei and other Chinese manufacturers to fare much better at home with 3G technologies once these were launched in China.
Huawei and ZTE’s display of their 3G equipment at a recent conference in Hong Kong impressed many in the industry who had been sceptical of the two companies’ ability to compete at the top end of the market.
“For the first time, their equipment and presentation matched that of Motorola and Cisco,” said an industry executive who attended the conference.