The presence of three senior executives from China's biggest telecommunications contractor in Cairo is a sign of the growing attractions of the Middle East and North Africa (MENA) region's potentially enormous and largely untapped telecommunications market.
The presence of three senior executives from China's biggest telecommunications contractor in Cairo is a sign of the growing attractions of the Middle East and North Africa (MENA) region's potentially enormous and largely untapped telecommunications market. Huawei Technologies' vice-presidents Tian Feng, Joe So and Sun Hanwei were in the Egyptian capital on 3-4 December to open Huawei's new $20 million facility in Nasr City. The facility, which comprises a training centre and a technical assistance centre, forms the nucleus of an ambitious regional investment strategy that will see the company double its turnover in the region this year. Although Huawei already has a strong presence in the MENA region, with sales in 2004 of $446 million from operations in 22 countries, this represented a mere 12 per cent of its global sales of $3,827 million. By the end of 2005, Huawei is targeting MENA revenues of $1,000 million. Huawei Technologies was established in Shenzhen in 1988 as a private company providing telecommunications systems and technology in China. Over the subsequent 17 years, the company has grown rapidly at home and abroad; it is the region's leading code division multiple access (CDMA) technology provider, with a 65 per cent market share, as well as being one of the world's biggest optical fibre network and data communications providers. The company currently operates in more than 90 countries, has contracts with more than 300 mobile and fixed-line operators across the globe and supplier agreements with almost half of the world's top 50 telecoms operators. Huawei's product portfolio includes both network and wireless products, as well as value-added services such as wireless data and intelligent networks. Huawei cites a strong emphasis on research and development (R&D) as one of the reasons for its rapid ascent. Huawei reinvests about 10 per cent of its revenues back into R&D and as well as operating six research centres in China, it operates R&D facilities in the US, India, Sweden and Russia. Nearly half of its 24,000 employees are involved in R&D. A second factor in Huawei's success story is its 'reasonable price strategy'. In the past, the low-cost base of Chinese companies has been associated with an inferior quality of product. But Huawei has been able to circumvent this image by forming partnerships with technology giants such as the US' IBM, Intel and Microsoft. The opening of Huawei's new facilities in Cairo coincides with the signing of a new contract between the Chinese contractor and Egyptian fixed-line operator Telecom Egypt which will see the firm supply and install a wireless fixed network using CDMA technology. The company also has its eye on the opportunity to supply technology to the winner of Egypt's third GSM licence. Bids for the licence are currently under evaluation. With most Western telecoms markets already saturated, the relatively untapped MENA market offers better opportunities for Huawei, with Egypt and Saudi Arabia seen as the territories with the greatest potential. With a population of about 70 million but mobile phone penetration of only 6 million, Egypt offers enormous growth potential. A similarly low rate of penetration in Saudi Arabia offers comparable attractions. Add to this the young, growing populations across the MENA region and the excitement over the licensing rounds in Egypt, Tunisia and Algeria, and it is easy to understand why Huawei is placing such emphasis on the region. With the fast pace of technological development in the telecommunications sector, there is always an element of uncertainty about whether the next technological leaps forward will run predominantly on fixed or wireless networks. But there is little reason to doubt Huawei's grounds for optimism. The company's expertise in intelligent optical n
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