China’s Huawei leaps into the big league


Published on 02/11/2008

By Peter Okong’o

The next generation of mobile and fixed wireless infrastructure will be intelligent and eco-friendly systems, able to “think” for themselves, and save energy.

This puts Huawei Technologies at the top of the rung. The reality of convergence and global warming issues means that wireless networks will now have to deliver broadband, and “go green”.

Huawei is already building intelligent fourth generation (4G) networks that require less space, and can switch off non-essential systems to reduce power consumption, without being prompted.

The firm is also working on core mobile network solutions for Vodafone, a key shareholder in Kenya’s Safaricom.

These include base stations that can cover wider geographical areas, but require fewer cooling equipment, and so consume less energy. Huawei supplies the broadband equipment and technology for Safaricom’s mobile Internet service.

The firm’s ability to cut the downtime between conceptualisation and delivery of solutions remains its biggest asset in an industry where competition is cutthroat.

The investment has been huge, with much of it going into its massive Banxuegang Industrial Park in Shenzhen, China.

The sprawling facility resembles a university with buildings spread out over 1.3 square km.

The success of cellular technology in emerging markets where fixed line telephones previously restricted access to communication has helped power Huawei’s growth.

new connections

However, while new connections continue to grow, in countries like Kenya, voice revenues are beginning to decline and will eventually force carriers keen to lock in top paying subscribers to adopt third-generation (3G) networks for their bandwidth-hungry value added services. However, for now, basic GSM provides the largest growth opportunity, due to the continuing need for delivery of basic coverage and capacity. This year, Huawei, which has had an office in Kenya for the last 10 years, finally broke into the top 50 of the Fortune 500 rankings for network communications, coming in at number five globally, and boosted by contract sales worth $16 billion dollars last year, 72 per cent up on 2006.

It is projecting that its sales for this year will top $23 billion.

“Most of our growth has been made in emerging markets like Kenya and other African countries,” Mr Ross Gan, the company’s head of corporate communications, told Tech.Insight.

backbone

Most of the company’s business is in providing the backbone for telecommunication services, as it does not produce for the mass market. Instead, it designs and manufactures equipment under contract by various companies, and customises them to meet specific requirements spelt out by their clients.

The advantage of this approach is that most of the cost goes into research for products it is already contracted to deliver, and so there is very little wastage. This explains why 43 per cent of the company’s employees are researchers, and only 29 per cent are in sales. And if a company’s ability to innovate were strictly measured by the number of patents it has applied for, then Huawei, with 30,569, would certainly qualify to be in the top 10.

In the last five years, China’s rabid pace of modernisation and growth has seen its companies gain an increasingly influential traction in the world of technology.

The country’s ravenous appetite for new technology to power its rapidly growing economy was partly responsible, as was the countdown to this year’s Olympics. China Mobile is now the world’s largest mobile service provider, and is Huawei’s single largest customer. The other reason is the Chinese government’s tacit backing of private non-monopoly technology firms, with a bias for research.

But the firm has also grown into a true international player, with most of its contract sales last year coming from non-Asia related operations. Huawei Technologies was this year ranked number five in the world by Fortune magazine in network communications.

product menu

The company, started in 1988 as a distributor of PABX boxes, today churns out hundreds of customised products and solutions for the likes of Spain’s Telefonica, IBM, and HayGroup. PricewaterhouseCoopers, British Telecoms, Germany’s Deutsche Telekom, Telekom Italia and Mercer.

But the model adopted by Huawei appears more sustainable in light of the changing needs of the market place.

By the end of last year, Huawei controlled 43.7 per cent of the world’s mobile softswitch market, and was ranked number one globally in contracts held for next-generation WCDMA equipment, mostly for the European market where mobile penetration is highest, and the transition to 4G networks has already picked up. The company is still not at the level of Ericsson, Nokia Siemens and Alcatel Lucent in terms of revenues, but has been building market share and traction at a pace that makes it a direct and credible threat to the three.

In fact, Huawei’s human resource base already places it among the top two, with a team of 34,000 people, most of them under 29 years old and armed with college degrees. Among the pillars behind Huawei’s rise are cost leadership, customer service, professional services and technology.

The company has been successful at leveraging low operational costs and access to finance. It is able to customise and work with clients, and has established a reputation for quality technology. To improve communication, once one of its weakest links, the firm now hires 58 per cent of the staff in its overseas offices locally.

In addition, it has invested in 31 training centres across the globe, mainly for the benefit of its clients.

cessful at leveraging low operational costs and access to finance.

It is able to customise and work with clients, and has established a reputation for quality technology. To improve communication, once one of its weakest links, the firm now hires 58 per cent of the staff in its overseas offices locally.

In addition, it has invested in 31 training centres across the globe, mainly for the benefit of its clients.

|   |    |    Comments (0) |   Add Comment


Today’s magazine

    Crazy Monday
Kogelo attracts ‘wonder-baby’ tourism

Jackie Adams*** gyrated her curvy hips in a sexy motion that resembled a fertility dance. The young woman from New York was among the multi-racial throng that celebrated Barack Obama’s inauguration at Kogelo village in Siaya.