The Well-Heeled Upstart on Cisco's Tail

The campus of Huawei Technologies Co. in Shenzhen, just over the border from Hong Kong, looks like a giant construction site. In one area, the network-equipment maker is erecting a 21-story steel-and-glass tower that by mid-2003 will accommodate the company's 10,000-strong research and development staff. Across the campus stand five more buildings that will provide additional space for Huawei engineers. Another set of offices is due to open this fall. And down the road is the Hundred Herb Garden, a residential complex that includes tennis courts, a swimming pool, and three-story townhouses to accommodate 3,000 Huawei networking and software experts.

Huawei's building frenzy reflects its determination to be a world leader in switches and routers. These make up the backbone of corporate networks, as well as the Internet itself. Huawei aims to catch up quickly with industry leaders Cisco (CSCO ), Nortel (NT ), and Alcatel (ALA )--mainly by selling reliable, low-cost knockoffs of their products. But the upstart also hopes to match the big boys in innovation. And although its market share is still minuscule outside China, the mere mention of its name can raise pulse rates in Silicon Valley.