After months of allegations and denials regarding its potential as a threat to US national security, Chinese telecommunications vendor Huawei is giving up its efforts to expand into the US market and will instead focus on "the rest of the world."
"We are not interested in the US market anymore," said Huawei executive vice president Eric Xu at an analyst conference in Shenzhen, China. "Generally speaking, it's not a market that we pay much attention to.
"We now have a deeper understanding of the market," added Xu, who scaled back his previous prediction that Huawei's $ 2bn enterprise division could reach $15bn in annual sales in the next four years. "If we can achieve $10bn by 2017, that will be good enough for me."
"Don't get me wrong, I'd love to get into the US market," Huawei CTO Li Sanqi told IDG News Service. "It's a high-value market. We today face reality. We will focus on the rest of the world, which is reasonably big enough and is growing significantly."
The announcement comes as US federal regulators have been putting pressure on Softbank to steer clear of Huawei gear as a condition for approval of the Japanese wireless carrier's proposed takeover of Sprint Nextel.
According to reports, Sprint and SoftBank were prepared to promise that if the $20bn buyout is approved, they will rid their systems of Huawei telecommunications equipment and give US authorities - including national security officials - unprecedented visibility into any future network improvements.
Suspicions of Huawei's trustworthiness were fanned in October 2012 when a US congressional subcommittee issued a report citing Huawei and fellow China-based telecommunications company ZTE for secretive business practices and ties to the Chinese communist government and claims that its equipment could be used to spy on US companies and government agencies. Other countries, including Canada, Australia and New Zealand, have expressed similar concerns and have banned Huawei, which was founded by a former Chinese military officer in 1987, from bidding on government contracts.
While the congressional committee's report was damning, the White House had a different opinion. Sources say the White House conducted its own review of Huawei's business practices and security threats and found no evidence of spying or the potential for espionage.
Although its forays into the US market have been rocky, the UK government appears to have welcomed Huawei with open arms. The company is investing is constructing a new UK headquarters in Reading as part of a £1.3bn investment in this country. Huawei also has a huge footprint in Asia and a growing base in Europe and Latin America.
Huawei has been investing heavily to attract global partners in its effort to become a $100bn company, according to officials. The vendor in February announced a new Dandelion Empowerment Programme to spread the seeds of its products around the world to grow market share.
Through the Dandelion programme Huawei is providing its global partners access to training on the latest information and communication technology (ICT) innovations and systems. The program includes partner-needs analysis, in which Huawei will help its solutions providers understand their capabilities gaps and undertake individual training plans.
Thus far, The company reports recruiting more than 300 top-tier partners and 2,500 resellers in regions around the world.
Earlier this month Huawei reported stellar financial results, forecasting a double-digit compound annual growth rate over the next five years after a 2012 in which sales grew a robust 8 percent.
For the 2012 calendar year the Chinese giant's revenue rose to $35.5bn, up from $32.9bn in the prior year. Net profit jumped 32 percent to $2.5bn, equating to net margins of about 7 percent.
Chris Gonsalves is vice president of editorial at Channelnomics.
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