In a sign of patience wearing thin, after a long agonizing wait-and-watch
period since March 2005, China based Huawei Technologies decided to pull
out its application submitted to India's Foreign Investment Promotion Board (FIPB),
in September. The application was to request permission for beginning local
manufacturing of CDMA-based terminals.
However, it is not the end of the road, as Huawei and its rival Chinese
vendor ZTE have taken the automatic route for investment proposals. Michael Lin,
director marketing, Huawei Telecommunications, India said, “Huawei is very
optimistic about the long term market potential in India as it is one of the
most promising telecom markets in the world.” Lin informs that Huawei is
eligible for the “automatic route” for its investment proposal and there is
no need to pursue with FIPB according to this directive. “We have intimated
RBI in compliance to the prevailing FDI policy,” he adds.
Under the automatic route, investors are only required to notify the
concerned regional office of RBI within 30 days of receipt of inward
remittances. The company has to file required documents with that office within
30 days of issue of shares to foreign investors.
The Indian Connection
The roots of Huawei go back in India to 1999 when it set up its
representative office. It has come a long way since then. Today the Bangalore-based
Huawei Technologies India (HTIPL) comprises of two R&D centres, which is the
company's largest overseas operation. The company wants to add another 500
engineers over the next two years.
However, the roadblocks came up with the question of security, not only faced
by Huawei but also by ZTE. Some news reports have quoted the defense ministry as
stating, “there are general security concerns regarding activities of Chinese
companies. Safeguards are practically difficult to implement in highly technical
areas.” According to another news report, India's Intelligence Bureau
suspected Huawei to have ties to China's intelligence apparatus and military,
and even perform the debugging sweeps for the Chinese Embassy in India, a charge
that led to China Council for Promotion of International Trade, (the apex
Chinese chamber of commerce), batting for Huawei in its defense.
Johnson Hu, vice president, Corporate Branding & Communications Dept,
Huawei Technologies, clarifies, “We do not have any military background and we
function like any other corporate.” On the delay from India for approval of
the manufacturing facility he says, “There has been some misunderstanding and
we are more than willing to clear the air. Right now we have presence in over
100 countries providing services, and partnering in major telecom projects on
all leading technologies. For the first time, sales from international markets
represented the majority of our contract sales, accounting for $4.8 bn, or 58%
of our total sales. This is proof of our global connection. In no other country
have we faced security clearance as an issue.”
|
Global
Highlights, 2005
A look at some of the key deals
clinched by Huawei last year |
|
Collaboration
Partner
|
Project
Details
|
|
Thailand's CAT
Telecom
|
A contract worth $187
mn to expand its nationwide CDMA 2000 3G network.
|
|
Intel
|
Joint cooperation in
building carrier class wireless broadband networks supporting the new
WiMAX / IEEE 802.16 standards.
|
|
MTN, Largest African
mobile operator
|
To buy from Huawei,
mobile communications equipment, SDH products and services for the entire
southern African region.
|
|
Royal KPN, Dutch
communications service provider
|
Contract for CWDM/DWDM
project that includes access layer CWDM covering the whole of the
Netherlands and the national backbone DWDM.
|
|
Arcor, Germany's
leading fixed network operator
|
Huawei will build
Arcor's next generation SDH transmission network.
|
|
Vodafone
|
Selected Huawei is an
Approved Supplier for Vodafone's Global Supply Chain.
|
|
Telefonica, largest
telecom company in Spain and Latin America
|
Strategic partnership
agreement for 3G and broadband innovations.
|
|
Sonaecom, Portugal's
major telecom group
|
Huawei is its strategic
partner in wireless network, fixed network, optical transmission and
value-added services and applications, to develop the Portuguese telecom
market.
|
Despite the blame game, Huawei plans to invest $100 mn in
India and claims to be strongly committed to its plans here. Lin adds, “The
Company is establishing the necessary infrastructure in India with very long
term market perspective, to support operators here, proactively. Huawei is
looking at manufacturing on a broader perspective to drive the benefits of
economies of scale commensurate with the market potential in various technology
domains.”
It's worth noting that Huawei's equipment is already installed in
BSNL's broadband network and the vendor has won contracts with MTNL, Reliance
Infocomm, and Tata Teleservices (See box: Doing Business in India) During the
past year, HTIPL was involved in developing 40 platforms and products, and delivered
239 releases of projects to its customer (Huawei).
|
'For the
first time, sales from international markets accounted for 58% of our
total sales last year'
-Johnson Hu, vice president,
Corporate Branding & Communications Dept, Huawei Technologies |
Global Tracks
A decade ago, it was just a telecom midget, but today Huawei is reckoned as
a major manufacturer of wireless phone and networking equipment, with offices in
41 countries. The company competes with multinational big boys-Northern
Telecom, Alcatel, Lucent, Cisco Systems-and its products and solutions are
deployed in over 100 countries.
The 2005 revenue stands at $5,982 mn, a growth of 56% over last fiscal's
revenue. It is difficult to miss the fact that more than half of Huawei's
orders (by value) come from markets outside China. In many ways 2005 was
significant for the company as it bagged several prestigious deals worldwide.
(See box: Global Highlights, 2005)
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