Huawei Quietly Builds Up Its U.S. Presence, But Needs Channel Partners To Start Making Some Noise


China-based electronics giant Huawei is hungry.

The company aims to dominate key areas of the IT market, from mobile phones to carrier-grade networks, and has the kind of growth most of its competitors would die for: fast-growing sales, strong profits, a hearty research-and-development budget, and all the hallmarks of a worldwide success story. Except it's not a worldwide success story, due to its underwhelming market presence in one part of the globe: the U.S.

Huawei puts on a show about not caring about the U.S. market.

At the company's annual Huawei Global Analyst Summit in April, which CRN attended, much was made of the company's strength in Europe, Asia, Africa and Latin America, with nary a word said about the U.S. except when pressed by an analyst or reporter. Huawei's' current rotating CEO last year even said the company is not interested in the U.S. market, only to later explain that he meant the carrier network business and not the market as a whole.

[Related: Huawei's Revenue Picture]

Huawei's business in the U.S. has been held back in large part due to the U.S. government's concerns that networking and other enterprise gear from Huawei, whose chairman is a former officer in China's People's Liberation Army, could be used to spy on government and commercial organizations.

As a result, total U.S. 2013 market sales of Huawei products fell 1.3 percent compared with the previous year, even as total sales worldwide rose 8.5 percent, according to Huawei.

Despite government spying concerns, and despite a slow ramp-up in the U.S. including a false start when a joint venture between Huawei and U.S.-based security developer Symantec dissolved in 2011, Huawei knows it must succeed in the U.S. market to get the one thing it can't find anywhere else: access to the American consumers' mind-set.

Huawei: Success In The U.S. A Priority

Patrick Zhang Shunmao, president of marketing and solutions for the Huawei enterprise business, told CRN that while Huawei has only a small share of the huge U.S. market, it is a market the company simply cannot ignore.

Zhang told CRN that the U.S. is the world's technology leader, making it important that Huawei succeed in that market despite the perceived security issues.

"Innovation depends on two wheels: customer requirements and technology," he said. "So a company can't just invest in technology. Technology is important, but not everything. The other wheel is customer requirements. U.S. customer requirements are usually advanced compared to other areas. To keep in a leading position, for us the U.S. is not just technology, but also its lead in in customer requirements."

Tom Costelloe, marketing manager at Buffalo, N.Y.-based VoIP Supply, a supplier of VoIP equipment and complete VoIP solutions, said he has seen an interest in the Huawei products the company carries, but they haven't taken off as expected.

"They are a new name to many in the U.S. market and not as well-known here as in the rest of the world," Costelloe said.

Huawei's acceptance in the market depends where in the industry a partner sits, said Mario Guerendo, president and CEO of EcoTech Solutions Group, an Indianapolis-based solution provider and Huawei channel partner.

"In the state, local and federal government, some people are OK with the Huawei brand, and some are completely against it," Guerendo said. "Because of controversy from the government over Huawei, even people who are OK with the brand may not want to purchase it."

However, that controversy has less of an impact in commercial accounts, Guerendo said. "A couple of people ask about it, but they tell us, 'You are our VAR, and if you trust the brand, we're OK with it,' " he said.

When asked about last year's drop in Huawei's North American sales, Zhang told CRN the main cause was a fall in carrier sales. However, he said, sales into the U.S. of enterprise products, including servers, storage, networking and mobile equipment, should reach $100 million this year, up from $60 million in 2013.

Huawei looks to achieve this growth with a focus on three primary verticals, including education, retail and ISPs, Zhang told CRN. The company's storage, eLTE (enterprise LTE), and networking switches and Wi-Fi equipment are all targeted at those verticals, he said.

That represents a change in strategy for Huawei, which used to try to go everywhere in the U.S. market. "Our biggest mistake was starting in the U.S. with our market segments too diversified," he said. "We weren't focused enough on specific marketing."

That was an issue, Guerendo said.

"Huawei has reduced its portfolio," he said. In the beginning, it did too much. This focus helps us with our telepresence, Wi-Fi and routing business. We now have Huawei-certified engineers, and we're getting all sorts of training, including on-site and via telepresence."

About 90 percent of decision-making in the U.S. market is done locally, depending on certain pre-authorized parameters, Zhang said.

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