DALIAN, China/HONG KONG (Reuters) - Huawei Technologies Co Ltd, the world’s No.2 network equipment maker, expects its deals in the enterprise sector to total more than $7 billion by next year, banking on demand from key markets such as China, a senior executive said.
Huawei also plans to triple staff numbers at its enterprise unit to about 30,000 in the next three years from 10,000 expected by the end of this year, to compete with the likes of Cisco Systems Inc and Hewlett-Packard Co, with half in research and development.
The enterprise unit provides equipment such as hubs, routers and switches that run networks transferring data across corporations.
Huawei signed contracts worth $2 billion last year and aimed to double that figure to $4 billion this year and $7 billion next year, William Xu, president of Huawei’s enterprise business group division, told Reuters in an interview late on Wednesday at the World Economic Forum in the northeastern Chinese port city of Dalian.
The Shenzhen-based company aimed to expand its enterprise business aggressively in coming years, targeting contract sales worth $15-20 billion by 2015, Xu said.
“Cloud computing is a revolution in the IT sector and gives information and communications technology suppliers such as Huawei new opportunities to get into the enterprise sector,” the Shenzhen-based executive said.
“Our key clientele used to be network carriers, but we’re expanding into vertical markets in various sectors,” he said, adding that Huawei would actively target sectors such as energy and transport, in which China is actively investing.
Huawei was restructured this year into three main units - one that supplies equipment to network carriers, another that makes consumer devices such as cell phones and tablet PCs and the third, the enterprise division led by Xu.
In the telecommunications sector, Huawei competes with market leader Ericsson and smaller local rival ZTE Corp in providing infrastructure equipment to network carriers.
Huawei derives its revenue, which totaled 185.2 billion yuan ($28 billion) in 2010, mainly from network equipment sales, but has been actively marketing consumer devices because of growing global demand for smartphones and tablet PCs.
Although Europe, one of its key markets, is embroiled in debt problems, Xu said the crisis had little impact on Huawei’s revenue.
“We didn’t see reduced spending in the ICT sector as corporates are investing in cloud computing,” Xu said. “Some chief information officers, such as those in the financial sector, prefer to spend the same amount, but they are now demanding more for their money, especially since the economic climate is tough.”
However, the United States has been a difficult market for Huawei to crack as some politicians are wary of the company’s secretive founder and Chief Executive Ren Zhengfei, a former military officer.
But Xu said it was more an issue of familiarity that hampered Huawei from clinching deals in the United States.
“Clients in the North America are not familiar with the Huawei name. In the enterprise sector, many people haven’t heard of Huawei, so that is something we have to work on with our partners,” he said.
Additional reporting by Li Ran; Editing by Chris Lewis