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New Huawei Enterprise chief handicapped by politics, not products

David He, newly appointed president at Huawei Enterprise U.S., is ready to turn over 100% of sales to partners. He is optimistic despite cloud of Chinese cyber spying.

Chinese tech giant Huawei has been trying unsuccessfully for years to get on the short list of large U.S. enterprises and carriers in the market for information and communication technology. Nevertheless, with perseverance drawn from its roots in a country where patience is a virtue, Huawei is making another major push in the United States -- this time with a new head of its U.S. subsidiary.

Last month, David He, former head of marketing and sales at Huawei's enterprise business group, took over as president of Huawei Enterprise U.S. with the single immediate goal of adding resellers to the list of 300 the company currently has.

"I need to find more partners and more customers to show Huawei solution capabilities," He said. "For me, my target is 100% of revenue comes from partners."

Yet He's strategy for convincing resellers, IT service companies and tech consultants to add Huawei Enterprise to their lists of preferred vendors is not clear. He declined to provide details or to discuss what he would do differently from his predecessor, Ming He, who became the country general manager for U.S. operations.

Secrecy aside, He's plans are likely to be derailed not by anything he does, but by a 2012 congressional report that effectively shut out the parent company, Huawei Technologies Co. Ltd., from the U.S. market. The report recommended U.S. carriers avoid Huawei products, citing concerns that the Chinese government could use them to spy on Americans.

While Huawei has repeatedly denied the allegations, the U.S. subsidiary has been left trying to sell a tainted brand, Sathya Atreyam, an analyst at IDC, said. Until China and the United States reach an agreement on cyber spying, whatever He plans to do to attract resellers and boost sales is unlikely to succeed.

"They have a whole bunch of things to leverage upon, but all that will be a zero if the political scenario doesn't change at the government level," Atreyam said.

Huawei technology

Huawei's strengths include competitive technology in all the hottest markets -- cloud and internet of things (IoT) infrastructure and big data analytics, Atreyam said. "Everything looks credible, and there are good proof points of their success, so there's no doubt that there's some quality in those solutions."

Indeed, He declined to discuss the subsidiary's revenue, but the parent company reported last month that revenue in the first half of the year grew 40% globally to $36.7 billion. The company didn't disclose net profit. In the first six months of 2015, Huawei's revenue increased 30% from the same period in 2014.

Besides China, Huawei has a strong presence in Europe through partnerships with large carriers, including Deutsche Telekom in Germany and Vodafone in the United Kingdom, and 18 research and development sites in eight European Union countries. Huawei spent $9 billion in R&D last year, roughly $1 billion more than Apple.

In the United States, Huawei has focused primarily on rural carriers with 5,000 to 10,000 subscribers, Atreyam said. Within that pool of between 150 to 200 customers, Huawei is likely to sign deals worth less than $1 million.

The company could also find sales among small and medium-sized businesses, Atreyam said. "That's pretty much what their scope is at this point, and it will be for some time until, at the highest levels, things get cleared up."

He said Huawei's strengths in technology and research are all he needs to turn U.S. tech buyers of all sizes into customers. "For the customer and the partners, Huawei can create value."

That may be so, but it's likely He will need perseverance and patience while working in a hostile U.S. market.

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