Huawei to Double Europe R&D Team as Sales Rise

Photographer: Chris Ratcliffe/Bloomberg

A Huawei Ascend P7 smartphone during its launch in Paris. Huawei is focusing investment on countries where it has been accepted, after lingering suspicions in the U.S. that its gear may give Chinese intelligence services the opportunity to tamper with networks for spying, the company said last month. Close

A Huawei Ascend P7 smartphone during its launch in Paris. Huawei is focusing investment... Read More

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Photographer: Chris Ratcliffe/Bloomberg

A Huawei Ascend P7 smartphone during its launch in Paris. Huawei is focusing investment on countries where it has been accepted, after lingering suspicions in the U.S. that its gear may give Chinese intelligence services the opportunity to tamper with networks for spying, the company said last month.

Huawei Technologies Co. plans to double its research and development team in Europe as it competes for business in the region against rivals including Alcatel-Lucent (ALU) and Ericsson AB. (ERICB)

China’s biggest maker of phone-network gear will double the number of research and development employees to 1,700 in Europe in the next three years, Chief Strategy Marketing Officer William Xu said in an interview in Milan. The hiring is part of the company’s plan to add about 5,500 workers in the region in five years, he said.

Huawei is focusing investment on countries where it has been accepted, after lingering suspicions in the U.S. that its gear may give Chinese intelligence services the opportunity to tamper with networks for spying, the Shenzhen-based company said last month. Revenue from Europe, the Middle East and Africa rose 9.4 percent in 2013 to the equivalent of about $13.6 billion, more than Asia-Pacific and the Americas combined.

Increased competition “is good for both business and security,” said Stefano Zanero, an assistant professor at the Polytechnic University of Milan who specializes in cybersecurity. “The news seem to imply that most of the engineering and R&D will remain in China, so this specific announcement doesn’t have any immediate positive security repercussions.”

Huawei now has about 7,700 employees in Europe, Xu said. That’s about 5 percent of its global workforce of approximately 150,000 in 2013. “Huawei’s 2013 European procurements exceed $3.4 billion,” Xu said.

Italian Business

European carriers have been slower than their U.S. or Asian peers to spend on a new generation of faster networks. Huawei is strengthening its business in Italy, where it has established its only microwave research-and-development center in the world, in Milan, with more than 100 engineers. The company has about 800 employees in Italy.

Alcatel-Lucent forecast in April that demand for network equipment from European operators would pick up in 18 to 24 months. This week the French company announced it hired Huawei’s former vice president for Western Europe to head its Italian unit.

Huawei’s Italian customers include phone company Wind Telecomunicazioni SpA, owned by Russia’s VimpelCom Ltd. (VIP) Last year, Wind hired Huawei and Milan-based Sirti SpA to supply equipment and infrastructure services as it spends 1 billion euros ($1.4 billion) over five years to build a high-speed mobile network.

Sales Forecast

Xu welcomed a trip by the country’s prime minister to China this week. “Huawei and the Italian government have always had friendly communications,” Xu said. “The visit of Italy’s Prime Minister Matteo Renzi in China will enhance the understanding between two countries.”

The company forecast in April that its sales will rise 77 percent to $70 billion by 2018, from $39.5 billion last year.

To reach its target, Huawei is broadening its portfolio with smartphones, tablets and business-computing products, as well as cloud services. Ericsson, which divested its mobile-device business to focus on network equipment, has reported stalling revenue for two consecutive years.

Cybersecurity requires global cooperation, Xu said when asked about the prospect of collaboration with the U.S. government. “Cyber attacks can come from any place of the globe,” he said. “That’s why cybersecurity requires collaborative efforts from governments, operators and the whole industry. We need also to establish global cybersecurity standards.”

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Robert Valpuesta, John Bowker

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