Huawei plans $400m investment in NZ

Chen Lifang, Huawei global president of public affairs (left), Ren Zhengfei, and Government ministers Paul Goldsmith, Simon Bridges and Mark Mitchell.

Telecommunications giant Huawei plans to invest at least $400m in New Zealand over the next five years.

At a meeting with Prime Minister Bill English earlier this month, Huawei founder and CEO Ren Zhengfei outlined plans to spend on local procurement, plough money into university research, and build cloud computing infrastructure. The company will also open a new regional office in Wellington.

"The bulk of the money has been earmarked to bring New Zealand companies into our global supply chain," says Andrew Bowater, Huawei New Zealand director of public affairs.

He says Huawei has set aside $250m for local procurement, although there could be more money if the right opportunities appear.

"For Huawei, procurement means building more connections with New Zealand companies. We also want the connections to go deeper. Getting to that point is going to take time.

"We've asked NZTE to help us find suitable potential partners. We're looking for everything from phone apps to chip sets. It's a huge opportunity for local businesses. We have a similar programme in Australia, more than 200 suppliers doing business with us over there," he says.

For local developers and manufacturers, partnering with Huawei means getting an important entry point into the Chinese market. Bowater says an earlier deal with Rakon was worth more than US$50m to the company, with the New Zealand-developed technology being used in mobile phone handsets sold around the world.

Huawei has been in New Zealand for more than 10 years. In the early days it sold network equipment to telecommunications companies. Then it made low-cost cellular phone handsets that mobile carriers could sell under their own brand. That business evolved into Huawei-branded Android handsets.

Today Huawei is New Zealand's and the world's third-biggest handset maker. More recently it has begun selling enterprise information technology systems and, in the last year, portable computers.

Bowater says the long relationship with New Zealand is important to the company. "Ren (Zhengfei) takes a personal interest in New Zealand. When he met with Bill English he talked about how impressed he has been with our fair and open approach to international trade. New Zealand has been good to Huawei. In part, the investment is a recognition of that."

Partnerships are central to Huawei's way of doing business. Bowater says: "We can turn up anywhere in the world and sell our products, but we like to offer more. The cloud computing project will be the same. We're looking to work with a local cloud partner in New Zealand that will most likely be an existing player".

Huawei sees cloud computing as a way to move from being a telecommunications equipment company to a broader supplier of information technology products and services. It plans to repeat its telecommunications success and challenge IT brands like HP Enterprise, Cisco and IBM.

The company's strategy is to not to sell cloud services direct, at least not outside China, but to provide enabling technology for cloud service companies. Its longstanding relationships with telecoms companies helps because many now aim to add cloud services to their portfolio. The Spark-owned Revera operation is one of the largest home grown cloud service providers in New Zealand.

In the long term, Huawei sees New Zealand as a potential safe haven for data storage. Political stability is part of the attraction for overseas companies wanting to keep data safe. So is distance from the rest of the world.

For now, Huawei's New Zealand cloud focus will be local. While Bowater says the obvious place for a new data centre would be in the Auckland area, it could be anywhere in the country. No decision has been made yet.

Victoria University in Wellington has been a Huawei partner since 2015, and Huawei will open an innovation laboratory at the university's Kelburn campus later this year. Bowater says the lab will mainly focus on the practical use of big data and how to unlock the potential of the internet of Things.

The internet of Things will cover sensors and devices connected to the internet using cellular technology. It's already growing fast. Two years from now there will be more connected sensors than phones, computers, tablets and wearable devices combined. However, things will really take off when the next generation (5G) of mobile phone technology arrives at around the end of the decade.

Huawei is a major player behind 5G mobile and plans to use the Victoria innovation lab to stay on top of how it works with the internet of Things.

Bowater says the emphasis will be on areas where New Zealand is strong, such as agriculture where sensors can be used to monitor crops, pastures and animals. He says Huawei is forming a similar partnership with the University of Canterbury. "The focus is likely to be much the same, although the university also has a very good engineering school we would like to work with."

Huawei has a programme to share academics with local universities. This means some will get to spend time at Huawei facilities in China and elsewhere. The company has 18 labs around the world including those in Seattle, Paris, Finland and Russia.

"We invest heavily in research and development. This is how we stay ahead of the game. Huawei is committed to innovating." Bowater says.

Huawei employs 161 people in its Auckland office. At present there is one person working in Wellington, but that will grow when the new office opens there.

Bowater says there may be five people in Wellington at first but it will ramp up to at least 10 people.