Telecom giant makes clear it's not exiting US market

Updated: 2013-04-26 15:41

By Zhang Yuwei in New York and Yu Wei in San Francisco (China Daily)

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Huawei Technologies Co, the Chinese telecommunications-equipment giant, has no plans to exit the US market despite a senior executive's remarks that sparked a media frenzy.

Eric Xu, Huawei's executive vice-president, said at the company's annual analyst conference on Tuesday in Shenzhen that Huawei is "not interested in the US market anymore" during a briefing on Huawei's growth in various business segments, including carrier networks. His comment was soon being quoted by media outlets speculating that the company might pull out of the lucrative US market.

William Plummer, vice-president of external affairs for Huawei's US operation, said Xu's remark reflected the "reality" Huawei is facing in the United States and didn't signify anything beyond that.

"The comment that was reported on simply was a brief observation reflecting the current market situation in the US," Plummer told China Daily on Thursday.

"In terms of the statement he made, he was just making an obvious reflection on the situation in the US right now," he added. "The barriers that existed are where they are. It was not a near-term source of growth of our revenues, but we are still committed to providing quality service to our customers" in the US.

Matt Walker, an analyst with Ovum, a London-based firm that tracks the telecommunications industry, monitored Huawei's analyst conference. He said the media reaction was due to a "misinterpretation" of Xu's comment.

"In fact, many potential Huawei customers in the US would like to have a choice of selecting Huawei for future deals - if only to improve their negotiating power over other suppliers," Walker said.

The world's second-largest manufacturer of networking gear by sales has been a target for some US lawmakers who accuse the company of undue secrecy.

In September, the US House of Representatives Intelligence Committee conducted a hearing on Huawei and ZTE Corp, another Shenzhen-based telecom-equipment maker with US operations. That followed a yearlong probe by the committee into whether the two Chinese companies were a risk to US national security.

It was the first time that Chinese business executives testified in Congress.

Charles Ding, Huawei's corporate senior vice-president in the US, said at the hearing that 70 percent of his company's $32 billion in annual revenue comes from markets outside China.

The committee in October issued a report stating that both companies posed a threat to national security and "cannot be trusted".

Clif Burns, a lawyer in the Washington office of Bryan Cave LLP, who specializes in export controls and economic sanctions, said the report reiterated general accusations about Huawei and ZTE but didn't present evidence supporting specific claims.

"I don't think anybody is going to stop dealing with Huawei and ZTE because of this, nor should they," Burns told China Daily at the time.

Much of the House committee's claims stem from the Chinese companies' links to the People's Liberation Army and the central government in Beijing. However, Huawei - both at the hearing and on other occasions - has said that when Ren Zhengfei founded the company in 1987, he had already left the PLA.

Despite the challenges in the US, the company has kept pace with international rivals. Huawei sold 10.8 million mobile-phone handsets around the world during the fourth quarter of 2012, a third-place finish behind Samsung Electronics and Apple Inc, according to market researcher International Data Corp.

"The bottom line is, we derive most of our businesses from developed markets around the world that are outside of the US," Huawei's Plummer said. "Given the situation that we face in the US, it's difficult for that market to become big revenue or a key growth area for the carrier business."

Walker, the analyst, said that despite its challenges in the US market, Huawei still has the potential to grow. "Even if Huawei does not sell much in the US, there is a lot of innovation taking place in the market - in technology development, implementation and business models."

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