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Chinese telecommunications equipment makers such as Huawei Technologies and ZTE Corp are increasing market share in Europe and the United States by beating foreign manufacturers on price.

 

The international expansion by Chinese firms is putting competitive pressure on global giants such as Alcatel, Ericsson and Siemens, industry insiders said.

 

"In addition to strong performance in the developing countries, we have expanded our business in the high-end Western market," ZTE said in a statement delivered to Shanghai Daily Monday, declaring 2005 to be a "milestone year."

 

ZTE has signed agreements with 30 of the world's top 100 telecom operators, including France Telecom and Hutchison. ZTE's products, from broadband equipment to third-generation phones to next-generation networking, are increasingly being sold in the West, according to the Shenzhen-based firm.

 

Huawei, also based in the south China commercial city, said it has won several important deals from Britain Telecom and Vodafone for 3G phone and network infrastructure.

 

"Our business in the United States, though one or two years behind our European business, has also jumped rapidly," Huawei spokesperson Fu Jun said yesterday, without revealing detailed figures.

 

Earlier, Chinese firms focused mostly on emerging markets, including those in Africa, the Middle East and Russia. But with made-in-China products 30 to 40 percent cheaper than foreign components, Huawei and ZTE are now directly challenging the giants that dominate the Western market, industry insiders said.

 

And Western firms are making new efforts to cut costs to compete. The latest example is the merger of Alcatel SA and Lucent Technologies Inc.

 

Alcatel will acquire Lucent through a US$13.4 billion stock swap to form a new firm with annual revenue of US$25 billion. In the process, some 8,800 jobs will be cut to save costs.

 

Huawei and ZTE declined to comment on the Alcatel and Lucent tieup Monday.

 

Huawei earned US$8.2 billion in revenue in 2005, and overseas accounted for US$4.75 billion. Huawei now has a presence in 14 European and North American countries, including Germany, France, Britain, Spain, Portugal, the United States and Canada.

 

Hong Kong-listed ZTE will publish its 2005 fiscal report on Friday.

 

The overseas expansion by Chinese firms, especially in countries where 3G services are available, will help them gain market share when the 3G era dawns in China this year.

 

"The overseas network operations will bring Chinese firms experience and make them more reliable. It will be easier for them to get deals in the domestic market," said Li Xuefang, an analyst at Beijing-based CCID Consulting Co, a research firm under the Ministry of Information Industry. 

 

(Shanghai Daily April 4, 2006)