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The last (and only) time Huawei made headlines in Britain was when it emerged two years ago as a bidder for Marconi, the British group that had come close to collapse after a string of disastrous acquisitions.
Marconi went on the market after it lost out on a
key contract to build part of BT's next-generation network, 21CN. Huawei, a little-known Chinese company, picked up the work instead.
The rump of Marconi is a small, anonymous part of the sprawling Ericsson empire. Huawei, by contrast, is one of the largest telecoms equipment manufacturers in the world.
Its headquarters is more like a small town than an office building. Located a few kilometres from the centre of Shenzhen, the Chinese city that neighbours Hong Kong, Huawei's campus stretches to nearly 2.5sq km. A three-lane highway runs through it.
The company's chairman is in the habit of visiting a different country, noting the architecture he likes and putting up buildings of the same design at Huawei's HQ. A large office complex looks very like the White House in Washington and a staff "chill out" area resembles a Bali beach hut.
More than 20,000 staff work there, while 3000 live on site in a residential area that has schools, playing fields and other urban trappings.
There is a massive research department, a highly automated distribution centre that handles 30,000 raw materials but employs only 38 workers, and a manufacturing complex.
In 2005, when it made its abortive bid for Marconi, Huawei had turnover of US$3.8 billion ($5.5 billion) and net income of US$681 million.
Last year its turnover was US$8.5 billion, its revenues US$512 million.
It now holds more than 20,000 patents and most of Europe's major telecoms companies are its customers.
Its relatively low profile is explained by the fact that in Europe it does not sell directly to the consumer.
It was founded in 1988 by Ren Zhengfei, a former officer in the People's Liberation Army. Little is known about him or his fellow board members. A company spokesman says the firm began as a third-party reseller of other groups' telecoms devices, before selling its own technology to the domestic market. Huawei has apparently never had any outside investment, although its expansion has been funded in part by unspecified loans from nationalised Chinese banks.
While this may seem odd in Western business circles, it is more normal in Chinese culture, where it is bad form to boast about success.
In a rare interview, Hu Zhijun, chief marketing officer, says the lack of transparency applies only to the public and not to its customers: "The telecoms industry has a small overall base of companies in about 500 operators globally - and we are fully understood by our customers."
In addition, Huawei is audited every year by accountants KPMG, and its annual report gives a modicum of information about its operations and operating performance.
Yet questions remain about who is ultimately responsible for the company's behaviour and performance, and arguably it is this that has made it harder for Huawei to break into new markets.
Not that there seems to be much wrong with its technology. The company employs 30,000 research and development engineers across the world. It has development bases in Stockholm, Bangalore, Moscow, Dallas and San Diego, and 10 per cent of group revenues - some US$1 billion this year - is spent on R&D.
Although this is low in absolute terms compared with the sums spent by rivals such as Ericsson, Huawei's low cost base gives it a distinct edge (as Marconi found to its cost in 2005).
"R&D cost is largely made up of the cost of people," says Zhijun. "But to hire a Chinese engineer costs about a sixth of what it does to hire an engineer in America or Europe."
In the company's giant exhibition hall at its Shenzhen base, the scale of Huawei's ambitions becomes clear.
As well as network equipment for fixed-line and mobile telecoms operators, it has a thriving terminal division which supplies devices such as mobile handsets, video-conference phones, wireless internet routers and 3G data cards for laptops.
The company shipped 27 million such devices last year and a further 17 million in the first half of this year, including three million for Europe.
It has achieved what most Chinese companies have failed to do: it has become a genuine global giant. But until the group opens the door to its boardroom, as well as its exhibition hall, its achievements will remain open to question.
- Independent
