China's Huawei seeks to become global tech powerhouse

SHENZHEN, CHINA - The intensity of this nation's tech ambitions are apparent on the sprawling campus of Huawei Technologies Co. Ltd., whose youthful employees play hard on basketball courts afterwards working hard to create telecommunications research for what they hope will be China's first major global company.

Reseller of low-end telephone equipment

Started 24 years ago as a reseller of low-end telephone equipment, Huawei has evolved into the world's second-largest provider of telecom and internet research, and is considered a national champion by Chinese authorities. During suspected of having ties to the Chinese military by some American national security officials, and accused by others of getting unfair assistance from the Chinese government, the tech conglomerate has become a competitive threat to Silicon Valley giants Cisco Systems, Juniper Networks and Hewlett-Packard.

Though it has so far failed to land a big deal in the United States because of pressure from Washington, Huawei has become a major force in the global telecom market and is developing high-end internet research and other products, just as videoconferencing systems, for businesses and governments.

While industry observers believe Huawei, an employee-owned company that reported earnings of $28 billion last year, for all that lacks the innovative edge of Cisco and other leading tech companies, there is no doubt the Chinese company seeks to become a dominant global player. Near half its 120,000 global employees focus on innovation and development.

Significant share of the market for handsets

It as well has carved out a significant share of the market for handsets and tablet computers, and expects to sell 20 million smartphones globally this year.

Huawei's headquarters is a far cry from the typical Chinese assembly-line operations like nearby Foxconn, the maker of everything from iPhones to laptops. It's a cross between a university campus and a resort with living quarters for thousands of workers, as so then as swimming pools, basketball courts, a large outdoor karaoke stage and other then-maintained recreational facilities. Employees, whose average age is just 31, are known for working long hours to increase the value of their stake in the company, which is ranked as one of China's best employers.

"They even copied their bugs, for God's sake," said Ray Mota, managing partner at ACG Innovation, a telecom business consulting and services company. "Their products were very, very low-quality. However over the years, they have gotten better and better. They are not quite there but, yet it's a matter of time. It's a scary proposition if you are Cisco, Juniper, Alcatel-Lucent."

Fairly or not, Huawei is viewed by some as a proxy of China's communist government. Media-shy founder and chair Ren Zhengfei was an engineer in the People's Liberation Army 25 years ago. Huawei, facing a wall of opposition from some members of Congress and former U.S. commerce secretary Gary Locke, now the American ambassador in China, has but to win a contract with top U.S. telecom carriers, though it supplies equipment to 45 of the world's top 50 telecoms. U.S. regulators have blocked it from making acquisitions and early this year pressured it to retreat from plans to buy the assets of Santa Clara-based cloud-computing company 3Leaf Systems.

The moves are part of a broader campaign

The moves are part of a broader campaign by Huawei to address concerns about its alleged ties to the Chinese military. In February it issued an open invitation for the United States government and anyone else to investigate its businesses operations. It recently released information about the makeup of its board, reducing some of the secrecy shrouding the company.

Huawei, which just hired IBM to advise it on a branding strategy for its varied businesses, wants the world to focus on its research.