Where is Huawei Headed in 2013?

Huawei (News - Alert), a company that is touted as providing global information and communications technology (ICT) solutions, might feel somewhat vindicated after a recent report was released by Chairman Mike Rogers (News - Alert) and Ranking Member C.A. Dutch Ruppersberger of the Permanent Select Committee on Intelligence in October 8, 2012.

The report titled, “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE (News - Alert),” reveals that companies should be very careful when dealing with both Huawei and ZTE because the possibility of these companies working for the Chinese government soon is very real. During its press conference on Monday, Huawei mentioned the great numbers the company posted during this global economic downturn and little about the security issues with the company and the U.S.

"We feel that security concerns in the United States are restricted within the country and that won't have an impact on strategic decisions made by other countries. Over the past 20 years, we have not had any incidents based on security issues," said Cathy Meng, chief financial officer, Huawei, in a statement. The CFO further commented about protectionism and the effect it has on free trade, although the trade imbalance greatly favors China with the United States.

The above comment was made during the organization’s financial report for 2012 where it reported record numbers. The company’s net profit rose by 33 percent to 15.4 billion Yuan or $2.5 billion. Revenues were up by eight percent for a total of 220 billion Yuan or $35.4 billion for the year. The company expects figures to increase by 12 percent next year due to smartphone sales and cloud computing.

Meng added that Huawei is going to be making up to five percent of increased capital investment in telecom, and that cloud computing and the smartphone penetration rate is still low and there are opportunities to be had. The company is seeing encouraging growth and strong sales in Africa, Asia and Europe as of late, but news of the report is still hampering the growth the company thinks they should be experiencing.

Huawei was founded by Ren Zhengfei, a former Chinese military engineer. It got its start by selling imported telecom equipment and moved to manufacturing its own equipment. Besides reporting on the financial status of the company, Meng commented that it was trying to "honor its commitment to transparency." The company still claims it is owned by its employees and there is no truth to statements claiming the Chinese military or government has any ownership.

Whether the report will have any further impact on the company can only be proven over time, but Huawei says it now serves 45 of the 50 biggest telecom carriers in the world. This gives it access to the largest markets in the world and with an annual investment of $4.7 billion for R&D this year, the company will continue to grab larger market shares.

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