Telecom Equipment News
- SZ telecom-gear giants expand in U.S.
Date: 6-Aug-2007 Sources: (Shenzhen Daily)
FOR China's high-flying manufacturers of telecom equipment, the U.S. market has always been a no-go zone.
But it's not that for both Shenzhen-based Huawei and ZTE. They have been boosting their sales and marketing teams in the United States.
Huawei last month inked a deal with Cricket Communications, a subsidiary of NASDAQ-listed Leap Wireless International, to supply its latest-generation CDMA multiplexing technology to the San Diego wireless carrier.
The agreement, signed July 11, was the second in the past 12 months for Huawei with Leap. On Aug. 15 last year, Huawei announced that it had won a contract to launch 3G networks for Leap's Cricket subsidiaries.
ZTE, Huawei's cross-town rival, is used to playing second fiddle to Huawei. But it has scored the highest-profile win to date in the United States. On July 17, the company and Sprint Nextel announced an agreement for ZTE to provide the U.S. carrier with an undisclosed amount of wireless broadband, or WiMAX, equipment.
ZTE has made some smaller deals, too, and George Sun, chief executive of ZTE's American subsidiary, says that the company is also in the final stages of negotiations on a deal to provide ZTE cellular phones to an American customer. After years as a U.S. also-ran, 'we have successfully penetrated this market,'Sun boasts.
Making headway in the United States is just the latest sign that the Big Two Chinese telecom equipment makers are now formidable challengers to the big Western equipment makers. After the bursting of the telecom bubble in 2000, the Chinese largely avoided the United States and stuck to easier markets. What the Chinese did have in the United States was largely research and development facilities.
Instead, the two Chinese companies focused on their domestic market as well as elsewhere in the developing world, where competition was less fierce. That strategy worked nicely for a while but last year started to create some problems for ZTE as demand from China's telecom operators fell because of delays in the launch of 3G cellular networks in the country.
ZTE's American push dates back to 2005 with the arrival of Sun from corporate headquarters in Shenzhen. The company had just a handful of sales and marketing employees in the United States at that time. Since then, Sun, a 38-year-old electrical engineering PhD from the Chinese Academy of Science who has worked for ZTE since 1998, has added several dozen salespeople and opened company offices in the United States.
To make real inroads in the United States the Chinese will have to establish a reputation for quality, not just low prices. That price advantage is waning anyway as just about all of their Western rivals have now shifted their manufacturing to low-cost locations in Asia. And big telecom operators in the United States are accustomed to buying in huge volumes and getting favorable deals from suppliers. 'It will take a few more years before these efforts really pay off,'says Matt Walker, an analyst with Ovum-RHK, in an e-mail interview.
Huawei's Charlie Chen, senior vice president for marketing in the United States, says that the company is up to the challenge. The roster of Huawei customers in Europe includes such big names as Vodafone, Telefonica, T-Mobile, and British Telecom. 'These companies don't just consider prices,'says Chen.
And John Saboe, vice president for engineering at Cricket, notes that his company's choice to go with Huawei came only after thorough testing of the Chinese technology.
ZTE's Sun dismisses suggestions that the company will suffer from a backlash against Chinese-made products. 'Manufacturing for this company has never been a problem,'he says. 'The only challenge is to try to understand the U.S. market and its requirements.'Besides, he adds, 'It's not as if ZTE is unique in trying to market Chinese-made telephones to Americans. Even Motorola and Nokia, most of their handsets are made in China.'
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