$100bn: Huawei's five-year plan

BEIJING: Huawei Technologies Co, China's largest phone-network equipment maker, aims to more than triple annual sales to about $100 billion in the next five to 10 years as it expands into cloud computing and small-business networks.

Huawei forecasts sales this year will climb to 199 billion yuan ($31 billion) from 185.2 billion yuan last year, Richard Yu, chief marketing officer, said in Shanghai today.

"Traditional industry boundaries are blurring and the telecommunications industry will be redefined in the next 10 years," Yu said at the meeting with analysts and media. "Low- cost, huge-capability networks will be the industry requirement."

Chief Executive Officer Ren Zhengfei, who founded Huawei in 1987, built it into the world's second-largest maker of equipment for mobile-phone networks, behind Ericsson AB. After starting off in China's rural communications market and then expanding that strategy through Asia and Africa, Ren is now looking to boost sales in Europe and the U.S. to further close the gap with its Swedish rival.

Huawei, based in Shenzhen, southern Guangdong province, held about 15.7 percent of the $78.6 billion global market for carrier network infrastructure last year, second to Ericsson's 19.6 percent share, according to estimates from research firm Gartner Inc. on April 11.

Growth areas
Huawei will increasingly look to expand beyond the traditional phone-network market because of limited growth prospects in that business, Yu said.

"The traditional telecom industry market will have a growth in volume that can only support our expansion to about $40 billion in annual revenue," Yu said. "So we are looking to expand our business with enterprise, devices and cloud computing."

The company still wants to maintain leadership in its traditional business with telecommunications carriers, he said.

Huawei, which didn't win its first contract outside China until 1997, achieved international sales of more than $100 million by 2000. Overseas business exceeded contracts in China for the first time in 2005, according to the company's website.

Growth in overseas sales raised Huawei's total revenue to 185.2 billion yuan last year, the company said in its annual report released this month, or about $27.36 billion based on the average exchange rate for the yuan to the dollar last year. That compares with Ericsson's $28.3 billion in sales last year at the equivalent average exchange rate.

Huawei got 65 percent of its revenue from outside of China last year, up from 60 percent in 2009, according to the report. Overseas sales jumped 34 percent at Huawei to 120.4 billion yuan last year, according to the report.

Its sales in China gained 9.7 percent to 64.8 billion yuan. China accounted for 35 percent of the company's sales last year, down from 40 percent in 2009. Net income rose 30 percent to 23.8 billion yuan, from 18.3 billion yuan a year earlier, Huawei's report said.

The company is owned by its employees and the Chinese government holds no shares, according to its website. The company employs 110,000 worldwide, the annual report said.

Source: timesofindia.indiatimes.com