Huawei facing challenges in EMEA

Fast growing Chinese mobile phone maker Huawei has some tough challenges ahead, analysts believe. 

China's largest mobile hardware manufacturer is focusing its international expansion efforts on Europe, the Middle East and Africa.

"Huawei has made a tremendous investment into local facilities, staff and marketing which has left it at risk of being over-extended", said Matt Walker, senior analyst at Ovum. "Clearly Huawei is taking some bold risks in the region." 

The expansion follows major contract wins, mainly in infrastructure projects, with international customers including Vodafone, Telefónica, Orange and Deutsche Telekom. 

Projects like these have catapulted Huawei into the ranks of the world's top five telecoms equipment suppliers.

The most important challenge, Walker believes, is implementing all its recently-won mega-projects effectively over time.

"If Huawei does not succeed with the latter, it will quickly find out how fickle service providers can be when performance is sub-par," he said.

Other challenges for Huawei over the next few years include consolidation by the West's mobile suppliers, and a growing threat from other Chinese firms, including some founded by ex-Huawei staff, eroding Huawei's market and its labour pool.

Huawei's home base of China accounts for 35 percent of its sales, with another 18 percent coming from the Asia-Pacific region.

The company's strength in emerging markets will be an important weapon in its armoury as the battle for handset market share intensifies, analysts believe.

ABI Research recently forecast that emerging markets in Asia, Africa and Latin America will be home to more than 80 percent of new mobile phone subscribers in the next five years.

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