Chinese network vendors splash down

Two of China’s largest network equipment makers used this week’s Supercomm trade show here to signal their entry into the U.S. market.

ZTE Corp. and Huawei Technologies Co. Ltd. both offer a wide range of equipment and may be able to parlay the relatively low costs of design and manufacturing in China into a competitive advantage against better known North American and European vendors. China’s network gear makers have grown up with a rapidly developing fixed and wireless infrastructure in the country. Both companies are based in Shenzhen, a booming economic centre that borders Hong Kong.

ZTE, a major maker of both mobile and wireline equipment, looks to seize business through a combination of low cost, quick project turnaround and technological innovation.

ZTE has had research and development facilities in the U.S. for about two years and is now piecing together a marketing plan that probably will involve selling both directly and through U.S. partners, company officials said Wednesday at a news conference at the show. The entry into the U.S. market is the latest step in an international expansion plan that began in 1996 and has seen the company break into more than 40 countries.

The company holds about 23 per cent of the market for telecommunications equipment in China, with conventional carrier switches as its mainstay. It also makes a broad range of GSM (Global System for Mobile Communication) and CDMA (Code Division Multiple Access) wireless network gear and has played a role in the recent development of a nationwide commercial CDMA network in China. Other areas of expertise include data network equipment, optical gear and programmable “softswitch” platforms for packet-based networks that carry data, voice and video. ZTE also is conducting trials of 3G (third-generation) high-speed mobile technology in China.

ZTE six months ago opened an optical research facility in Richardson, Texas, according to John Yu, general manager of the U.S. optical operation. The company has had a research and development agreement with CDMA technology company Qualcomm Inc. since 1999 and has a wireless research facility near Qualcomm’s San Diego headquarters, as well as a site for softswitch development in New Jersey, Yu said.

ZTE officials declined to provide details of the company’s marketing plan for the U.S. They pointed to its cost advantage over big-name competitors in North America and Europe as an initial advantage, but said ZTE would have to bring other capabilities to bear. Because of its greater efficiency and smaller size, the company can turn around customized systems for customers in one-third or less of the time bigger competitors would require, they said. ZTE also believes it ultimately will be able to compete on innovation as well.

The company has had discussions with possible partners in the U.S., officials said. In most other countries outside China, ZTE has marketed its products both on its own and through partners.

Despite currently slow capital spending by carriers, Yu said now is a good time to enter the U.S. market, comparing the move to buying stock at its low point. Hiring skilled staff in the U.S. also is easier now, he added.

Huawei on Tuesday introduced FutureWei Technologies Inc., its U.S. subsidiary, which will develop and sell both enterprise and carrier network equipment, according to a Huawei statement. Its lineup will include metropolitan optical and broadband access gear, LAN switches, VoIP (voice over Internet Protocol) gateways and videoconferencing systems.

FutureWei, based in Plano, Texas, has regional centres in Reston, Virginia, and San Jose, California and will conduct research and development as well as design and marketing of products in the U.S. FutureWei will sell products through channel marketing and direct sales and by making products for sale under other brands through original equipment and device manufacturer arrangements.

Also at the show, Huawei introduced the OptiX Metro 1600 and Metro 3600 Multiservice Provisioning Platforms, which are equipped for SONet (Synchronous Optical Network), PDH (plesiochronous digital hierarchy), ATM (Asynchronous Transfer Mode) and IP metropolitan networks. Huawei also introduced the SmartAX series of broadband access products, as well as enhancements to its ViewPoint 8000 videoconferencing platform.