Huawei sets sights on Europe

Huawei intends to establish Europe as its "second home", with plans to almost double its headcount in the region to 13,000 from 7,000 currently.
Li Sanqi, CTO of carrier business group, said the US is not a focus now -- for obvious reasons. The US, he said, accounts for just 30% of worldwide telecom spend, down from 70% a decade or so ago.
Speaking at the company's analyst summit on Tuesday, he said Huawei has to be more business driven than in past when it was technology driven.
In a shift from the past, when it was a follower and focused on offering low prices, he said. "We now have to be a strategic partner and are now working closer with customers [telcos] to improve on the business side. They want us to be more engaged with them on TCO (total cost of ownership) issues."
The company's overall revenue grew 9% last year, which corporate controller CT Johnson said was faster than the market and "very robust growth and in a year filled with political and macro economic challenges."
He forecast 10% annual growth for the next five years. Its operating margin stayed at 9.1% while its gross margin increased 2.3 percentage points to 39.8%. China accounted for 33% of revenue (growing 12.5%), Asia 17%, EMEA 35% and the Americas 14.5%.
The company's sales have jumped from $2.7 billion 10 years ago to $35.4 billion last year. It now has 150,000 employees -- up from 22,000 in 2002.
To cope with that kind of growth, he said requires making significant changes in the way you do business "to ensure we're optimized for growth going forward." One way it intends to boost its "organizational vitality" is it has "amped up the recruitment of outside talent to augment the home-grown talent with people who have experience in other countries and other companies."
He pointed to himself as a recent example -- he previously worked for Ericsson in North America as well as Ernst & Young in the US and Russia.
It also is delegating more authority to the frontline. "One of the things that we've heard from customers is that we need to let local staff have more authority to make their own decisions."
Johnson said it has taken a number of steps to make that happen. For example, in Australia and France it has appointed advisory boards to its local organizations.
The carrier group, which accounted for 73% of revenue last year, grew 6.7% while the consumer group's revenue increased 8% and the enterprise group expanded by 26%. He expects the carrier business to account for 60% of business by 2017. The consumer group will expand marginally to represent a quarter of revenue (23% in 2012), and the enterprise until is forecast to account for 15% of sales, up from just 5% now.
The carrier business is forecast to grow 6% over the next five years -- about the same rate as last year. By 2017, the group will have $35 billion in revenue, up from $25.7 billion last year. Mobile and fixed each account for about $8 billion in revenue while global services represents $7 billion and software $3 billion. While smaller business units, software and services are expected to increase 15% per year over that period. 
Li said the carrier group aims to be No 1 in Africa, Russia and Asia.
Johnson said R&D spend last year increased to 13.7% of revenue from 11.6% in 2011 -- $3.7 billion in 2012 (30.1b RMB) and $3.23 billion (26.3b RMB). Its16 R&D centers around the world employ 70,000 people -- almost half of its employees.