ZTE, Huawei begin to expand European market

Absrtact: Cisco's attitude suddenly turned around only one months after terminating its sales partnership with ZTE. Recently, the company's CEO, Chambers (pictured), said in a first-quarter earnings conference call, ZTE is a partner, not a competition

Cisco's attitude suddenly turned around only one months after terminating its sales partnership with ZTE. Recently, the company's CEO, Chambers (pictured), said in a first-quarter earnings conference call, ZTE is a partner, not a competitor. Cisco will expand its cooperation with ZTE in the future, and is committed to long-term development in China.

Suddenly the good

ZTE and Huawei

Last month, when the United States investigated ZTE and Huawei events were abuzz, Cisco was speculated by the industry behind the scenes. Moreover, Cisco has unilaterally ended its seven-year partnership with ZTE. The spate of events has made Cisco a target, perhaps under pressure, and Cisco has begun to show its Chinese manufacturers.

After expressing his relationship with ZTE, Chambers also said Cisco had nothing to do with the U.S. Congress report on the product safety threats issued by Huawei, and that the US and China would resolve the conflict and not trade wars. "Cisco has always regarded Huawei as its main competitor, and previous disagreements have led to little likelihood of a trade war." "You will see both sides trying to solve this problem because it is beneficial to both the world and the economies of both countries," he said. The divergence has put pressure on Cisco's business in China. ”

Last month, the US Congress reported that Huawei's products threatened U.S. national security because its products were vulnerable to cyber-espionage attacks. The report repeatedly points to a strong link between Huawei and the Chinese government. Huawei has defended the safety of its products and said it has no connection with the Chinese government.

Forced to compromise

From market pressure

At present, the domestic Internet and data transmission, routers, switches and other network equipment market, Cisco occupies most of the market share. And as the sound of information security amplified, Cisco began to be challenged by all sectors.

Not long ago, China Unicom (Weibo) has completed the "China169" backbone of Jiangsu Wuxi node of the core cluster router relocation project, and this is the relocation of Cisco router CRS. In this regard, some analysts believe that Cisco's product vulnerabilities and backdoor problems, it is the main reason for operators to worry about or even replace their equipment.

In fact, with the continuous development of Internet technology, network security has increasingly become the focus of attention of operators. Previously, Cisco's exposure to security leaks has sparked widespread concern among operators.

Cisco is rightly worried about the Chinese market, although its first-quarter results last week exceeded expectations, but the two-quarter profit is expected to be flat and revenue growth slowing. Chambers expects the situation to deteriorate further before the real upturn in the European market, in the same view as he did on the fourth quarterly conference call in August.

Seeing such earnings forecasts, the Chinese market is critical to Cisco, which will be in a bad position once it loses the Chinese market and the European market does not improve.

Lack of innovation

Lead to standing still

Why is Cisco considered behind the scenes? Why did Cisco and ZTE Hope to get back together after breaking up? Perhaps the biggest cause of a series of events is the lack of innovation in Cisco.

Careful research has found that, in the past decade, Huawei insists on opening up the road of innovation, while Cisco under the normal competitive means to suppress Huawei, gradually towards closure.

Based on official data from two companies, over the past decade, Huawei's sales have grown 7 times times, its employees have grown 10 times times, while Cisco's sales in the past decade have grown only 1 time times, and its employees have grown only 1 time times, Cisco's market capitalisation has fallen below hundreds of billions of dollars, just around 1/5 per cent of the peak.

It can be seen that the rapid development of Huawei's insistence on open innovation and the extraordinary attention of Cisco Chambers to Huawei have allowed Cisco to use political means to crack down on Huawei and keep Huawei out of Cisco's stronghold.

Cisco seems to live only in the shadow of once glorious. March 27, 2000, Cisco's total market capitalisation reached 555 billion U.S. dollars, at one point overtook Microsoft as the most valuable company in the United States. However, the boom is not long, 2010 Cisco income of 43.218 billion U.S. dollars, 10 years only increased 1 time times, and at the end of 2011, Cisco's market value has fallen below 100 billion U.S. dollars, less than the peak of around 1/5.

Cisco's lobbying spending hit a record high of $2.8 million trillion in 2011 when the House Intelligence Committee launched a survey of Huawei and ZTE, according to OpenSecrets statistics from nonprofit organizations.

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ZTE, Huawei begin to expand European market

The US market is so upset that ZTE and Huawei will focus on the European market, and the two global companies will not be hanged in a tree.

France has welcomed China's telecoms equipment companies, saying there will be no obstruction to businesses like China's communications. France will treat all Chinese companies that enter Europe fairly. In addition to France, the British Prime Minister's government has also expressed support for Huawei's business in the UK.

It can be seen that ZTE, Huawei's strength is still recognized by many countries and regions. "Only by winning the markets of developed countries is the true triumph of ZTE's globalisation." ZTE Chairman Houweigui said. A long time ago, ZTE took to the United States to seize the European market, ZTE Grand X in the "Heart of Europe" Austria overseas start, which also opened the ZTE occupy the high-end market in Europe long-term strategy.

Not only ZTE, but Huawei also said its investment in Europe was second only to Geely, the number one in China, and the number of European employees employed in the first place, reaching 7300. Huawei executives said they would announce new investment projects in Europe within weeks and stressed that their development plans would not be affected by congressional reports. Huawei wants Europe to focus on expanding its smartphone business.

Despite these potential challenges, Huawei and ZTE say Europe is still more friendly to them than the US. The European market is more open and transparent than the US market.