Huawei Technologies has lined up a €20 billion credit line from the China Development Bank (CDB) to help it win telecom contracts abroad.
The two companies yesterday signed a “strategic partnership agreement”, expanding a €6.7 billion loan deal from 2004, the official Xinhua news agency reported.
Earlier this year Huawei’s smaller rival ZTE secured €10 billion in credit from the CDB and another €6.7 billion from the Export-Import Bank of China, also to help it win foreign contracts.
The lines of credit create a huge war chest for the two suppliers, enabling them to extend low-interest loans to help their customers – many of whom are in emerging markets, or are feeling the effects of the recession – to buy their equipment.
Xinhua said the CDB was putting into practice the government’s globalization strategy.
“As a major medium to long-term investment bank, CDB implements the country’s globalization strategy, supporting strong companies to expand their businesses abroad,” Xinhua said.
The state-owned bank had €54 billion in foreign currency loans outstanding at the end of August.
CDB and Huawei had already worked closely for the past ten years and had cooperated in foreign markets since 2004, Xinhua said. Since the financial crisis broke a year ago, Huawei had “grasped the counter-cyclical development opportunity” to win business from foreign service providers, it added.