Huawei, ZTE stalled in US again

Matt Walker/Ovum
06 Dec 2010
00:00

Huawei

ZTE

were locked out of a big deal with Sprint

This would have been their biggest breakthrough since entering the US about 10 years ago. Despite this and other setbacks, the time is ripe for a push into the US. Unfortunately, the playing field for foreign vendors in China remains tilted, which inevitably provokes complaints from rivals.

For Huawei, ZTE, and select other Chinese vendors to succeed in the US, they may have to forgo the government support that helped them grow, and insist on a more open market. Otherwise, entrepreneurial politicians in the US will continue to raise the national security issue to exclude Chinese competition.

Chinese vendors’ domestic share was stable in recent years, until 2009

Both Huawei and ZTE were founded in the late 1980s but were tiny through the late 1990s. In the interim, foreign vendors were the incumbents. Over the last ten years, though, Chinese vendors have become dominant in many sectors domestically, and, for Huawei, increasingly, internationally as well.

Circa 2010, we consider Huawei one of four global tier-1 telecom infrastructure vendors, along with Ericsson, Nokia Siemens, and Alcatel-Lucent; ZTE is a leading tier-2 player. These positions are due to hard work and creativity, but have been enhanced by government support.

China has a clear policy goal of supporting local vendors – whether government-owned or not – through R&D subsidies, tax policy, banking support, and procurement policies of state-controlled telcos.

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