Huawei earns Europe's trust with excellence in high-tech

With sales in the continent growing, telecom titan is set to meet its 2016 target of 140 million handsets

"This is the guts of the business, this is what we do," our guide said, patting a large green, hardware-filled street cabinet sitting in the bowels of Huawei Technologies Co's UK headquarters in Reading.

To the average Briton, Huawei is best known as a smartphone manufacturer. Its basic models could be an alternative to pricey market leaders. Some are aware of the TV commercial for its higher end P9 featuring movie stars Scarlett Johansson and Henry Cavill.

But most would be unaware that Huawei plays a key role in the "last mile" technology that delivers superfast broadband from the pavement to some 20 million homes across the United Kingdom.

"This is where it all begins, the kit that weathers rain or shine... If this doesn't work, nothing else does."

Reliable equipment and thrust on innovation have helped Huawei to emerge as the world's biggest telecommunication equipment manufacturer, after starting as a private reseller of PBX switches in China in 1987.

Founded by Ren Zhengfei with an investment of $3,500, Huawei's revenue reached $60.8 billion in 2015. It's the only Chinese company in the Fortune 500 list to make more money abroad than domestically.

The company said it will likely meet its sales target of 140 million handsets this year, driven by over 50 percent year-on-year growth in western and northeastern Europe, two of its fast-growing markets.

Huawei is also the world's third-largest smartphone vendor after Samsung Electronics Co Ltd and Apple Inc. The gap between Apple and Huawei is narrowing.

Huawei's market share was 8.2 percent in the first quarter of this year, up from 5.2 percent last year, while Apple fell to 15.3 percent from 18.3 percent, with Samsung remaining at around 24 percent, market research firm International Data Corporation reported in July.

Both Apple and Huawei are likely to benefit from Samsung's ill-fated Galaxy Note 7.

Analysts attributed Huawei's success to its unique management and ownership structure. Huawei is a 98.6 percent employee-owned private entity run by rotating CEOs. Emphasis is on research, which received $38 billion over the last 10 years and 45 percent of its 176,000 employees worldwide.

According to Roland Montagne, head of broadband practice at European telecoms think tank IDATE, making inroads into Europe is at the heart of Huawei's global rise.

"Huawei decided to invest quite early in the European market because it's a center of expertise in terms of technology and it is a dynamic market," he said. "That's why they decided to collaborate quite quickly with the main players in Europe - BT, Orange, Telefonica, to mention a few."

After setting up its first UK offices in 2003, Huawei clinched a game-changing supplier deal with British Telecom in 2005, to roll out the latter's 21st Century Network data network program.

"At the time, very little was known about (Huawei) outside of Asia, it didn't really sell very much in Europe," said Mike Galvin, head of technology, services and operations at BT. "We compared Huawei's with others' equipment ... and we said this equipment meets our needs. It was well-made."

Galvin said Huawei scored in terms of security of supply and ethical practices. He attributed much of its success to customer centricity.

"The unique thing ... (about) Huawei ... is how close they are to their customers and how their customers drive what products they produce."

Stefano Cantarelli, chief technology officer and network vice-president for UK and Ireland at Huawei, said gaining BT's trust opened the doors to other major deals in the UK and Europe. Carriers Vodafone and EE went on to buy Huawei equipment for their telecom networks. Huawei teamed up with EE later to launch the UK's first 4G LTE (long term evolution) network.

The BT deal signified the opening up of the traditional, R&D-driven European operator market to Chinese vendors, Cantarelli said. "They (BT) have been fundamental in establishing trust, and we were able to get the second-biggest deal we got with Vodafone. It has been pivotal in creating a brand reputation."

According to Montagne, maintaining such trust is imperative for Huawei as the new frontier of all-cloud transformation and cloud-based strategies offer a fresh set of complex security challenges.

Contact the writers at angus@mail.chinadailyuk.com and daitian@chinadaily.com.cn