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China's Telecom Gear Champs Invade U.S.

 August 02, 2007

For China's high-flying manufacturers of telecom equipment, the U.S. market has always been a no-go zone. The Chinese government wants its companies to go global, but for Huawei Technologies and ZTE, that has meant heading to the developing world.

Customers in Southeast Asia, the Middle East, sub-Saharan Africa, and Latin America have all been receptive to Chinese-made equipment that performs almost as well and costs far less than comparable gear from Cisco (CSCO), Nortel (NT), and Alcatel-Lucent (ALU). And while the Chinese made some forays into Western Europe they stayed clear of the U.S. after an embarrassing legal challenge by Cisco in 2002 cast an unflattering light on Huawei for alleged copying.

That timidity is now starting to fade. Both Huawei and ZTE have been boosting their sales and marketing teams in the U.S. and becoming more aggressive in trying to land deals with American carriers. Huawei last month inked a deal with Cricket Communications, a subsidiary of Nasdaq-listed Leap Wireless International (LEAP), to supply its latest-generation CDMA multiplexing technology to the San Diego wireless carrier.

A Flurry of Deals for ZTE
The agreement, signed July 11, was the second in the past 12 months for Huawei with Leap. On Aug. 15 last year, Huawei announced that it had won a contract to launch 3G networks for Leap's Cricket subsidiaries in Boise, Idaho, Reno, Nev., and Spokane, Wash.

ZTE, headquartered in the southern Chinese city of Shenzhen along with Huawei, is used to playing second fiddle to its larger cross-town rival. But it has scored the highest-profile win to date in the U.S. On July 17, the Chinese company and Sprint Nextel (S) announced an agreement for ZTE to provide the U.S. carrier with an undisclosed amount of wireless broadband, or WiMAX, equipment.

ZTE has made some smaller deals, too, and George Sun, chief executive of ZTE's American subsidiary, says that the company is also in the final stages of negotiations on a deal to provide ZTE cellular phones to an American customer. After years as a U.S. also-ran, "we have successfully penetrated this market," boasts Sun.

News Source : http://www.businessweek.com