When a young company's headquarters resemble a small city, chances are it has big plans. China's largest telecoms equipment maker, Huawei Technologies, boasts a sprawling, 11.3-square-kilometre (4.4-square-mile) complex in the southern boomtown of Shenzhen, where more than half its 24,000 staff toil to propel the brand onto the world stage. Huawei's soaring sales and recent deals have attracted the attention of would-be investors eager for it to list on the stock market, and competitors wary of low-cost Chinese manufacturers staking claims in Western markets.
Last month, it won its first major European contract, pipping Sweden's Ericsson for a deal worth up to 400 million euros ($530.1 million) to build a third-generation (3G) mobile network for Telfort of the Netherlands.
"The next two years will be very good for us in Western Europe. We started from emerging markets because there is less competition," said Huawei spokesman Richard Lee, after a brisk march past a series of bustling, pristine assembly lines.
Driven by business in markets such as Russia, the Middle East and Africa, Huawei's international sales climbed 117 percent to $2.28 billion last year, while revenue in the saturated China market rose 18 percent to $3.3 billion.
Huawei has said exports could grow to as much as $4 billion in 2005 as it focuses on battling the likes of Motorola, Ericsson and Nokia in Western Europe and North America. Huawei's rivals acknowledge the pressure.
"Where they compete is on price," said Richard Wright, a Hong Kong-based spokesman for Lucent Technologies. "Competitors such as this one force us to be better for our customers."
While China excels at making things cheaply, its companies have struggled to build their brands overseas. That may be changing. Last month, top Chinese PC maker Lenovo Group agreed to buy the personal computer business of IBM for $1.25 billion. Appliance maker Haier and TV and mobile phone manufacturer TCL Corp have also made inroads abroad.
Low-cost Huawei exerts an outsized influence, analysts say.
"Huawei may still make less revenue than major players like Alcatel and Siemens, but its growth rate is much higher, so its impact on the markets is much greater than its actual size," said Gartner analyst Bertrand Bidaud.
"Their next step will be to clinch a deal with a major international player. They are clearly negotiating with several major operators, which will give them more credibility," he said.
Huawei's lack of brand resonance is the biggest challenge to breaking into top-tier markets, Lee said.
"We will do an IPO, but we don't have a timetable. We do aim to be a transparent public company ... It will help us improve our brand," he said.
The company is not under financial pressure to list, Lee added, after securing a $10 billion line of credit from China Development Bank last month.
But Bidaud argues that the bigger Huawei gets, the more urgently it will have to think about going public.
"At some point, Huawei's potential tier-one customers will demand a higher level of transparency, which will force the company to go public," Bidaud said. "Going public is not only a financial question, but also a strategic one."
But if Huawei plans an IPO, it should address perceptions about its background and ownership, said Duncan Clark, managing director of Beijing telecoms consultancy BDA China Ltd.
The company bristles at suggestions that it has ties to the People's Liberation Army. Huawei's low-profile chief executive officer, Ren Zhengfei, a former PLA soldier, founded Huawei in 1988.
"It's a private company. It's 100 percent owned by the employees," said Lee. "It has nothing to do with the PLA."
Huawei's image was bruised when US giant Cisco Systems Inc sued it in 2003, accusing the firm of copying its intellectual property and infringing on patents. Last year, Cisco dropped the suit after Huawei took steps to address its concerns.
"It may not be that any of those are valid issues, but certainly those would be played up by foreign vendors lobbying (against them)," said Clark. "Telecoms is a highly political industry.
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