Huawei uses Davos as platform to emphasise European growth plans

Huawei made use of the World Economic Forum in Davos this week to reiterate the importance of the European market to its growth strategy, as the U.S. continues to freeze out the Chinese equipment manufacturer because of concerns over spying.

According to a report from Bloomberg, the company's founder and president Ren Zhengfei also again stressed that the company has never received a government request to spy. Ren added that the U.S. is "not a must for us" as the company has "so many other markets."

"We could surely do more in Europe. We have good relationships with European governments such as the U.K., France and Germany," Ren was quoted as saying.

Huawei rarely lets an opportunity pass to emphasise its ambitions for Europe. In October last year, the company said it plans to increase its procurement spending in the European Union as part of its overall investment strategy for Europe, and expects to make direct purchases worth an estimated $4.08 billion (€3.6 billion) in 2015 after spending an estimated $3.7 billion 2014.

The Chinese vendor has also previously said it plans to hire 5,500 more staff in Europe over the next five years and to double its R&D staff in the next three years.

Huawei was recently forced to defend its 2014 earnings after preliminary figures for the year showed that operating profit growth slowed relative to 2013. However, CFO Meng Wanzhou said that it was not appropriate to compare 2014 operating profit with 2013, and that the Chinese vendor's focus on growth and profitability in 2014 paid off in the form of a stable profit margin of around 12 per cent.

The company's mobile device division--its Consumer Business--generated the highest annual revenue rise among Huawei's business units in 2014. Sales at the unit grew 32 per cent year-on-year, which the company said was due to higher sales of mid-range and high-end handsets amid a rapidly growing global smartphone market.

Speaking in Davos, Ren said the company's main focus in its mobile business is on margins: "We only look at two things: profit and stockpile. It's such a low margin business, if you have a large stockpile, it eats away at all profits. We don't want products that are low cost, low price and low quality," Ren said, Bloomberg reported.

For more:
- see this Bloomberg article

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