Huawei targets corporate sector

China’s Huawei Technologies is opening up a new battleground with western groups by supplying companies with telecoms equipment and information technology.

Huawei is stepping up its efforts in corporate-focused telecoms infrastructure and IT, in a move that puts the Chinese company into direct competition with US technology groups led by Cisco Systems, Hewlett-Packard and Avaya.

William Xu, president of Huawei’s new enterprise division, said he was looking to win deals with companies in countries across the world, including the US, where some politicians have claimed that the Chinese group is a threat to national security.

Huawei has become one of the world’s leading suppliers of fixed-line and mobile infrastructure to network operators, competing for deals with western groups led by Ericsson and Alcatel-Lucent. Huawei is expecting to report revenues of $28bn for 2010.

In a sign of how Huawei is prioritising corporate-focused telecoms, the Chinese group is restructuring itself into three divisions. The first division supplies infrastructure to network operators, the second is consumer focused and makes mobile phones, and the third, led by Mr Xu, is serving companies.

Mr Xu told the Financial Times that Huawei had set a target of securing contracts worth $4bn in 2011 with companies that need phone and data services.

Huawei signed deals worth $2bn with companies in 2010, but Mr Xu said the Chinese group was expecting the annual contracts to be worth $15bn in three to five years.

“Our extensive product portfolio, strong research and development capabilities and engineering resources give us a competitive edge to meet the needs of enterprise customers,” added Mr Xu.

Many of the $4bn of contracts that Huawei is seeking in 2011 should involve supplying companies with network equipment such as routers and switches that direct data traffic over their telecoms infrastructure.

Huawei is also considering collaborating with network operators to provide cloud computing services to companies, although Mr Xu declined to identify potential partners. Huawei would provide the hardware for cloud computing, while network operators could supply software and services.

Mr Xu said Huawei had challenges in the US, where some Republican lawmakers see the company as a threat to national security.

Much of the US concern stems from the fact that Ren Zhengfei, Huawei’s founder, was an officer in the People’s Liberation Army. Huawei has repeatedly stressed it is a privately held company in which the Chinese government and the PLA hold no shares. Mr Xu said Huawei represented no threat to national security anywhere.

“There has never been a single network security breach case that has ever happened with Huawei.”

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