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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.”
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Global Highlights, 2005
A look at some of the key deals clinched by Huawei last year
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Collaboration Partner
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Project Details
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Thailand's CAT Telecom
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A contract worth $187 mn to expand its nationwide CDMA 2000 3G network.
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Intel
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Joint cooperation in building carrier class wireless broadband networks supporting the new WiMAX / IEEE 802.16 standards.
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MTN, Largest African mobile operator
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To buy from Huawei, mobile communications equipment, SDH products and services for the entire southern African region.
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Royal KPN, Dutch communications service provider
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Contract for CWDM/DWDM project that includes access layer CWDM covering the whole of the Netherlands and the national backbone DWDM.
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Arcor, Germany's leading fixed network operator
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Huawei will build Arcor's next generation SDH transmission network.
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Vodafone
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Selected Huawei is an Approved Supplier for Vodafone's Global Supply Chain.
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Telefonica, largest telecom company in Spain and Latin America
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Strategic partnership agreement for 3G and broadband innovations.
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Sonaecom, Portugal's major telecom group
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Huawei is its strategic partner in wireless network, fixed network, optical transmission and value-added services and applications, to develop the Portuguese telecom market.
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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).
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'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
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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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