Image via Reuters

Like I said last week, it never seems to be good news for Huawei and ZTE, does it? The companies already stand accused in the EU of taking unfair subsidies from the Chinese government, and now the EU has opened second line of investigation in the form of an anti-dumping probe into the two Chinese companies.

Chinese Commerce Minister Gao Hucheng has already responded to the news, giving an interview to state wire service Xinhua in which he says the move would inevitably harm the interests of both sides and making finding a solution more difficult.

Elements on both sides are hoping to deescalate the situation with continued talks, but that looks increasingly unlikely, and the Telegraph quotes EU trade commissioner Karel De Gucht as saying: “We have already had three rounds of negotiations, but without any satisfactory outcome. It is better for the whole world economy to come to an amicable solution, but you need two to tango.”

But if a trade war is on the way, European companies may find they don’t like the way China does the tango. Late last year after ongoing negotiations seemed not to be shifting public opinion, China responded to American concerns about Huawei and ZTE and the potential security risk they pose by blasting American company Cisco in a full-on attack on the company in Chinese state media. It’s the trade equivalent of an eye for an eye: ‘if you smear our companies for security flaws, we’ll smear yours for the same thing.’

So if the EU really does levy trade duties on the Chinese telecoms and launch a full investigation into whether they’re violating anti-dumping regulations, is China likely to respond in kind? Very possibly. Several Chinese commenters on the Xinhua article have already pointed this out. “If you tax others, do you think they’re not also going to tax you in return?” wrote one. “No one takes a beating without trying to hit back,” wrote another. And there are several European telecommunications companies with interests in China that might be vulnerable to new trade duties or whatever other form of retribution China plans to bring to bear. Ericsson, Alcatel, and Siemens all have operations in China that could now be at risk.

The EU seems poised to fire the first shot, but whether or not the battle over Huawei escalates into a trade war will depend on where things go from there. At this point, China’s government is unlikely to ignore attempts to restrict or penalize Huawei and ZTE, but when it responds and comes to the aid of the companies it further reinforces the idea that they have closer ties to the government than they let on in public. Even so, China is unlikely to stop defending its largest and (in the case of Huawei) most internationally successful tech companies. And so, although no one really wants a trade war, one seems to be in the offing.

I wrote about this problem a while ago in the context of Huawei’s troubles with the United States; I think the mutual suspicion and distrust is so deep at this point that conflicts like this one are virtually inevitable. Huawei, ZTE, and China’s government have proved fairly unwilling to accept that other countries do have legitimate reasons to be concerned about some of their practices; at the same time, though, most other countries are so wary of China that any Chinese company looking to move abroad already has a significant competitive disadvantage. As time goes by, both sides seem to be willing only to dig further in, so I expect the high profile disputes like this to continue. That’s bad news for Chinese companies, and bad news for foreign companies wanting to do business in China.

Image via Reuters

I’m beginning to think we might as well just consider Huawei and ZTE, given that they seem to pop up together constantly in the news. And, unfortunately for both companies, it’s never something good. When we last checked in with the dynamic duo it was because they were (and still are) under investigation by Indian Intelligence authorities, and now there’s more bad news for the Chinese telecoms in the form of this Reuters report suggesting the European Union may levy trade duties against Huawei and ZTE over what it considers to be illegal subsidies from the Chinese government.

Needless to say, Huawei and ZTE don’t see it that way and deny any wrongdoing. Chinese foreign ministry spokesman Hong Lei told reporters on Wednesday:

We hope the EU can proceed from the standpoint of protecting the stable development of trade relations with China and not make promises to undertake protectionist measures or adopt restrictive measures.

I have a feeling that having an official government spokesperson step in to defend the companies is not going to help dissuade the EU or anyone else that Huawei and ZTE are entirely too closely tied with the Chinese government. And indeed, the EU is apparently as concerned about security as the US and India are:

An internal EU report last year recommended that the 27-member bloc should take action against Chinese telecoms equipment makers as their increasing dominance of mobile networks made them a threat to security as well as to home-grown companies.

The increased scrutiny bodes poorly for both Huawei and ZTE, as both companies do significant business overseas, although ZTE is probably worse off since it is already losing boatloads of money. But the concerns expressed by lawmakers in the US, India, and the E.U. should give the companies pause — if they’ve managed to scare three of the world’s biggest markets on three separate continents, perhaps there really is something wrong with the way they conduct business.

Or perhaps it’s just a PR problem. Certainly neither company could be accused of having mastered international public relations, and the occasional revelations that they’re doing things like working with the Iranian government on “big brother” domestic spy equipment haven’t helped. As I pointed out above, it also isn’t helping when the Chinese government jumps to their defense — all that does is reinforce the perception that it’s a de facto state-run company, even though that’s not the case. Obviously Huawei and ZTE can’t really control what the government says, but if China wants its tech brands to succeed abroad, it might want to consider letting them sink or swim on their own, because the current method clearly isn’t working very well.

(via Reuters)

Here are the newest rankings and China market share (where available) data from Canalys:

• 1st: Samsung, with 20 percent market share
• 2nd: Coolpad
• 3rd: Huawei
• 4th: Lenovo
• 5th: Apple, with eight percent market share

Samsung (005930:KS) and Apple are the only non-domestic brands in the top ten, continuing a trend that’s been going on for a couple of years. Canalys notes that 68 percent of all shipments within China are from domestic brands. Lenovo (HKG:0992) is aiming to outsell Samsung within China in the near future.

In contrast to the 82 million smartphones shipped in China (yes, Canalys focuses on units shipped, which admitedly doesn’t correlate with devices bought; many might be still sitting on shelves or in warehouses), the US market saw 27 million smartphones shifted.

For a rough idea of actual units sold, it’s worth noting that Samsung sold 30 million of its phones in China in 2012.

(Source: Macworld/IDG News)

Image via Reuters

On Monday, the US Department of Defense released a report that once again points the finger at China for hacking and other forms of digital data theft that pose a threat to American public and military interests. And although the report doesn’t mention Chinese telecom companies Huawei and ZTE by name, it apparently spooked Indian intelligence authorities enough that Indian intelligence agencies are now undertaking a thorough investigation of the Chinese companies.

According to the Hindustan Times, Indian intelligence has set up a testing facility in Bangalore and plans to run Huawei and ZTE equipment through the ringer.

This isn’t the first time Huawei and ZTE have found themselves in the sights of Indian authorities. Last year, India considered investigations into the telecoms, and earlier this year both were denied ‘domestic telecom’ status in the country over lingering security concerns.

Concerns about Huawei and ZTE stem from their apparent ties with the Chinese government and military. Huawei, for example, was founded by a former military officer and maintains a Chinese Communist Party office within its corporate headquarters.

(Hindustan Times via Sina Tech)

On Sunday, Ren addressed both of these rumors directly in an email sent to internal team members but subsequently published by the Chinese tech press. In it, he firmly denies the rumors of an IPO, writing that in the next five to ten years, Huawei has no plans for an IPO or for any kind of merger, segmentation, or acquisition that would get the company into capital markets. “The rumors that [Huawei] will IPO have no basis,” wrote Ren in his letter.

He was, if anything, even more blunt in his rebuttal of claims that he planned to appoint a member of his family as his successor. After laying out a number of qualities he feels his successor must have such as vision, character, and a number of business-specific abilities, he wrote:

None of my family members possess these qualities; therefore, they will never be included in the sequence of successors [for Huawei].

Harsh words if you’re a member of Ren’s family, but it’s good to see that he’s willing to address both of these rumors clearly and directly and deny them both in very clear terms. I can’t believe I’m about to write this about Huawei, but other Chinese tech companies would do well to learn from Ren’s example when it comes to squashing rumors.

(via Sina Tech)

Image via Reuters

So it turns out Huawei may not be as Cartman-esque as we originally suggested. After the Financial Times reported earlier in the week that Huawei’s executive VP stated the company is no longer interested in the US, a Huawei spokesman told the Beijing News that actually, the FT report is based on a mistranslation and Huawei does not intend to abandon the US market.

According to the Huawei spokesperson, VP Eric Xu was asked by a reporter about where the company’s new growth markets would be in the future, and he responded that they would be in developed countries, not including the United States. “This does not mean that Huawei is giving up on the US market,” said the Huawei spokesman.

But it does seem the company is placing less importance on the US. The company’s CTO Liu Sanqi said Tuesday that Huawei was “not focusing on the US market,” a quote that the company does not seem to be disputing. So, while Huawei hasn’t totally given up on the US, it certainly has turned its focus elsewhere, specifically towards Europe and Asia.

(Beijing News via Sina Tech)

UPDATE: Huawei says the Financial Times misunderstood what was said and actually it isn’t abandoning the US market.

So much for the American dream. After struggling to overcome regulatory opposition and its own reputation, Chinese telecom equipment company Huawei is finally calling it quits. At a summit on Tuesday, executive VP Eric Xu put things quite bluntly according to the Financial Times: “We are not interested in the US market any more.”

The company’s CTO Liu Sanqi elaborated a bit, telling IDG:

Don’t get me wrong, I’d love to get into the US market [...] We today face reality. We will focus on the rest of the world, which is reasonably big enough and is growing significantly.

Of course, that’s true, but it’s worth pointing out that the rest of the world isn’t necessarily all that excited about Huawei either. The company was turned down for ‘domestic telecom’ status in India over security concerns, has faced labor strikes in Indonesia, and Japanese telecom Softbank has said it won’t use Huawei equipment.

Still, the world is a big place, and of course there’s always Huawei’s home turf and its 1.3 billion denizens. So in the style of a migratory bird (I swear to god this is a relevant link), or perhaps in the style of Cartman from South Park, Huawei thumbs its nose at the US House Intelligence Committee and says in its best Cartman voice: “Screw you guys, I’m going home!”

(Financial Times and IDG via Ars Technica, headline courtesy of @samuel_wade)

With renewed tension and worries over cyberattacks reportedly emanating from state-sponsored entities in China, the new funding bill that passed the US Congress this week has a lot of provisions that ban government IT spending on Chinese technology. These sanctions effectively allow for the banning of buying federal computer and telecoms equipment from entities “owned, directed, or subsidized by the People’s Republic of China”.

This anti-China tech stance was spotted in the 574-page bill by lawyer Stewart A. Baker. TechCrunch notes that he’s the former assistant secretary in the US Department of Homeland Security under George W. Bush. In two posts by Baker (here and here), he unpacks the ramifications of these provisions and the damage they could do to Chinese firms like Lenovo (HKG:0992), ZTE (HKG:0763; SHE:000063), and Huawei. Indeed, Lenovo has previously been unscathed by recent alarm over potential backdoor surveillance in Chinese technology sold to overseas governments, perhaps because Lenovo’s gadgets are largely based on its IBM PC business acquisition.

Lenovo, notes TC’s Catherine Shu, is a major supplier to the US military, NASA, the Department of State, and the Department of Energy, not to mention Lenovo’s growth being dependent on taking market share from Dell and HP in American classrooms and local government offices.

Baker points out that China has played this protectionist game itself in the interests of national security, but Washington could still face World Trade Organisation (WTO) protests from Beijing:

While the provision doesn’t prohibit purchases of Chinese-government-influenced systems, it makes such purchases politically difficult. How will China react? Not well. China has spent years trying to curtail its own purchases of IT from outside its borders, but that won’t stop it from calling the bill protectionist and claiming a violation of US WTO obligations. Legally, China may have trouble making such a claim stick. China has not signed on to the WTO’s government procurement code; it is just an observer.

This bill could affect Chinese-brand PCs and telecoms equipment regardless of where they’re actually manufactured or developed in the world. Baker explains:

But China may not have to make the claim stick in its own right. That’s because the provision doesn’t hit China directly. Instead, it restricts purchases from Chinese-government-influenced entities, no matter where those entities manufacture their products. This means that the provision could prevent purchases of Lenovo computers manufactured in Germany, or Huawei handsets designed in Britain. Both of these countries have joined the WTO government procurement code, which obliges its members not to discriminate against other member countries in procuring data processing software and hardware. This means the US could see WTO challenges to the provision from its own allies (unless they’re so sick of Chinese hacking that they decide to emulate the new provision rather than attack it).

With Chinese cyberattacks allegedly traceable to a unit of its People’s Liberation Army, the nation might have no plausibly persuasive argument for Lenovo, Huawei, et al being trustworthy partners for sensitive tech equipment.

It’s a complex issue emerging from a massive bill, so Baker’s two posts deserve to be read closely to see how the Obama administration might enforce this – and how it might need to issue waivers for equipment that’s desperately needed. Plus, there’s always the risk of Chinese laws being swiftly crafted in retaliation.

(Via: TechCrunch)

Credit: Okezone.com

Huawei’s Indonesian labor union (Sehati) is holding its second demonstration today to protest illegal foreign workers hired by the company. Huawei’s presence in Indonesia is quite important as nine out of 10 local telcos use Huawei’s telecoms equipment, and now the company’s operations are put on hold for three days because of this protest.

TribunNews quoted Sehati chairman Dedy Adriyansah today as saying that they demand Huawei management treat workers more fairly. The union claims that the company discriminates against Indonesian workers and prioritizes foreign ones, even those who are working here illegally.

Dedy believes that there are a lot of Huawei foreign employees who do not yet have a full working permit here. Furthermore, they are occupying strategic positions which are not permitted by the Indonesian government, such as in the HR department. Lastly, the union states that quite a few foreign workers do not even have adequate working qualifications. 80 percent of Huawei’s 1,000 higher up positions, the group claims, are taken by foreign workers from China, India, and Pakistan.

Since the first Sehati demonstration in December, a few of Huawei’s foreign employees have been tracked down by authorities, but some of them haven’t been processed by the immigration office. Dedy also explained that, more often than not, Huawei has forced its workers to work overtime on public holidays, and threatens to fire them if the workers do not comply. One of the other labor union demands is for an appropriate overtime payment that corresponds to standards set by Indonesian law.

One of the demonstrators, Diyan Pramudya, spoke to Liputan6 and said they also demand the conversion of many Huawei temporary/outsourced workers into permanent employees.

Indonesian law states that outsourced workers must be converted into full time employees after being contracted more than twice. A lot of Huawei’s outsourced workers have been contracted seven to 10 times and still haven’t been promoted to full time positions. Temporary workers account for 70 percent of Huawei’s entire workforce.

Diyan believes that the number of demonstrators will continue to grow to 1,500 people today.

Huawei’s second strike

Kompas cited Huawei’s representative Yunni Christine in February stressing that the company has never violated Indonesian employment law. Only 20 percent of Huawei’s employees are foreigners, with the rest of them being local workers.

There still remains the claim that 70 percent of the so-called local workers have been outsourced too many times without being given a full time position – as well as many not being given appropriate overtime pay. Sehati has previously claimed that the union has proof that 1,000 out of the 1,300 foreign workers at Huawei do not have legal working permits.

(Sources: TribunNews and Liputan6)

Chinese mobile product giant Huawei is in the news a lot, but many people don’t know that the company has the pretty interesting policy of rotating executives in and out of the CEO position every six months. This approach has only been in place since last year, so it’s pretty new and it may not last. But at the Mobile World Conference last week, current Huawei CEO Guo Ping told Fortune magazine about the inspiration for the system, and it’s not what you’d expect:

Our management model is quite new, but actually it comes from an idea from a book written by an American author, called Flight of the Buffalo. The theory of that book is about how migrant birds fly across the Atlantic Ocean — they always fly in a V-shape but the lead[er] of the team is not always the same bird. So they change and rotate to lead the whole team across the ocean.

Indeed, migratory birds often fly in a V-formation to reduce wind resistance. The bird at the front of the V (the leader) experiences the most wind resistance, so the birds take turns flying in the leading position, which allows the entire flock to fly for a longer period of time than it could with one leader consistently in the front.

It will be interesting to see whether this rotation strategy will be something that Huawei keeps in the long term. But even if it doesn’t, I’ve got to give the executive team some credit for looking to the animal kingdom for inspiration here. Perhaps there is more we can learn from animals about what it takes to build and run a successful company.

(via Fortune)

The new Huawei Ascend P2 revealed today at MWC 2013 (Image: Engadget)

Chinese phone-maker Huawei unveiled its new Ascend P2 today at Mobile World Congress in Barcelona, Spain. Then Huawei revealed some of its 2012 numbers in a press release. Of 52 million handsets shipped in 2012, 32 million were smartphones, an increase of 60 percent on the previous year.

In terms of financials, which also covers the company’s under-scrutiny telecoms business, Huawei saw US$7.5 billion in sales revenue in 2012 as a whole, up 10 percent from the previous year.

The new Ascend P2 runs Android 4.1 (not the latest 4.2) and has a 720p 4.7-inch Gorilla Glass 2 screen. It marks Huawei’s second year using the ‘Ascend’ name for its premium smartphones, which include the 6.1-inch screen of the Ascend Mate which is designed as a challenger to the popular palm-stretcher that is the Samsung Galaxy Note 2.

Earlier this month, Canalys observed that Huawei is now the world’s third-largest phone-maker, behind Samsung and Apple and only just ahead of compatriot rival ZTE.

Huawei’s recent financial report noted that the company sees 66 percent of revenues coming from outside China – mostly from Europe, the Middle East and Africa.

The research firm Canalys has unveiled new data for Android shipments in Q4 2012. With Android now powering a third of all mobile phones shipped in that quarter, it’s especially notable that Android has helped China’s Huawei, ZTE (HKG:0763; SHE:000063), and Lenovo (HKG:0992) move into the top five among global smartphone makers.

Canalys tracked smartphone shipments in over 50 countries to conclude that the smartphone market grew 37 percent compared to the same time in 2011. Android is on 34 percent of all such phones around the world, with iOS on 11 percent of them.

There are actually four Chinese brands to look out for, as Canalys notes that Huawei, ZTE, Lenovo, and Coolpad (though the researchers used the “Yulong” (HKG:2369) parent company name) “all grew by triple-digit percentages.” As we noted recently, figures from Gartner have already told us that Coolpad (and Lenovo, ZTE, and Huawei) is outselling Apple’s iPhone within China. But that’s just within China. So CoolPad is mostly restricted to domestic sales, and is not in the worldwide top five.

Samsung still grew 78 percent globally according to today’s stats. Samsung was China’s top smartphone brand in 2012 as its Galaxy phone series, particularly the large-screen ones like the Note II, sold well. But Lenovo has plans to topple Samsung’s statue in China, with CEO Yang Yuanqing having recently declared that intention.

While Coolpad’s success is almost exclusively within China, its compatriot brands have successful overseas sales as well. Today’s report notes:

Huawei took third place for the first time in Q4 and ZTE fourth. As well as their home markets, they have been relatively successful in the US, where ZTE was fourth and Huawei fifth, driven by their portfolios of low-cost LTE smart phones. Even so, both vendors took less than 5 percent share each there.

Lenovo pushed out Sony to get into the top five. Here are the Q4 2012 global stats:

(Source: Canalys)

It’s no secret that India and China aren’t the best of friends. The two countries still have unresolved territorial disputes, and are also engaged in an ongoing struggle for regional influence and control. So it’s no surprise that India hasn’t been excited about the idea of Chinese telecoms like Huawei and ZTE, both of which have close ties to the Chinese government, getting too deep into the Indian telecommunications market. And those two companies faced another big step backwards in their Indian aspirations late last week when India’s Department of Telecommunications (DoT) rejected their applications to be included on a list of domestic telecom companies.

Inclusion on the list would have made it easier for Huawei and ZTE’s Indian subsidiaries to do business in the country, especially on public sector projects. Both countries cited substantial manufacturing and investment in India, but were rejected amidst claims of security concerns. The real reason for the rejection may go deeper: the list was prepared by an Indian telecommunications lobbying group that neither Huawei or ZTE is a part of before it was approved by the Indian DoT. An internal memo from the DoT attained by the Economic Times raised the possibility that the companies might be included on some future list, though, saying of ZTE: “we may not include them now.”

Whatever the true reason for Huawei and ZTE’s rejection, India is clearly concerned about Chinese espionage via telecommunications networks. The country has also expressed concerns about Chinese telecommunications networks building infrastructure in Indian neighbor countries like Nepal and the Maldives, fearing that this equipment may be used to monitor communications coming out of India. Chinese companies, of course, claim that these suspicions are completely unwarranted, but at least in the short run, that isn’t likely to matter. As I’ve said before, brand China is poison (especially when it comes to telecommunications), and Chinese companies are going to continue having a very hard time convincing foreign governments that everything they’re doing is on the level.

(Sources: Sina Tech, Times of India, http://tech.sina.com.cn/t/2013-01-28/14338022829.shtml again)

That’s the most surprising finding in recent figures from Gartner which show that CoolPad’s Android-based phones have soared to third place in terms of the number of smartphones sold in China at the end of the previous year. CoolPad is one of four Chinese brands in the top six, a phenomenon we first noted last year when Canalys pointed out that domestic phone-makers now account for 60 percent of sales in China.

The CoolPad 8060, one of the phones now outselling the iPhone in China. (Image: ZOL.com.cn)

Going back to the Gartner numbers, China’s smartphone top six now looks like this:

• 1st - Samsung

• 2nd - Lenovo

• 3rd - CoolPad

• 4th - ZTE

• 5th - Huawei

• 6th - Apple

So how did CoolPad phones, made by the relatively tiny China Wireless Technologies (HKG:2369) which used to make PDAs and very unimaginative feature phones, manage to leap past the over-hyped and hallowed iPhone? And that’s despite Apple doubling iPhone sales in the country in 2012. As anyone following the progress of Android in China, you’ll have figured out how already. Android is one big reason, and price is the other. Basically, CoolPad is making a lot of serviceable – if not very trendy – phones for a mere 10 percent of the cost of an iPhone 5. The CoolPad 8060, for example, sells for just 500 RMB (US$80) unlocked, and is a highly affordable gateway to the smartphone world [1].

300 million smartphones to be sold in China in 2013

With smartphone sales at an estimated 189 million in China in 2012, and expected to reach 300 million by the end of 2013, Apple can no longer ignore the entry level market. To do so, some might say, would be to replicate the mistake of decades past that made Apple’s Mac OS into a fringe platform, dwarfed by the widely-used Windows. Apple might have an addressable market at the moment of a few hundred million Chinese middle-to-upper income individuals, but the larger potential market is people who can’t afford to pay out one, two, or three months’ salary for the current iPhone.

Although Apple would never go as low as CoolPad’s price points, there are rumors that Apple is pondering a lower-cost iPhone that could better help it battle Android in China and other important developing markets. Even if Apple aimed at half of the cost of the full iPhone, that would create a smaller iPhone priced at 2,500 RMB in China. That would at least put it closer to more well-specced Android devices in China (not CoolPad’s), such as the Xiaomi Mi2. The young phone-maker Xiaomi sold 7.19 million of its Android-powered phones in 2012, mostly to Chinese consumers.

In some ways, Xiaomi is the cool equivalent of CoolPad. While Xiaomi phones seem to be sold mostly to younger people, with 70 percent of them sold online, CoolPads are sold to a wider – and maybe less affluent – range of consumers from electronics retailers such as Gome and Suning.

CoolPad, then, represents the huge amount of people in China who’re ditching Nokia and feature phones, and jumping onto the cheapest thing that lets them play Temple Run 2. Apple needs to decide whether it wants to bring Xiaomi and CoolPad buyers closer to its price range, or forever push them – all half a billion of them – out of its exclusive club.

ZTE and Huawei seem to get lumped into the same basket when it comes to international security concerns, so it’s good to have an occasional reminder that the two companies are actually quite different. One key difference: Huawai is making a lot of money, ZTE is not. Huawei’s 2012 financial report is pretty triumphant; profits are up 33 percent and overseas business is growing. But ZTE’s preliminary report, released Sunday, makes for rather brutal reading.

All in all, ZTE thinks it lost about 2.5 billion RMB ($400 million) on the year. Net profit attributable to the shareholders dropped between 220 and 240 percent on the year, in large part due to drops in both the company’s revenue and profit margins. Revenue was down 18 percent year-on-year in Q4 2012 alone, and profit margin was down 11 percent over the same period due to an increased number of low-margin contracts both at home and abroad.

The company has rosier hopes for next year, though. In one release, it announced it would be undergoing complete reforms that would affect everything from the company’s management to its products and target markets. And the company is even predicting a profit for Q1 2013, although that sort of prediction obviously needs to be taken with a few grains of salt. Can the folks at ZTE right the ship in 2013? It will be interesting to find out. We talk a fair amount about the company’s image woes overseas, but that’s not going to be a particularly important problem if it can’t figure out a way back to profitability.

(via ZTE IR and Sina Tech)

Chinese telecoms firm and phone-maker Huawei might’ve had the kind of publicity in 2012 that’s usually only seen in a PR director’s worst nightmares, but that didn’t prevent some solid financial results. Huawei revealed today that the past year saw rising revenues (up eight percent to US$35.14 billion) culminating in a net profit of $2.46 billion, a rise of 33 percent from the previous year. Interestingly, 66 percent of Huawei’s overall revenue came from outside China.

The nadir of Huawei’s year came in October when a US congressional hearing cleared the company’s telecoms equipment of being able to spy on all users on its networks, but still judged there to be a security risk. Huawei denied the allegations and insinuations, but is still facing similar government-backed probes in India and the European Union. The company is also accused of being complicit in selling telecommunications interception equipment to Iran that would’ve helped Iranian authorities to spy on its citizens.

Nonetheless, Huawei CFO Cathy Meng says that Huawei expects its overall revenue to grow 10 to 12 percent in 2013. [UPDATE: An interesting little fact, from the WSJ, is that Ms. Meng is the daughter of founder Ren Zhengfei]. As a private company, these figures are guidelines for now, and KPMG audited results for the full year will be revealed in April. It seems to be part of a PR strategy of Huawei being more transparent to try shake off its shady reputation.

In addition, it was revealed today that the company “has cumulatively invested 120 billion RMB [$19.15 billion] in R&D over the past 10 years, including a 29.9 billion RMB [$4.77 billion] investment in 2012.”

Huawei is made up of three main divisions: network, enterprise, and consumer. The latter department makes its smartphones, which Canalys says are now outselling Apple’s iPhones within China. Its newest model is the ginormous Ascend Mate, which is designed to compete with Samsung’s popular Galaxy Note range. Huawei’s phone business brought in $7.72 billion of its total figure for the past year, and is said to be “continuing to grow in developed markets including Europe and Japan.”

Of the two-thirds of Huawei’s total revenues coming from overseas, most of it came from Europe, the Middle East and Africa, which is the company’s biggest single area for sales (77.4 billion RMB), just ahead of China (73.6 billion). The Americas made up a much smaller chunk, bringing in 31.8 billion, which is just over $5 billion.

Or does it? At 6.1-inch, does the thing even qualify as a phone? Not according to many tech blogs, which are calling it and other devices like it phablets, a word I hate so much that that is the first and last time I am ever going to type it. Whatever you call it, though, what the hell is this thing actually for? It’s way too big to fit comfortably in your pocket like a phone should, but it’s too small and low resolution to make it a particularly engaging entertainment device. It is essentially the worst of both worlds: big enough to be more awkward than a regular phone, but small enough to be less enjoyable for watching videos or playing games than a regular tablet or a laptop.

The Huawei phones are only being released in China for now, and I hope they fall flat on their 6.1-inch faces. They probably won’t — some people seem to like these gigantic things, like the Samsung Galaxy Note — but I think they represent the laziest kind of design. It’s something we’ve seen everywhere from cars to televisions; when you don’t have any ideas for actually improving the product, just make it bigger. Ugh.

Maybe I just don’t get it. Maybe there’s some reason I haven’t grasped yet that my phone needs a bigger screen, or that my tablet would need a smaller one, if I had a tablet. Perhaps this is better understood as a sort of mobile-hardware Parry expedition, with Huawei bravely taking the lead in exploring the how big a phone can get before it collapses upon itself like a dying star. Perhaps someone can justify this monstrosity (and others like it) to me in the comments. But there are so many interesting things happening in mobile Chinese hardware right now that it’s very difficult to get excited by such an uninspired offering from Huawei.

I really hope that 2013 is not the year that we see the ever so ridiculous term ‘phablet’ go mainstream. But if mobile companies continue to push out 5-inch and 6-inch handsets this year, we might be in for a rough year. Everyone’s favorite Chinese manufacturer, Huawei, has announced a number of new oversized smartphones at CES today, most notably the 6.1-inch Ascend Mate ¹.

The company has dubbed this monster the “world’s biggest smartphone” and it has a 720p display, with a 4050mAh battery to ensure that the screen has adequate juice. It runs on Android 4.1, and has an 8 megapixel camera.

Ascend D2

Huawei also unveiled a marginally less monstrous smartphone at CES, in the 5-inch Ascend D2, which comes with a 1080p display, a 1.5GHz quad-core processor, and a 13 megapixel camera. While the Ascend Mate appears to have turned more heads at the show, the D2 could be a more appealing phone for the masses. Huawei also highlighted its splash proof feature, which makes me wonder if Huawei is planning to introduce the D2 to Japan where waterproofing is more in demand among consumers.

It will be interesting to see if consumers actually bite on Huawei-branded smartphones this year. The company has been embroiled in controversy over the past year in relation to its network equipment business. I think that controversy will certainly be an obstacle to the company as it tries to develop its smartphone brand in markets abroad. So it will be interesting to keep an eye on how many smartphones the company manages to ship this year. Stay tuned! (Via The Verge)

Image via Reuters

It’s no secret that the US and China have a bit of a disagreement on their hands when it comes to Huawei, the ostensibly-private Chinese telecommunications company. Today, though, I came across this article in the Legal Weekly — a state-run newsweekly — that I think is very indicative of how the Huawei scandal is being packaged domestically and why this isn’t likely to be resolved anytime soon. Here’s a key passage from the article:

This [Huawei's R&D investments in the US] have also made the Americans cry “the wolves are coming,” and America’s “worries” about Huawei were laid bare in 2012. In addition to the US Congress’s investigation into Huawei and ZTE over “national security”, a US International Trade Commission member launched a number of “337″ investigations into the two companies, saying that Huawei and ZTE had stolen American companies’ intellectual property. Whether it’s the Congress’s suspicions or the 337 investigations, the intention is to prevent Huawei and ZTE’s products from entering the United States.

Of course, it’s no surprise that official state media would imply that American (and other countries’) suspicions about Huawei and ZTE are nothing more than protectionism. But I think this article illustrates the larger problem on both sides that will prevent this situation from being resolved any time soon, and a problem that all Chinese and American companies will face when trying to expand into the opposite markets: mutual suspicion that borders on paranoia.

As an American, I’ll admit that I’m probably a bit biased about this; I think that in the case of Huawei, the US is very right to be suspicious. I still haven’t heard a good explanation for why Huawei — ostensibly private company — has a Party office located in its headquarters, and I think both Huawei and ZTE have a lot of answer for when it comes to their business engagements with Iran. That said, though, other Chinese companies far less deserving of suspicion are going to be met with it anyway. We’ve written a lot about this before, but that’s only one side of the story.

The other side is that the suspicions now go both ways. If the US investigates Huawei, China will investigate Cisco. But the article I’ve quoted above goes beyond that; it indicates a complete lack of unwillingness to accept that at least in Huawei’s case, there might be some grounds for suspicion.

Of course, I would never expect state media to imply that Huawei might be helping the government spy on foreign countries. But if it wanted to, state media could characterize the US allegations as a misunderstanding of Huawei; ‘Americans misunderstand China’ is a well-worn and not entirely inaccurate story, and that would provide a foundation upon which to lay out a defense of Huawei; a clear explanation of its government connections. But instead, the article above — and many others like it — adopt a confrontational tone, suggesting that there is no question whatsoever that American motivation for keeping Huawei out of the US is strictly commercial.

(It probably goes without saying, but that argument is also hugely misleading; Huawei and ZTE products are already widely available within the United States and there has been no attempt to kick the companies out wholesale. Mostly, what has actually motivated the US investigations is an interest in limiting Huawei’s access to “sensitive” sectors of the US economy, like government and defense contract work).

In short, then, each side is now fully convinced that the other is operating with ulterior motives. The US believes Huawei to be, at the very least, a bit too cozy with the Chinese government, and China believes the US’s suspicions are politically and commercially motivated. Neither side has a completely convincing argument, and it’s hard to see much progress in either direction as both sides are no longer even speaking a common language. Instead, they are simply trading mostly-unfounded allegations back and forth, ignoring what the other side has to say.

There is blame on both sides here, and no real end in sight. A similar tone is already swirling over the SEC’s probe of accounting firms and PCAOB reports that might ultimately result in the delisting of Chinese companies from US stock exchanges, with some Chinese media suggesting that these investigations are the result of anti-China bias rather than the result of the SEC trying to enforce American laws. We can — and will — argue more in the days and months to come about who is in the right, but it is probably mostly academic at this point. The suspicions on both sides run quite deep, and it’s difficult for me to even imagine a way to establish at least some mutual trust again. That’s bad news for Huawei, but it’s also bad news for other Chinese companies, from startups up to the tech giants, that are interested in entering the US market. It’s also bad news for American tech companies looking to move into China, as they are likely to be met with similar suspicions going forward.

Taiwan’s Digitimes Research has a new report out looking at the smartphone landscape in mainland China. It states that sales of smartphones in China – across all platforms, like iPhone and Android – are expected to grow 137 percent year-on-year to 189 million devices in 2012.

It’s expected that 86 percent of fourth quarter sales in China will be Android phones (with 50.8 million Androids sold in Q4). For the year as a whole, that amounts to an impressive 157 million Android smartphones sold in China during the whole year, which is up 260 percent from a year ago.

The new report also signals a shift towards Chinese consumers favoring domestic smartphone brands, with local brands expected to account for 61 percent of China’s smartphone market in 2012 led by Lenovo. That syncs with Canalys data we saw last month which pointed out that China’s top five smartphone brands are, in descending order, Samsung, Lenovo, CoolPad, Huawei, and ZTE. That’s very bad news for the once-beloved HTC; as for other overseas phone-makers, only Samsung and Apple appear to be making a strong showing this year.

This all seems to be on a par with what Canalys said earlier this year. It found that China “accounted for 27 percent of the 158 million global smartphone shipments” back in Q2 alone.

[Source: Digitimes and Digitimes Research]

There are lots of questions about Huawei; questions like “Why does the CCP have an office in your headquarters?” or “Why are several countries investigating you?” or “You did what in Iran?” But the real question at the root of those questions is whose security Huawei really has in mind as it develops and operates in sensitive areas beyond China’s borders.

To that end, Huawei’s head of cyber security John Suffolk has recently written a blog post about a discussion he had with Huawei CEO Ren Zhengfei that shares some of Ren’s views on security. Parts of it are fairly interesting, although it’s very important to keep in mind that this is essentially a PR move and that one Huawei exec talking to another doesn’t make for the most unbiased reading ever.

In the post, Ren talks about Huawei’s commitment to keeping their infrastructure operating even in times of crisis:

In the 2008 Wenchuan earthquake, communications services in the quake-stricken area broke down completely. Our Chairwoman of the Board immediately established a work team and chartered four airplanes to Chengdu…

…To provide emergency communications and facilitate coordination, the rescue forces used helicopters to transport our base station to the mountain top in the quake-stricken area; the base station was set up to form a temporary communications network together with antennas and satellites…

…Our employees deploying the base station on the mountain top had to work in the rain and sleep on the wet ground at night. In the mornings, they went down the mountain to fetch diesel oil for the generators. The arduous hike took 4 to 5 hours back and forth.

Ren also addresses, albeit somewhat vaguely, one of the questions I mentioned above:

“Information leakage is first a legal and social issue to the international community; then it is a technical issue, which requires concerted efforts of society and the entire industry [...] We are determined to make internal adjustments to ensure that our equipment is the most secure, transparent, high-quality equipment in the world.

Suffolk himself then goes on to paraphrase Ren’s apparent opinions on what Huawei needs to do going forward, which includes a lot about transparency and allowing for independent external verifications. It’s the sort of talk that’s hard to disagree with, but also hard to execute, and it’s pretty clear that thus far, Huawei has not been able to satisfy the expectations of government officials in at least the US and India.

Whether those expectations are fair or not is definitely debatable, but it’s also probably irrelevant; if the government thinks Huawei is facilitating spying, Huawei isn’t going to get all that far in the country. So it will be interesting to see what concrete steps Huawei takes over the next year to attempt to assuage fears and (hopefully) answer a few of the questions I posed at the beginning of this post.

Image via Reuters

Hoo boy. Chinese telecom equipment provider Huawei has been having a rough couple of months what with all the speculation about spying coming from places as high up as the US government and the Indian government. But if you thought that was damaging to Huawei’s image and overseas business plans, wait until you get a load of this Reuters investigation (h/t to Sinocism for pointing this out):

Documents seen by Reuters show that a partner of China’s Huawei Technologies Co Ltd offered to sell a Huawei-developed “Lawful Interception Solution” to MobinNet, Iran’s first nationwide wireless broadband provider, just as MobinNet was preparing to launch in 2010.

The system’s capabilities included “supporting the special requirements from security agencies to monitor in real time the communication traffic between subscribers,” according to a proposal by Huawei’s Chinese partner seen by Reuters.

Huawei also gave MobinNet a PowerPoint marketing presentation on a system that features “deep packet inspection” – a powerful and potentially intrusive technology that can read and analyze “packets” of data that travel across the Internet. Internet service providers use DPI to guard against cyber attacks and improve network efficiency, but it also can be used to block websites, track internet users and reconstruct email messages.

The article goes on to say that MobinNet is actually using some of Huawei’s DPI equipment, although the company has denied selling it and it’s not clear how MobinNet acquired it. Last year, Huawei promised to restrict its business development in Iran by not signing new customers, but since MobinNet is not a new customer, it’s quite possible the companies are still working together.

If this is all sounding very familiar, it’s because Reuters released a similarly damning report about ZTE back in March. The report found that ZTE had sold “a powerful surveillance system capable of monitoring landline, mobile and internet communications” to Iran’s state-owned TCI.

Anyway, as far as international PR goes, helping Iran spy on (and subsequently arrest, torture, and kill) its own citizens is pretty high on the list of don’ts. At this point, it’s hard to imagine that either Huawei or ZTE have any hope of winning over Western countries that are considering allowing them to work in the local telecommunications industry. And while China seems to be taking the scrutiny of Huawei and ZTE personally, this report is just the latest in a long list of reasons why that scrutiny is pretty well-deserved. It’s also a good reason why the official scrutiny is probably irrelevant; even without official hoops to jump through, it’s doubtful that Huawei would be able to dig itself out of the PR hole that is “we helped Iran spy on its own people.” The Reuters story, for example, opens with a vignette in which Iranian authorities beat a college student with an iron bar, which is then immediately followed by the section about Huawei quoted above. That’s not the sort of thing a company can come back from quickly, especially when it didn’t have much PR good will to lose in the first place.

So Huawei and ZTE are toast in the US, and probably most of Europe, for the foreseeable future. But the real shame here is that this news will stigmatize other Chinese tech companies looking to expand too. Most Chinese companies don’t have internal Party committees and they certainly haven’t sold surveillance equipment to Tehran, but that isn’t going to matter much. That people will judge companies by their country of origin is biased and unfair, but that doesn’t make it any less of a reality, and every time news like this breaks, it makes it that much harder for the next Chinese company to gain any traction or trust outside China’s borders. There’s a reason major tech firms like Tencent are already rebranding when they expand beyond China’s borders. Brand China is poison, and it’s not all the Chinese government’s fault.

[Reuters via Sinocism]

Whether or not these accusations are true in either case is anyone’s guess — I haven’t been particularly impressed with the evidence presented on either side so far — but it now seems clear that the article above is not a fluke, but rather part of the first volley in what may well be a wave of attacks coming from Chinese state-run media and targeted at Cisco. For example, in addition to the China Economy and Informatization piece, another piece reacting to the Huawei investigation by suggesting Cisco and other US companies should be investigated was published in Caijing National Weekly yesterday. It reads very similarly to the China Economy and Informatization, accusing Cisco of conspiring with US officials to “plot attacks on competitors [like Huawei and ZTE]” and citing “information” suggesting Cisco has a virtual stranglehold on China’s network infrastructure.

Although the name might suggest it is connected to the independent and respected Caijing magazine, Caijing National Weekly is actually a state-run media outlet too (it is directly managed by China’s official Xinhua News Agency). One Cisco hit piece in state media in one day? That could be a coincidence. But two? That’s a little suspicious. And it wasn’t limited to just two; a Voice of China radio broadcast on the subject was adapted into this similar piece that ran yesterday in the People’s Daily. Then there was this article in the China Enterprise Report, yet another state-owned outlet. Numerous versions of this story were published across China’s major news portals, but most of them (every one that I looked at) seem to lead back to one or more of these state media reports.

It is clear, then, that China’s government has decided to respond in-kind to the frosty reception ZTE and Huawei have gotten from the US Congress. I would be quite surprised if a formal investigation into Cisco is not announced within the next few months, and other US companies like Microsoft may also be on the list. But it seems someone has decided that Cisco will bear the brunt of this storm; the company is mentioned more than a dozen times in each of the articles mentioned above. Cisco and other American and Chinese tech companies may need to batten down the hatches for what appears increasingly likely to become a protracted trade war of sorts.

(As a side note, the choice of Cisco as the target of these accusations is interesting given that Cisco has also been accused by the US of collaborating with the Chinese government. In 2008 the company was heavily criticized after it became apparent that Cisco had helped with the infrastructure of China’s Great Firewall censorship system, and in 2011 Cisco was sued in US court by Chinese Falun Gong practitioners for helping the Chinese government persecute them. On the other hand, though, rumor has it that Cisco has been partially responsible for the cold reception Huawei and ZTE have gotten in the US, and if that’s true, it would make Cisco a very attractive target for this kind of “revenge” in China.)

Investigating Cisco: the front page story in China Economy and Informatization

With the US Congress taking swings at Huawei and ZTE it was only a matter of time before China took some swings of its own. Now, the magazine China Economy and Informatization has run a front-page story about the security threat posted to China by Cisco (NASDAQ:CSCO) and other US companies, based primarily on data from China’s National Computer Network Emergency Response Team (CNCERT).

According to the article, more than eight of Chinese servers are being controlled by American sources via trojan horses and botnets. It also says that 3 out of 4 IPs found to be imitating Chinese banking sites originated in the US. The article jumps straight from there into a condemnation of Cisco and the “eight American King Kongs” that have made an “empty shell” out of Chinese information security. It quotes an anonymous information security expert as saying, “China is basically standing naked in front of the armed-to-the-teeth eight American King Kongs.”

But it turns out that’s pretty misleading. The article cites data from 2011, but CNCERT’s most recent information security report rates the threat to China as “moderate,” makes zero mention of Cisco, and does not suggest that the US or US companies pose any particularly grave threat as compared to other nations. CNCERT’s 2011 report — which, presumably, is the data set China Economy and Informatization was drawing from — is roughly the same. The United States is mentioned only twice as the source of attacks mentioned in the report, and is not listed as a significant threat. Cisco isn’t mentioned at all, and CNCERT’s summary of 2011 states that “China’s internet and network security situation continues to be stable, without any major internet safety incidents” and that things are generally improving. That is certainly a far cry from the China-is-naked picture painted by China Economy and Informatization and its anonymous expert.

It’s worth mentioning that China Economy and Informatization magazine is administrated by China’s Ministry of Industry and Information Technology. As a part of the state-run media and a representative of government interests, the magazine’s objectivity is certainly questionable, but for the same reason, it’s possible that the magazine is offering a glimpse into the future, and some idea of what the justification for a Chinese government investigation of Cisco could look like.

Of course, it is certainly true that a lot of the software and hardware used to access the web comes from the United States, though that’s probably not a sinister imperialist plot as much as it is a reflection of the fact that the United States has been a center of innovation and development in computing and internet technology for decades. Still, it’s understandable that this would make other nations, including China, nervous. But why the specific focus on Cisco as a threat in the China Economy and Informatization article? It’s not entirely clear.

CNCERT’s reports don’t cite the company as a specific threat, and the magazine’s evidence against Cisco is sketchy at best. Cited reports of Cisco interference are limited to a 2005 internet outage for some Beijingers that was traced to a piece of Cisco equipment, and IPTV drops for Xiamen Telecom users in early 2011 that were also blamed on Cisco technology. These temporary outages must have been annoying for the minority of users they affected, but it’s unclear how they represent a threat to China’s national security. Later, the article alleges that Cisco has “an extremely close relationship with the NSA,” but the only evidence cited for this is that 71 US congressmen (or about 13 percent of Congress) own shares of Cisco stock.

The article also states that reporters “learned” Cisco’s operating system is full of security flaws, although it does not say how reporters acquired this information or what its source is.

All of this is not to say that Cisco equipment doesn’t pose a threat to Chinese information security. Although the article does a poor job of supporting its case and it seems probable there are political reasons behind its publication, Cisco probably does have a close relationship with the US government, and as the article rightly points out, the Patriot Act can compel American tech companies to turn information about overseas users over to American intelligence organizations, which could indeed pose a threat to other nations’ national security.

As you might expect, the comments piling up on this article are quite divisive, with some net users agreeing that Cisco and other American companies should be investigated, and others accusing the author of being a party stooge and suggesting that replacing American technology with Chinese tech might only make things worse.

Regardless of whether Cisco or other American companies actually pose a security threat to China’s IT security, Chinese companies like China Unicom are already moving away from Cisco equipment and replacing it with domestic brands. This may in part be because of security issues, but it’s also because the domestic technology industry has been developing by leaps and bounds, and domestic companies that weren’t real players five or ten years ago are now capable of competing with Cisco and other international brands, at least when it comes to domestic contracts.

Will the Chinese government investigate Cisco and other American tech companies? It is not yet clear, but such an investigation is not unlikely. China’s government does have a history of pointing out what it sees as American hypocrisy; for example, each year it issues its own human rights report on the US timed to correspond with the US’s yearly human rights report on China. Moreover, the use of a state-run publication to promulgate these allegations against Cisco certainly implies that the government is watching this issue carefully.

[via Sina Tech]

Chinese phone and telecom equipment makers Huawei and ZTE are having a rough go of it overseas. A recent US Congressional investigation alleged that the companies’ technology may have security flaws that could be easily exploited for the purposes of spying or data theft, and now the Indian government is expected to announce soon whether or not it will be opening investigations of its own into the two companies.

India’s interest in the companies was inspired by the US report, which will be discussed at the upcoming meeting between the Indian Department of Economic Affairs and the Foreign Investment Promotion Board. Both Huawei and ZTE continue to deny all wrongdoing, and both companies have agreed to share their source codes with Indian investigators. Huawei global chief security officer John Suffolk told The Times of India that the company had also shared its source code with other countries in the past.

It’s not hard to see why ZTE and Huawei would pull out all the stops to ensure that they continue to have a future in India: the country has more than 1.2 billion people and a developing mobile market that could represent billions of dollars in revenue. Both Huawei and ZTE spokesmen have said previously that it makes no sense for the companies to permit spying because if discovered, such activity would shut the companies off permanently from huge markets like India and the United States. But Indian regulators, it seems, are just as concerned as some American congressmen about the ties both companies have with China’s government and military. It remains to be seen whether India will launch its own investigation, but if it does, it will be interesting to see what gets turned up.

This kind of scrutiny and suspicion is something more Chinese tech companies are likely to face as they begin to move outside of China. Whether it’s fair or not, concerns about associations with China’s authoritarian government have already blocked numerous Chinese companies’ attempts at acquisitions and expansions abroad, and that trend does not seem likely to shift anytime soon.

[CIOL and Times of India via Sina Tech]

L-R: The HTC 8X, the Huawei Ascend W1, and the Nokia 920.

An industry source in China, cited by Sohu IT and Marbridge Daily, says that six new Windows Phone 8 (WP8) smartphones are lauching in the country in December. The rollout will mark the debut of Microsoft’s (NASDAQ:MSFT) revamped mobile OS in China, a mere eight months after the initial WP7 found its way onto the local market.

Three phone-makers will be spear-heading the WP8 launch here: Nokia (HEL:NOK1V; NYSE:NOK), HTC (TPE:2498), and Huawei. These are the six colorful contenders that they have lined up:

• Nokia will unveil the China-bound, WP8-powered Lumia 920, Lumia 920T, and Lumia 820 at an event in Guangzhou on December 5th. The model with the ‘T’ suffix is destined for China Mobile, and supports the requisite TD-SCDMA protocol for 3G.
• HTC will do a local launch for the 8X and 8S the next day in Beijing. The source claims that the models will go to both China Unicom and China Telecom. The 8X is expected to cost just over 4,000 RMB (US$636).
• Huawei will show its Ascend W1 phone sometime in mid-December. It’s not known which telco’s 3G network it will support. With a lowly 480×800 pixels screen, it’ll be the cheapest of the bunch at just 2,500 RMB ($400).

In June of this year we heard that the uptake of WP7 in China has been fairly brisk, and that the country is already the second-biggest market in the world for WP devices – with the US out front.

[Source: Marbridge Daily]

According to an interesting Reuters report, a White House-ordered investigation into Huawei that lasted 18 months has turned up no evidence that the company is actively spying. According to Reuters’ sources, though, the report still suggests that Huawei poses a threat to security because of easily hacked exploits and safety vulnerabilities.

The White House has thus far denied that such an investigation occurred — but it would be classified, so that’s more or less par for the course — but if this report is true, it may still not mean what it seems. Although Reuters sources are confident that if Huawei was actively engaging in spying it would have been discovered, there’s no way of knowing whether the security vulnerabilities found were accidental or were intentional flaws that could have been intended to easily leak sensitive data to hackers. So, although Huawei has been kind of cleared, it’s still not off the hook, and it doesn’t seem likely it will be any time soon.

Chinese net users continue to be unamused by what is seem as American bullying and protectionism. “Suspending normal business operations because you suspect Huawei has the potential to be involved in spying is just as ridiculous as locking up everyone with two hands because you suspect that have the potential to be thieves,” wrote one commenter on Sina Tech. Many commenters pointed out the perceived hypocrisy of the US given the ubiquitousness of Cisco. “America’s Cisco equipment is used all over the world, is that a threat to the national security of other countries?” asked another commenter. Many suggested that China’s government should kick Cisco, Microsoft, and other American tech companies out of China.

As we’ve mentioned before, a lot of the concern about Huawei comes from the fact that the company was founded by a former PLA officer. But are the security flaws discovered by this investigation intentional? There’s no way of telling. Certainly, security vulnerabilities of one kind of another are present in almost every tech product. Perhaps if the US report is ever declassified and released, we’ll learn more about what kind of vulnerabilities Huawei equipment was found to have and how easy those flaws would be to exploit.

[Reuters via Sina Tech]

Earlier today, U.S. Congressional investigators fired their latest shot at Chinese tech companies ZTE and Huawei, saying the companies pose a threat to American telecommunications security. Evidence that will be turned over to the FBI apparently indicates that equipment sold by both companies is stealing data and sending it back to China, although the committee is just passing along allegations of this and apparently didn’t look into it itself. Anyway, the committee recommended that “U.S. government and American firms avoid using equipment from the Chinese firms for tasks that involve large amounts of sensitive data.” It also expressed concern as to why ZTE and Huawei, supposedly private companies, have Communist Party committees within their corporate structure.

Needless to say, ZTE and Huawei were not excited about this, and Huawei has already suggested that the allegations against it are baseless. Many Chinese net users seem to agree. Many see the announcement as a kind of protectionism, although it’s worth mentioning that many Chinese headlines are suggesting implicitly that the U.S. Congressional investigatory committee’s recommendation means the U.S. has banned Huawei and ZTE products (which isn’t actually the case). In one early weibo post that has been retweeted hundreds of times as of this writing, a product manager at one tech site wrote:

Large airplanes, high speed rail, cars, organic medicines, and telecommunications are high-value products, and thus fields that Europe and the U.S. definitely don’t want to allow China to develop. When any Chinese product [in these fields] comes out they will find an agent to manufacture [negative] public opinion, make the problem seem bigger until [the Chinese product] is strangled. There are also many [in China] who make money off the sales of foreign products, so they’ll stand on the front lines of the fight to smother Chinese products. This is the reason that the high-speed rail crash was made into a big deal.

As you might expect, he’s getting a lot of crap for that last line about the high-speed rail crash (as well he should be), but overall, this does seem to be the prevailing sentiment when it comes to the accusations about Huawei and ZTE. A few have pointed out that when it comes to issues of protectionism in tech, perhaps the country that has blocked Facebook, Twitter, and a dozen other hugely popular overseas web services probably shouldn’t be throwing stones. But hypocritical or not, some folks are definitely angry about what they perceive to be the mistreatment of honest Chinese companies at the hands of the U.S. Congress.

Personally, while I sort of sympathize — I too think that Congress sucks — I’m not sure they’re wrong about this. Even without seeing the evidence for Huawei and ZTE products conducting spying, I do think it’s fair to be skeptical about companies with such close government and military ties. If Colin Powell were to found a tech company and begin exporting products to China, I have to imagine China’s reaction would be pretty similar, especially if there was a U.S. political committee as part of the company.

Moreover, much of the reporting and retweeting in China is making this seem like much more than what it actually is: a couple guys on a committee making some allegations in public before passing their investigation on to the actual pros at the FBI. The committee’s report does not speak for the entire Congress, let alone the entire U.S. government or the U.S. as a whole, but it is being perceived and sometimes reported that way on the Chinese web.

Whether there’s much truth to the Congressional report’s allegations remains to be seen. In the interim, though, it will be interesting to see if this news gains enough traction in China to get that country’s nationalists to stop yelling about islands for a little while.

Is there no escape from the constant dramas surrounding Qihoo 360 (NYSE:QIHU) and its CEO Zhou Hongyi? They are again in the news, as Qihoo and Huawei (SHE:002502) have gone their separate ways after a previous low-cost smartphone partnership didn’t work out. This is according to Marbridge Daily, who quotes Huawei senior VP Richard Yu’s microblog update:

Our product costs are slightly higher because of this, so we are unable to meet CEO Zhou Hongyi’s demands for lower prices. The Huawei Ascend will go on sale September 6 exclusively through Huawei, and will not be one of the Qihoo 360 handsets.

When we first heard about this el-cheapo collaboration between Huawei and Qihoo 360, my colleague Charlie expressed some skepticism whether such a smartphone could generate as much buzz as, for example, Xiaomi has. Turns out it didn’t really even get much of a chance to get off the ground.

Since then Qihoo’s motivation for wanting a piece of the smartphone business has become a little clearer, having parachuted into the China search wars practically overnight. Like China’s leading search company Baidu, who just announced new aspects of its mobile strategy, Qihoo could use a foothold in mobile too if it’s serious about search.

Marbridge mentions that there have been over 100,000 Qihoo handsets sold in total, with the Haier Battleship phone accounting for more than half. Lets wait and see if that ship can float longer than the Huawei one did.

[Source: Marbridge, photo: Shendu.com]

2G vs 3G vs Wifi

Among all the mobile visitors to Baidu, we also see a strong trend in greater 3G usage, now up to 15.6 percent of pageviews, up from just 6 percent exactly a year ago. If those visitors are broken down by iOS and Android versus everyone else, it should be no surprise that 3G usage wins out:

Phone brands

Apple accounts for a strong 8 percent of such visits to Baidu sites, which is impressive for just a few models of iPhone and iPad. That makes it the third most-used brand of mobile device, by Baidu’s observations. Nokia still (though not for much longer) reigns over Samsung:

Breaking down the Android space, it should be no surprise that Samsung and HTC rule the roost. Huawei is a very strong third, with 9.8 percent; but that’s down a bit from the previous quarter. The smaller homegrown phone-maker Xiaomi sure is making an impact, with its one single model now accounting for 4 percent:

But the iPhone remains the king, just as it was when I last looked in 2011 Q4. At that time, the iPhone was the biggest model observed visiting Baidu, with 4.48 percent, but now it has rocketed to 9.6 percent in the newest stats. The Xiaomi M1 makes an appearance as well:

Mobile OS

Android is, as we expected, now bigger than ever before – the new stats show that 21.4 percent of all Baidu’s mobile hits were on Android devices. The Symbian S60 platform, as seen in many recent Nokias, holds on to a shrinking third spot. But the presence of the generic “feature phone” label, and other JAVA-based OSes like MTK and S40, shows that non-smartphones – like the Nokia 5233 that’s ranked second only to the iPhone in terms of popular models – are still widespread across China. That gives smartphone makers a lot of scope for growth.

Changing Telcos

The search giant is seeing a sea change in the dominance of China Mobile (NYSE:CHL; HKG:0941) – it’s now seriously ebbing away, flowing to a rising China Telecom (NYSE:CHA; HKG:0728):

For the full PDF report, head to the ‘Baidu Open Mobile’ page.

Recently two influential magazines boast cover stories on Huawei (SHE:002502) which bring to light the Chinese technology giant’s two contradictory public relations faces: a patriotic company defined by its founder and president, former PLA engineer Ren Zhengfei, faces inward to China, while the outside world sees a company moving to distance itself from those same military ties.

The inconsistency could later haunt Huawei’s public relations efforts in western markets.

The English-speaking world received a report back in June from The Economist which reveals that Huawei is beginning to take measures to quell suspicions of its military and political ties to assuage foreign governments and corporations. Huawei has allegedly “hired lobbyists and public-relations consultants, and assembled well-paid advisory bodies” in important markets to tell one story of Huawei: it is a private-sector firm run by an engineer who retired from the PLA twenty years ago without a military rank.

But the story may not be as compelling as the one being told in China’s domestic market.

This week the Chinese-language China Entrepreneur magazine boldly states “Ren Zhengfei is Huawei, Huawei is Ren Zhengfei.” The article, which focuses on Huawei’s “genetics,” touches on a two-week “military-style training” that is a part of each new Huawei recruit’s six-month training period. According to China Entrepreneur’s report, in order to keep Huawei’s “genes from being diluted,” the same new recruits are subject to a “special” human resources assessment. Results from the assessment are fitted against the results of assessments of current corporate leadership. Huawei, at least culturally, seems intent to stay true to its military beginnings, which is at odds with the message it is trying to promote to the rest of the world.

China Entrepreneur’s coverage ends with a monologue by Yu Chengdong, CEO of Huawei’s Consumer Business Group, that reflects on why he works at Huawei. He derides working solely for money, raves about the hard work of the nearly 70 year-old Ren Zhengfei, and ponders the importance of contributing to society. “How do you contribute to society?” Yu says, “Develop a company, create national income, create profits, create taxes, pay more taxes. That is contribution to society.”

One wonders if Ren Zhengfei’s ideas of contribution to society are as straightforward. What do you think? Let us know in the comments.

The Top Brand Awards 2012, conducted by Frontier Consulting Group and Marketing magazine, wrapped up last night at Hotel Mulia, Jakarta. The award lists extensive brand categories in Indonesia ranging from food products to automotives. Here we bring to you a brief overview of the tech category winners:

Online Shopping Category

The winner for the new category ‘online shop’ is Tokobagus.com with an astounding 47.5 percent of the vote, making it a clear winner compared to runner up Kaskus with 15.6 percent. It’s quite interesting that e-commerce giant Multiply didn’t make it into the top four. Third place goes to Berniaga.com with 9.2 percent and fourth place to Bhinneka.com with 3.3 percent.

On this occasion, Ichwan Sitorus, the PR manager of TokoBagus shared some of their recent stats via Kabar Bisnis:

• There are millions of advertisement listings, with about 70,000 to 100,000 new daily ads.
• Daily number of visitors is 800,000 to 1,000,000.
• Monthly transaction value is reaching IDR 1.4 billion ($148,000) to 1.5 billion ($158,000) in 2012.

Mobile and Smartphones Category

In the mobile phone category, Nokia is champion with an impressive 54.2 percent, leaving the rest of the pack behind. The other runners-up didn’t even reach ten percent. They included second place Huawei with 8.5 percent, third place Samsung with 4.8 percent, and fourth place Nexian with 4.6 percent.

Now on to the smartphone category, did Samsung or the iPhone win it? No. Indonesia definitely loves Blackberry as it is the victor against Nokia in that category with 40.7 percent and 37.9 percent respectively. Samsung and Nexian took third and fourth places with 6.6 percent and 3.9 percent. Apple’s iPhone was fifth place in the vote with 3.8 percent.

The winners didn’t change much for both the mobile phone and smartphone category from the 2011 awards. The only difference in the mobile phone category is that Sony Ericsson fell from third spot in 2011 to fifth spot in 2012. iPhone had a similar fate in the smartphone category, dropping from third place in 2011 to fifth place in 2012, overtaken by new player Nexian.

Notebook Category

In this category the resounding champion is Acer with 42.1 percent. Second and third places go to Toshiba and HP with 15.9 percent and 13.8 percent respectively. Apple is in fourth place with a meager 6.1 percent. They’re all in the same exact positions as in 2011.

About the Top Brand Survey

The Top Brand survey was conducted among a total of 3,250 random respondents from eight big cities in Indonesia: Bandung, Jakarta, Makassar, Medan, Semarang, Surabaya, Balikpapan, and Pekanbaru. Respondents are aged 15 to 65 with an average expendable income per month of between IDR 750,000 ($79) and IDR 3,500,000 ($370). For the complete list of winners, you can see it here.

It has been another record-breaking quarter of smartphone sales in China with more than 42 million shipped in the country in Q2 2012. That’s from the newest report by the analysts Canalys. That represents 199 percent year-on-year growth in smartphone sales in China, and 32 percent up on the previous quarter.

Canalys also notes that:

China accounted for 27 percent of the 158 million global smartphone shipments, compared to 16 percent for the United States.

Samsung (005930:KS) remained the top smartphone vendor in China with 17 percent market share of sales. (Backing up web impressions stats we looked at last year showing that Chinese consumers love the Samsung Galaxy SII). But it can’t be complacent, as its sales were pretty flat. In second-, third, and fourth-place are, respectively, ZTE, Lenovo, and Huawei – all local brands. Lenovo saw astonishing 2,665 growth in shipments – but then it’s always easier to improve on a previously crappy performance. Apple fell to fifth place despite being up 102 percent year-on-year. HTC grew 389 percent, mainly on the back of its new Desire V phones which look to be replicating the success of the first Desire model. Nokia and Motorola both fell sharply.

Here’s all that condensed into our one simple graphic for China [1]:

The one primary winner among all this is Android, Google’s mobile OS, which is now on 68 percent of all smartphones sold globally. Apple’s iOS, by contrast, is on just 26 million of them.

Samsung is on top worldwide with “over 45 million” smartphones sold – that’s 35 percent of the pie. Apart from Taiwan’s HTC, no Chinese brands cracked the top five. Yet. Interestingly, that differs from IDC recent report for the same period that declares ZTE a new-comer in the global top five smartphone brands.

[Source: Canalys; via TechCrunch]

The men — ZTE’s Dong Tao and Chen Zhibo and Huawei’s Xiao Chunfa — were accused of involvement in a bribery scandal that saw they attempting to gain advantages for their companies with state-owned Algérie Télécom. The men were tried in absentia, found guilty, and sentenced to ten years in prison, as well as fined five million dinars (about $65,000). The companies Huawei and ZTE have also been fined and banned from partnerships with state-owned companies in Algeria for two years.

Unsurprisingly, the companies have denied the bribery charges, and Huawei told Light Reading that the charges were “very serious” and that it was investigating them. Supposedly, international arrest warrants have also been issued.

Whether they’re guilty or not, Dong, Chen, and Xiao can probably rest easy; it seems unlikely that China would extradite them. But their conviction on corruption charges will only accelerate the swirling suspicions that Chinese tech companies are untrustworthy.

[Light Reading via Sina Tech]

Today, news spread on Twitter that Sergei Skorobogatov, a security researcher, has found a backdoor in a Chinese-manufactured “American military chip that is highly secure with sophisticated encryption standard.” From his website:

We scanned the silicon chip in an affordable time and found a previously unknown backdoor inserted by the manufacturer. This backdoor has a key, which we were able to extract. If you use this key you can disable the chip or reprogram it at will, even if locked by the user with their own key. This particular chip is prevalent in many systems from weapons, nuclear power plants to public transport. In other words, this backdoor access could be turned into an advanced Stuxnet weapon to attack potentially millions of systems. The scale and range of possible attacks has huge implications for National Security and public infrastructure.

So yeah, that sounds pretty bad. And although the chip isn’t manufactured by Huawei, this could be the death-knell for its plans abroad — especially in the US — as this would seem to confirm suspicions that Chinese manufacturers are (knowingly or unknowingly) cooperating with the government to insert backdoor systems into foreign military hardware.

Now, grain of salt time: this doesn’t seem to have been confirmed by anyone else, and it’s difficult to confirm exactly how the backdoor was inserted in the first place, which means we don’t really know who is behind it. Moreover, Skorobogatov is not an entirely unbiased source, since it appears he is planning to sell the scanning technology used to uncover this backdoor.

In the end, if the story gets enough momentum, whether it’s true and who is behind it may not matter. Suspicions about Chinese hardware are already quite widespread; the revelation that Chinese chips with exploitable backdoor security flaws are installed in our military (and nuclear) equipment is not likely to make American legislators any more excited about welcoming Huawei (or other Chinese tech companies) into the US.

[via @pdenlinger and @niubi, image source]

The phone will be manufactured by Huawei, and it looks like it will carry Huawei branding in addition to being associated with Qihoo 360. In terms of specs, it sounds pretty standard for smartphones these days: 4.3 inch HD screen, dual-core 1GHz processor, 1 GB of RAM, 4 GB internal storage. At 1,499 RMB ($237), it runs slightly over the 1,000 RMB target everyone seems to be aiming for these days, but it’s not clear whether that will matter much. Xiaomi has certainly achieved a lot of success at an even higher handset price, but then again, Xiaomi has word-of-mouth buzz as a hip new company. I suspect Qihoo and Huawei may have trouble arousing the same level of interest.

Of course, this is all just speculation at this point. Is the market thirsty for as many cheap smartphones as China is serving up? We’ll just have to wait and see.

[via Sina Tech]

According to IDC’s smartphone shipment projections (see chart below), we can expect China to push the United States down into the number two spot by a very slim lead. IDC’s senior market analyst Wong Teck Zhung explained:

PRC smartphone shipments are expected to take a slim lead over the U.S. in 2012 before the gap widens in the coming years… There will be no turning back this leadership changeover.

As for India, you can see that it is expected to make a pretty big jump to around 9 percent by 2016. IDC cites the future ‘aggressive roll out’ of 3G networks from local carriers, as well the increasing availability of low-cost smartphones.

The report qualified that the cost of smartphone ownership in emerging markets still needs to come down, however, and it’s hoped that regional vendors like Huawei, ZTE, Micromax, and Spice can help improve this situation over time.

More news from Mobile World Congress out of Spain, as Chinese manufacturer Huawei (SHE:002502) has unveiled what it claims is the ‘world’s fastest smartphone’ the new Ascend D quad handset. And while we can’t verify any truth behind that speed claim yet, it’s notable that Huawei’s language regarding its MediaPad 10 also included superlative claims.

The engine behind the speed claims is Huawei’s K3V2 quad-core 1.2GHz/1.5GHz processor. It also boasts a 4.5-inch HD display, an 8 megapixel rear-facing camera, and a battery life of about one two two days (under normal usage). The company’s chairman, Richard Yu, commented on his company’s announcement:

In January at the Consumer Electronics Show at Las Vegas, we achieved a world record for the world’s slimmest smartphone with the Huawei Ascend P1 S. We are proud to once again introduce a world-first at the 2012 Mobile World Congress with the Ascend D quad, the fastest smartphone.

The phone is actually available in two models, the Ascend D quad and the quad XL, the former measuring 8.9 mm thin while the latter is 10.9mm. Both will run Android 4.0 (Ice Cream Sandwich) and will be released in most markets in April.

Huawei has shown promising growth in the phone market over the past few quarters, overtaking companies like RIM and Motorola on its way up the ladder [1]. Just this morning we also saw Taiwan’s HTC announce its One series smartphone, which it hopes will help it bounce back in the smartphone wars. It isn’t doing quite as well of late.

For more on the Huawei Ascend D quad, check out the somewhat dramatic promo video below:

Having launched Daum Mobage in Korea earlier this week, DeNA (TYO:2432) just announced that it will be bringing its social gaming platform to Huawei smartphones in China now too.

This means that the Chinese version of Mobage will now be listed in Huawei’s (SHE:002502) ‘HiSpace’ app store. There are also plans for a link to HiSpace’s list of Mobage games on Huawei smartphone homescreens. You can check out some of the screenshots below.

Readers may recall that this is not the first partnership that DeNA has made to push Mobage further in China. The Japanese social gaming giant has also partnered with Baidu and Alibaba Cloud Computing to bring Mobage to their respective mobile operating systems, and it struck a deal with social network Kaixin001 back in December.

According to the announcement, Huawei had shipped about seven million smartphones in China last year. The company is moving up quickly among the world’s top smartphone makers, along with domestic rival ZTE. It’s now gearing up for MWC 2012, where it is expected to unveil its MediaPad 10, which chairman Richard Yu says is the “most power tablet that ever existed.”

According to Huawei chariman ‘Richard’ Yu Cheng-dong, posting to his Weibo account, the company is ready to impress with its upcoming MediaPad 10 tablet. He claims that it is the “most powerful tablet that ever existed.”

It will be powered by something called the Hisilicon K3 V2 processor, but it has not been made clear if it will be dual- or quad-core. It might well be a quad-core beast if it shares the same heart as the forthcoming Ascend D1 Q phone.

Photos of the 10-inch screen MediaPad 10 tablet have leaked, giving us a few angles of its sleek frame and slim body. In an earlier Weibo posting made by Richard Yu, he said the MediaPad won’t show itself until MWC 2012, which kicks off next week, where Richard himself is scheduled to take off the wraps.

According to Sina Tech and PC Online, the MediaPad 10 has a quad-core processor (which, as we mentioned above, is debatable), a proper HD resolution screen that’s 1920 by 1200 pixels (also a questionable claim), an 8-megapixel camera, stereo speakers, a slimline build, a microSD card slot for expandable storage, and a SIM slot for 3G cards. It looks to be running Android 4.0, the very latest version of Google’s mobile OS.

There’s no word on price and availability for now.

[News and photo source: CnBeta.com]

China’s largest mobile ad platform, Madhouse, has released new stats which give a fresh picture of the smartphone landscape in China. It shows that, up to the very end of 2011, there has been a recent strong surge in Android usage, and that consumers are buying both cheaper and more high-end phones as iOS and Android phones spread across the social (and wage) spectrum.

The stats were taken from a very broad range of apps and websites that make use of Madhouse’s mobile ad platform, allowing the Chinese company to collate geographic, handset, and software data. And so this relates to observed usage, not sales figures. Some highlights include the 64.2 percent market share of Android devices (more than double that of all iOS ones), and another stellar quarter for Samsung (005930:KS) thanks to its range of Android phones.

You might like to contrast the Android aspects of the data with those sourced from Umeng, a rival Chinese ad and referral platform, which collects usage sessions data in the same way. Last time we looked at stats from Umeng, we crowned Samsung’s Galaxy S as the king of Android phones in China, but the Madhouse figures beg to differ.

Here are the five key areas of iOS and Android usage in China, whipped into graphic form by the Madhouse crew:

By Region and Province

It’s a bit of a surprise that Beijingers cause so few ad impressions. Perhaps the capital’s residents don’t browse the mobile web so much, are resistant to clicking ads, or can’t see their smartphone’s screens through the smog. No surprise, though, that the wealthier provinces make up the top four.

By Handsets and Phone Brands

But that doesn’t mean that only those with fancier phones go online, of course. Though Apple’s (NASDAQ:AAPL) iPhone 4 is the leading single model (albeit down 13.1 percent on the previous quarter), second place goes to the lowly Huawei C8500. In contrast to the data from Umeng, the Samsung Galaxy S is only the fourth most popular phone.

By Cost of Phone

As a corollary to the previous graph, we see the greatest growth in cheap phones costing from 1,000 to 1,499 RMB (US$159 to $238), such as the afore-mentioned Huawei C8500.

By Size of Screen

Meanwhile, higher-resolution screens were booming as well, presumably among more monied folk. Phones that have screens wider than 640 pixels include the likes of the Motorola MT917 and the HTC Sensation.

By Android or iOS Version

This data being from Q4 2011, we see that most iPhone users were on the fairly recent iOS 4.3, which was the last before iOS 5 rolled out. However, on the Android platform we see the effect of all those budget phones as the relatively ancient Android 2.1 was still (by a tiny margin of 0.4 percent) the most used version. The newest iteration for phones at that time was 2.3 (with 3.0 being for tablets).

But the headline news is that, judging by these metrics, Android is well over twice as popular as iOS in China – and a broad price range of handsets will accelerate that even further as yet more people snap up, say, the Galaxy S II and new budget phones from local brands Huawei and ZTE in the coming year.

As a side-note, Madhouse observed that just over half – 52 percent to be precise – of its tallied ad impressions were done over wifi, not 2G or 3G. Grab the full report from the Madhouse newsletter for February.

Apple's New Hong Kong store, photo via Casey Lau

According to new figures from Gartner, Apple (NASDAQ:AAPL) posted a stellar fourth quarter, increasing 121.4 percent on the previous year. On the strength of the iPhone, the Cupertino company bumped off LG as the third-largest handset maker, and also became the world’s dominant smartphone maker, grabbing 23.8 percent of that market.

Recent weeks have been great in terms of sales for Apple, but as my colleague Charlie points out in a very thorough post earlier today, the company is coming under scrutiny regarding labor issues with its suppliers.

Besides Apple, Chinese vendors ZTE (HKG:0763; SHE:000063) and Huawei (SHE:002502) were the fastest growing manufacturers in the Q4. ZTE in particular, which is planning a big push in the American market this year, did especially well moving up to fourth place in the mobile market.

In the charts below you play the animation to see the gradual rise of these three companies over the past two year, overtaking companies like LG and RIM. In the second graphic, you can view the mobile OS wars, marked by the slide of Symbian, and the rapid ascent of Android and iOS.

Want a fake Nokia N9 that has a rip-off iPhone (or also HTC Sense) UI? Then some random shanzhai manufacturer has just what you desire. (Image source: Micgadget)

China’s ramshackle cottage industry of low-grade phone and gadget makers – known as shanzhai in Chinese – looks to be on the verge of extinction with one report saying that the southern city of Shenzhen has gone from hosting thousands to just twenty such shady manufacturers in the past year. It comes as consumers in the country become more aware of branding and quality, and also due to crackdowns on shoddy or pirated goods and other illegal activities in which some of these shanzhai manufacturers engage.

It’s hard to define precisely what these cottage industry factories do. Some are genuine OEMs or parts makers that create things like phones as a sort of side-line, perhaps using their own cast-off parts. Others are opportunists that copy a popular phone to make a quick buck. A few used blatantly ripped off names, such as NOKLA; although most just made up a random logo with no thought to long-term branding. According to Techweb, which today writes on the demise of these shady gadget makers, a shanzhai manufacturer could copy a phone and get it ready for production in just two weeks – in contrast to the year or more that it takes established manufacturers.

Shanzhai manufacturers were always superb at giving consumers what they wanted, and so they contributed as much – or more – to the fall from grace of Nokia in China as, say, Apple (NASDAQ:AAPL) or Google (NASDAQ:GOOG). That’s because whereas China’s wealthier citizens bought smartphones, a lot of its poorer and rural folks made do with shanzhai ‘feature phones’ that gave them what they needed: dual or triple SIM support so as to juggle the cheapest calling plans; TV antennae; dozens of colours or snap-on accessories; pick and choose a fake UI skin that aped iOS, Symbian, or Android. It was grassroots innovation – so long as you didn’t expect your new phone to last for years. The fly-by-night gadget makers gave all those features, and more, for prices that way undercut Nokia (HEL:NOK1V; NYSE:NOK) and other feature phones.

The End is Nigh

But all that seems about to unravel, and it will be to the benefit of makers of cheaper devices, such as ZTE (HKG:0763; SHE:000063), Huawei, and perhaps Nokia as well.

The Techweb report says that a lot of factories in and around Shenzhen are going under, leaving thousands out of work, and collectively owing a lot of money to employees and investors. There appears to be four main reasons for this:

• A clampdown on illegal activities and piracy - With so many shanzhai manufacturers breaking numerous laws – from copyright infringement to tax evasion, the forging of IMEI numbers to the smuggling of parts or phones – increased police pressure is putting a lot of them out of business.

• Cleaning up Shenzhen ahead of the Universiade - A lot of the afore-mentioned clampdowns were actually clean-up campaigns related to the Universiade games which took place in Shenzhen in August of last year. Major events like these often cause a police sweep of normally overlooked illegalities.

• Consumers worry about quality - With a number of high-profile food safety concerns in China, consumers are perhaps thinking about their gadgets as well. After all, if a shanzhai phone explodes and rips your ear off, you’re unlikely to find the manufacturer let alone be able to win compensation.

• Better cheap phones from established brands - And, lastly, there are now cheap handsets with more diverse features from a number of well-known brands. They’ve finally realised they they need to listen to consumers more, and give them some useful features such as dual SIM slots.

We’ve already seen decreasing demand for these cheapo phones in China, but as long as there’s some measure of demand, some entrepreneur will choose to make a profit from it. And so we don’t think shanzhai is dead yet – perhaps it’s just about to depart Shenzhen and move inland.

[Source: Techweb - article in Chinese; image from Micgadget]

And this year's Android winner in China is... Samsung! Especially this Galaxy S, which seems to be China's hottest Android smartphone this year.

The Infographic of the Day series visually expresses important stories from Asia and the world of technology.

The Chinese mobile analytics company Umeng has released new stats which give us a clear picture of the Android user-base and the devices being used in China.

It shows us that in Q3 2011 Samsung (005930.KS) and HTC (TPE:2498) dominated the Android scene here, together accounting for about 53 percent of all phone traffic detected by Umeng. Bizarrely, it also reveals that Android tablets have become less popular this quarter, with decreased usage from Q2 to Q3.

Umeng only covers apps which utilize its mobile ad network – which we reviewed before – so this is not a measure of sales, more of active usage. But that’s actually fine, as it covers over 10,000 common apps that are downloadable from a range of sources and alternative Android app stores. And so it gives a pretty representative view.

Android Tablets vs Android Phones
Yes, Android tablets – which seem to be as popular as stale cakes – saw even less usage in China in Q3. The Ionesco-esque rhinocéros in the room is that the iPad is still booming, whilst Android tablets are not quite so appealing to consumers. Meanwhile, in the graph on the right, we see the top ten Android phone brands in China:

Phone Models
Samsung’s GT-I9100 – better known as the Galaxy S – is the most popular single model of Android phone in China. Huawei snuck into a surprise second place with its cheap but low-end C8650:

Tablet Models
Another victory for Samsung in terms of tablet models, with its seven-inch Galaxy Tab taking the top spot. It’s another home-grown competitor in second place, but this time it’s from Lenovo (HKG:0992):

Powerful Androids
It seems people are more likely to have really powerful tablets than phones. The processor speed (the CPU) of most phones is spread quite evenly, suggesting a broad price range of devices. The afore-mentioned Galaxy S phone has a 1 GHz CPU, making it pretty speedy:

Phone Screen Resolution
Further indication that many people in China are on budget handsets comes from the fact that about 40 percent of people are using phones with a resolution of 320 by 480 pixels or less. Higher rez screens, such as seen on the new Motorola MT917 for China are creeping in slowly, meaning that local developers need to remember to create more detailed graphics for apps and games:

Tablet Screen Resolution
Here’s the same scenario amongst tablet users here:

Pricey vs Cheap
From looking at the models that are on the Umeng network, the company has figured what kind of money people are currently spending on their Androids:

Across China
No surprises here, where the richest areas in China show the most usage of these smartphones and tablets. In descending order, the provinces are: Guangdong, Jiangsu, Zhejiang, Beijing, and Shanghai, which are highlighted in that blue rectangle:

How Has All That Changed From 2010?
Good question, dear reader. Looking back at Umeng’s report from Q4 2010, we see that Motorola (NYSE:MMI) and HTC had the most popular models. So it has not been too great a year for either of those to have been usurped by Samsung in 2011. Here’s the old view from 2010:

Download the full reports – and others from the archive – from Umeng at the link below.

[Source: Umeng report - page and report in Chinese]

A $100 Android device? That’s so passé. That’s because $50 Android smartphones are on the way for 2012. A brand-new pair of budget chipsets devised by the Chinese manufacturer Spreadtrum (NASDAQ:SPRD) will bring down the cost of entry to the world of smartphones very soon, with manufacturers able to make – says Spreadtrum – “$40 to 50” handsets that are expected to hit stores in China sometime next month. The chipsets – which hold an ARM 9 600MHz processor, and can support only the older Android 2.2 OS – have just starting shipping to OEMs.

One of the pair is the SC8805G (pictured above) which supports China Mobile’s (NYSE:CHL; HKG:0941) TD-SCDMA 3G network. The country’s largest mobile telco has already certified it for use on its network, and will likely subsidize a range of very low-price Android smartphones that will certainly be cheaper than its previous promotions for 1000RMB ($157) devices, such as the Huawei U8110, which is better known as the IDEOS (pictured below).

Previously one of China's cheapest Android phones, the IDEOS will soon by usurped by new $40 to $50 smartphones.

It’s not yet known which OEMs will be first to adopt Spreadtrum’s new chipset – but manufacturers have known they were coming for months in advance and will have been prepping devices in good time to ship in January, ready for Chinese New Year. Likely candidates include Chinese firms such as ZTE (HKG:0763; SHE:000063), Haier (SHA:600690; HKG:1169), and Huawei as well.

This development should increase the rate of 3G adoption in China, which has so far been quite slow. Currently, China Mobile has 43.2 million 3G users (in most recent stats for Q3 2011), the highest of China’s three carriers, despite running a made-for-China 3G spectrum not used anywhere else in the world.

The other chipset is the SC6810 for GSM handsets and which supports only 2G/GPRS plus wifi, and will likely power super-cheap Android phones on China’s other two networks as well.

In a press release to mark the shipping of these cheapest-ever Android-based chipsets, Spectrum’s president and CEO Dr. Leo Li, remarked that they were a first move into smartphones for his company, as well as a game-changing “new price segment that will make smartphone devices more accessible to consumers in China and emerging markets.”

Increasingly, Chinese manufacturers are breaking away from being OEMs and are also casting off the shoddy mantle of making shanzhai – fake, or low-rent – gadgets. That’s because the likes of OPPO, Tian Hua, ZTE, and many more, are aiming to make your next smartphone. In so doing, these ‘designed in China, made in China’ companies are hoping to emulate – and then topple – the likes of HTC (TPE:2498) and Samsung (SEO:005930).

And thanks to both Android and WP7, they have a chance of being the smartphone that more people in the US and Europe slip into their pockets.

Here are six Chinese brands who’re now pushing, and enhancing, their smartphone range more aggressively:

OPPO

(Image source: Engadget)

The Donguan-based OPPO sure likes ambitious marketing, recruiting Hong Kong starlets and even Hollywood heart-throbs for its marketing campaigns. But aside from those clever campaigns, its phones have been lacklustre, and its brand-name is still as low as it can go among Chinese consumers.

But its Android-powered X903 showed potential (pictured above), and it looks like it could find a niche – with later iterations – on American or US telcos as a budget smartphone for those who love hard keyboards.

Tian Hua

Tian Hua has been nicely cashing-in on its W700 smartphone (pictured above) this year, manufacturing it for Alibaba as the first Aliyun phone, for China Unicom (HKG:0762; NYSE:CHU) as a mid-range carrier device, and soon for the Indian telco Micromax.

Now that it has found its stride, it’s a contender for pushing further overseas – although it shows no sign of doing so yet.

Haier

(Image source: Phandroid.com)

Qingdao-based Haier (SHA:600690; HKG:1169) showed some flair earlier this year with the nicely-skinned UI on its seven-inch Haipad Android tablet.

And, indeed, being a larger company than the above two brands, it’s already on US shores – albeit with some low-spec and none-too-alluring phones. But it’s a start.

ZTE

Let’s get more realistic now and talk about a company who’s already making big moves in the US: the Shenzhen-born ZTE (HKG:0763; SHE:000063). Already China’s second-largest telecommunications business, it has hooked-up with UK, US, Canadian, and French telcos already. Its biggest-ever launch happened just this month as its mid-range, large-screen ZTE Warp (pictured above) hit Boost mobile.

ZTE looks the most likely to emulate the success of its Taiwanese brethren at HTC – by building its brand quickly with mid-range Android smartphone that are reasonably stylish and don’t look too off-puttingly cheap.

Huawei

Huawei is finally shaking off the shackles of being the guys behind the $100 (or 1,000 RMB) ultra-budget phones, such as its IDEOS. With such devices costing a reported 700 RMB to manufacture (before even adding in R&D and other overheads), it’s clearly better off building higher-end devices and spreading its name. To that end, the Huawei Honor (pictured above) is its biggest push, hoping to steal sales from LG or Samsung with a 1.4GHz processor behind a decent 4-inch screen. But it’s initially aimed at Russia, China, and the Middle-East; we learned earlier today that it’ll ship in December.

About the name… Huawei remains controversial in the US and elsewhere, unable to lose the stigma of being founded by a Chinese army soldier and retaining close ties to authorities here. That’s hampering Huawei’s telecommunications business – where it competes with Cisco, and Ericsson – and losing it contracts in overseas markets that fear security breaches. Perhaps its smartphones can be a softening touch to win round consumers (and politicians).

Lenovo

Not a smartphone, but a leaked Tegra 3 tablet from Lenovo. (Image source: Engadget)

Lastly, here’s a very well-known name: Lenovo (HKG:0992). Now the world’s number two PC-maker, Lenovo – like Huawei – has been only gradually moving away from cheap smartphones that had to be subsidized by Chinese telcos. It was an odd stage to be in: supposedly making some of the world’s best business-oriented laptops whilst simultaneously making some crappy phones that devalued its brand-name. The stylish LePhone was an interesting gambit, though it largely failed in the face of cheaper devices that weren’t tied to perennially unpopular carrier contracts.

But Lenovo is still lacking in convincing phones, and seems intent on complementing its PC hardware with some powerful Android tablets for the global market instead. There’s a Tegra 3-powered slate reportedly due by the end of the year (pictured above).

iSuppli forecasts that by 2015 global smartphone shipments are expected to grow from 478 million (currently) to 1.03 billion. It’s a higher profit sector than feature phones, and gives scope for international expansion.

Of course, there are still many challenges ahead – such as a lack of world-class local processing power; though Taiwan’s Mediatek (TPE:2454), or China’s Rockchip could grow in-line with strengthening local manufacturers (to truly maximize lower costs).

It’ll be interesting to see how keen – or resistant – western and pan-Asian consumers are to buying Chinese phones.

The phone will be available in Russia, Indonesia, Singapore, Malaysia, Japan, and China from December, with other markets to follow. The pricing hasn’t been announced yet though. The photos we received look pretty good, as you can see in the slideshow below. A few quick points about the Huawei Honor:

• Exclusively designed icons, widgets, and 3D transitions. Huawei-customized Android 2.3.5 user interface (UI).
• Backs up data like messages, contacts, and call logs on its SD card. Data traffic manager included.
• Social media aggregation. Users can view all newsfeed (Facebook, Twitter, etc.) in a single page.
• Allows users to close all running applications in one touch, thus saving on battery life.
• Huawei Guard scans and eliminates viruses, spam calls, and unwanted messages. It also has password-protect for private content such as contacts, messages, and call logs.

With Christmas – and Chinese New Year – coming up, we can expect more gadgets to be released over the next few weeks. Before you move on to our next post, let us know via the short poll below if you would be interested to buy the Huawei Honor this holiday season.

Chinese telecommunications companies Huawei and ZTE will help Softbank build it’s new 4G network. Softbank announced the new 110 Mbps network at an event yesterday, saying that it would launch in November.

The network will based on the AXGP format, which is compatible with the Chinese LTE TDD standard that Apple will reportedly support.

The announcement of the joint contract revealed what might be an underlying drama between Chinese rivals Huawei and ZTE. The latter had an interesting choice of words regarding the announcment, saying that it is the “primary strategic partner” for Softbank in building the new network, this according to a Bloomberg report.

Huawei had no such comment about the extent of its partnership, but its press release made no mention of ZTE. To be fair, there’s nothing that says it has to) — I just thought it was an interesting omission. When contacted Huawei by Penn Olson this evening, Huawei could not disclose the size of the contract, and not surprisingly, it declined to comment on its competitor’s comment.

It’s not insignificant that earlier this year Huawei sued ZTE alleging patent infringement relating to its LTE technology.

On a related note, both of these Shenzhen-based companies are expected to lead the smartphone industry in growth this year. For Huawei in particular, this venture in Japan is another example of how the company is stepping up its business operations overseas in comparison to at home (see right).

[Photo: mycom.co.jp, ascii.jp, Chart data from Huawei.com, PDF]

Huawei Honor

We just received an announcement that Chinese manufacturer Huawei is planning to release an intriguing new smartphone in the fourth quarter of this year. The design looks very sharp (pictured right), bearing more than some resemblance to the iPhone or Samsung’s Galaxy, whichever you believe came first.

The Huawei Honor will be powered by Android 2.3.5 and a hefty 1.4 GHz processor. It features 512 megabytes of RAM, 4 gigabytes of on-board storage supporting expansion of up to 32 gigabytes via a memory card slot. The 8 megapixel rear-facing camera is HDR-enabled, and there’s a 2 megapixel cam around front for chat. The company is touting it as one of the phone’s strong points, claiming that you can ‘share and connect’ for up to three days on a single charge. Chief marketing officer Victor Xu said in a statement:

Honor provides a package of features that elevates the smartphone user experience, including an ultra-long battery life, so critical to the performance of smartphones but yet is often downplayed.

With such solid specs, this phone could attract a lot of buyers. The a representative tells Penn Olson that Huawei isn’t targeting a specific region, although it will first be available in China, Russia, and the Middle East with other regions to follow.

Digitimes Research recently speculated that Huawei would lead the smartphone industry in growth this year, and a phone like this one would certainly help the company on its way. That report said that Huawei was expected to ship 400 percent more units on the previous year.

A few months back we looked at first quarter numbers from IDC regarding year-on-year growth among the world’s top smartphone makers. At that time, we noted the strong growth of Samsung and HTC (at 350 percent and 229.6 percent respectively), which likely correlated with the widespread growth of the Android platform.

Now new projections from Digitimes Research for the year 2011 still show stellar growth for those two companies at 191.3 and 106.2 percent projected for the year. But what’s even more notable is the growth that Digitimes is expecting for Chinese makers Huawei and ZTE (neither of which were specified in IDC’s Q1 release).

It’s expected that Huawei will see a 400 percent rise in shipments, moving 18.7 million units. ZTE should be close behind, expected to rise 330.3 percent with 14.2 units shipped.

Analyst Luke Lin elaborates on Digitimes’ forecasted figures:

Both China brands are benefiting from explosive growth in demand for Android devices, close ties with China’s local mobile operators as well as [the] competitive prices of their products.

It’s important to keep in mind however that these two companies, still have a long way to go before they can play with the big boys. According to the report, Apple – which will surpass Nokia as the top smartphone vendor – will move 86.4 million phones for the year 2011. Nokia, the only company in the report forecasted to see negative growth (see above chart), will move about to 74.4 million — still nothing to slouch at. Expect Samsung to leapfrog the Finnish phone maker next year if things continue like this.

Huawei is very serious about competing in Indonesia’s mobile market. After showcasing various mobile phone products at the Indonesia International Communication Expo and Conference (ICC) in June, and launching the IDEOS S7 recently, the Chinese mobile giant is now partnering with PT Teletama Artha Mandiri (TAM) to distribute mobile phones and tablets throughout the country. Both companies signed an agreement recently at Plaza Senayan, Jakarta.

As reported by Telset, the president of Huawei Devices South Pacific, Mike Liu, said that the company has an ambitious target in Indonesia. And introducing Android-powered devices is a priority at the moment. Considering TAM’s success in distributing BlackBerry products in in the country, Huawei believes it will bring luck to the company as well.

TAM is well-known for its vast distribution network across the country, with 2,093 wholesalers and retailers from its 20 branches. The company’s achievement as the leading distributor of Sony Ericsson, Samsung, and BlackBerry should be a big boost for a new-comer in the local retail market. So this looks like a promising step for Huawei.

It’s interesting to see Huawei move in the country as it tries to keep pace with fellow Chinese manufacturer, ZTE, which also recently announced its own retail plans with an affordable Android-powered phone and tablet for the Indonesian market. Both companies are making inroads in not just Indonesia, but in India as well. For Huawei, revenue over the past few years has shown more growth in overseas regions than in its native China (see chart, right), so stepping up its game in Indonesia should bolster that trend even more.

The timing is right for Huawei to start selling smartphones in Indonesia too. Why? Because many Indonesians tend to buy new mobile phones to celebrate Eid, the period following Ramadan. And with half of Indonesian netizens using mobile phones to go online, it shouldn’t be long before luck knocks on Huawei’s door.

Just as nature abhors a vacuum, Chinese web companies are amazingly good at filling a niche in the market. And so it follows that Tencent yesterday launched an Android management app that’s a sort of ‘iTunes for Android.’

As Android rockets in popularity in China, there’s obviously a huge hole to be filled by the lack of an Android equivalent of iTunes. That’s what Tencent’s new ‘App Assistant for Android’ aims to be. It’s a Windows app for managing everything about your Android phone over USB or wifi – downloading apps (see picture below), syncing music and other files, transcoding videos, taking Android screenshots, and backing-up your phone.

The Tencent Windows-only app – you can check it out here – supports XP, Vista and Windows 7 on the desktop side, and will hook-up pretty much any Android phone that’s ever been made, from your lowly Huawei (pictured top) to your shiny new Motorola.

The unofficial Android app store that's integrated into Tencent's new desktop app.

Back in May of this year we lamented that China was pretty much the only non war-torn or glacier-covered country in the world that didn’t have paid apps support in Google’s Android market. It has left quite a vacuum in terms of app availability that a lot of people have rushed to fill – from Downjoy inking a deal with Rovio to distribute Angry Birds, to Baidu setting up its own Android app catalog just last month.

To be fair, Tencent wasn’t the first to come up with this idea – some might say Tencent is never the first to come up with any of its ideas – as the guys over at the Chinese startup PeaPod launched a similar app over a year ago, and even attracted some VC funding earlier this year.

Elsewhere in the world, DoubleTwist has a similar app for Android-loving Mac users that syncs music, videos, incorporates its own app store, and supports the purchasing of music from the Amazon music store.

[Image source: Newhua]

The partnership apparently has Huawei and Kunlun looking beyond the Chinese market, too. Sources divulged that the two companies are planning a strategy for entering markets overseas. This doesn’t come as a huge surprise; Kunlun has obviously been eyeing the overseas market for some time, and in fact have made several forays into the it already with its English subsidiary, Koram Games.

Kunlun currently offers a variety of games, most of which are either RPGs or RTSs — these are the most popular game genres in China. Most of them are also browser-based and free to play. But Kunlun has been expanding aggressively for the past few years, and recently hired Chen Haoxian, the former vice-chairman of Chinese games giant Shanda, as their vice-chairman of research and development.

Kunlun sources suggested that the company plans to IPO sometime next year, and that the current round of financing is an important step in their strategic plan.

[Tencent Tech News via Techweb]

An Indonesia user on Huawei IDEOS S7 Slim. Credit: Okezone.com

In addition to smartphones, tablets are also gaining enormous popularity here in Indonesia. Almost every tablet offered by any vendor has been well-received by users. And the new Huawei IDEOS S7 Slim is no exception. People were seen lining up for the tablet’s first public sale last weekend at the Taman Anggrek Mall, Jakarta.

It’s quite a surprise considering that Huawei isn’t exactly as popular as other mobile maker brands like BlackBerry, Samsung, or Apple in Indonesia. The Chinese mobile giant didn’t splash any big budget on a marketing campaign either. But word about the device was spreading nonetheless among gadget enthusiasts in Indonesia. The end result was a long queue of people spotted at 5am (yes, 5am!) all hoping to be among the first to hold a IDEOS S7 Slim in their hands.

You may be wondering, why such a crowd for a Huawei device? It was an irresistible bargain. Huawei offered 100 units of IDEOS S7 Slim for Rp 2,000,000 (approximately US$231). That’s half the normal price. Plus, it is bundled with 12 months of unlimited 3G internet service by XL, making it a pretty sweet deal for many Indonesians.

The tablet is powered by Android 2.2 and a Qualcomm Snapdragon processor. It even has a kickstand to help you view the screen at different degrees, a minor but useful addition for YouTube and movie addicts. It also has a micro-USB and micro-SD card for easy file transfer. You can learn more about its tech specs on the official site here.

While there are many nice things to say about the tablet, the battery lifespan seems to be a major problem as it can only last about 4 hours with running Wi-Fi and perhaps even less if you were to stream videos on YouTube. The battery is replaceable though. But it’s still a big downside for the tablet.

For a closer look at Huawei’s IDEOS S7 Slim tablet, here’s a video review from MyTabletLife:

[Image source]

The order is believed to be for six different handsets, of 500,000 to 600,000 units each. All of them will be 3G smartphones, on the homegrown TD-SCDMA frequency that China Mobile uses, and they will all be low- to mid-level phones on the cheaper end of the smartphone scale.

Mobile TV is the most unique feature that the phones will bring. Again, this is a China-developed technology – the CMMB standard for mobile TV transmission – that is being pushed by the state-owned China Mobile.

The mobile TV roll-out started in March of this year, across 300 cities and to huge fanfare in (state) media – see this Sina Tech report from the time (article in Chinese).

It’s not clear which OS this new batch of mobiles will be running, but it is very likely that they’re also rocking China Mobile’s own Android modification, dubbed OPhone, which has mobile TV support baked in – as seen in the two photos of the OPhone-powered Lenovo O1 in this post.

China Mobile has struggled to get appealing handsets onto its TD-SCDMA network, but this year finally got some attractive top-end Motorola and HTC smartphones.

Between the previous sales figures and this new crop of mobile TV smartphones, China Mobile actually looks set to reach its initial goal of selling five million of them by the end of this year. Perhaps by then I will also have seen someone actually watching live TV on their phone, which I’ve not yet spotted.

[News source: Marbridge Consulting; Photo source: Zol.com.cn]

According to a report from Voice & Data, Indian consumers purchased over 120 million handsets in the 2010-2011 fiscal year, on average that’s a remarkable 10 million phones per month. India also added 18 million mobile subscribers for the year, as handset market revenue grew 15% on the previous year.

Nokia still holds the largest share of the market at 39%, but posted a meagre growth rate of 0.2% on the year. When we attended the Global Mobile Internet Conference in Beijing this year, Pankaj Choudhury, the managing director of iFree India explained:

India is getting hit from all sides in India. From NTK, Micromax. In India you need to roll out handsets very quickly, and Nokia isn’t doing that.

While Samsung holds the second spot at 17%, things get interesting after that with homegrown maker Micromax taking third posting 43% growth on the previous year, a Voice & Data explains:

Its success can be attributed to its strong distribution network and ‘good-looking’ phones at an affordable price. Certain credit can also be given to its brand promotional activities. It spent more money than any other mobile phone company in India on brand building.

Taiwanese manufacturer HTC led the field in growth at 99.1%, but companies like G7Five, Intex, and Maxx are also doing surprisingly well.

For more on the rapidly growing mobile Industry in India, check out this recent infographic that summarizes some key numbers.

Chart: Revenue in crore for 2010-2011 (% growth on previous year), dark green = high growth, light green = low/negative growth)

Photo: Phones.com

A Chinese recruitment website has released a survey of over 200,000 university students, asking them to choose the companies where they would like to work. Technology companies are well represented, so we thought we’d take a look at the top employers in each of the following sectors: online entertainment, Internet/e-commerce, computer hardware/software, and telecommunications.

Chinese Gaming Giants Beat out SNS

In online entertainment we have gaming companies Shanda and Giant topping the list (see table below), with video site Youku taking the third spot. Social networks Renren and Kaixin are in here as well, as is Facebook, perhaps the most surprisingly company listed considering that it doesn’t yet have a China presence.

Alibaba most attractive Internet company

In the Internet and e-commerce space, Alibaba stole the top spot from search giants Baidu and Google. Alibaba was, in fact, the third-placed company out of all employers in China, not just those in the technology sector.

It’s interesting to note that students still see Google as a desirable place to work despite the many troubles that the company has had in China over the past few years.

Would you like to work for Mac or PC?

In the personal computer space, Chinese manufacturer Lenovo topped the list while Apple finished in second. It’s somewhat surprising to see Foxconn make third place on this ‘desirable employer’ list, given all the reports of poor working conditions here. But of course, the job conditions for university grads are going to be far better than what we see in the news about Foxconn factories.

Meanwhile on the software side, Microsoft and IBM top the list.

And the winner is…

In the communications industry, China Mobile was the top ranked employer. In fact, the telecommunications giant was the number one company on this list for the third consecutive year. Huawei is a surprise at number two, or rather, it’s a surprise to me at least. While Huawei is a most remarkable Chinese company making waves on a global scale, it used to have a reputation for being a terrible place to work.

Communications / telecommunications industry
1. China Mobile Communications Corporation
2. Huawei Technologies Co., Ltd.
3. China Telecom
4. China Unicom Group Ltd.
5. ZTE Corporation
6. Nokia (China) Investment Co., Ltd.
7. Motorola Mobile Technology (China) Co., Ltd.
8. Ericsson (China) Communications Co., Ltd.
9. Cisco Systems (China) Technology Co., Ltd.
10. Datang Telecom Technology Industry Group

Note: These lists were machine translated with some manual correction where I saw appropriate. If there’s an inaccuracy, please let us know.

We received an pretty fascinating note this evening from Huawei’s press team telling us about the company’s new MediaPad. Billed as the “world’s first 7-inch Android 3.2 Honeycomb dual-core tablet,” this device certainly looks the part of an up-and-coming tablet competitor.

Huawei’s MediaPad sports an LCD capacitive touchscreen capable of 1080p full HD video playback, plus it features a HDMI port if you’d like to pipe your media elsewhere. The body is compact and slim, measuring only 10.5mm thick and weighing a mere 390 grams.

The tablet is powered by a Qualcomm dual-core 1.2 GHz processor, and it sports a five megapixel rear-facing auto-focus camera as well as a 1.3 megapixel cam on the front. The company doesn’t specify the amount of RAM, which leads one to suspect that it isn’t impressive.

The onboard storage is also not mentioned, although we’ve heard multiple reports that it will be eight gigabytes — clearly leaving much to be desired. But there is a microSD slot that’s good for up to 32 gigabytes should you feel the need to compensate.

You can see a video demo of the MediaPad and Huawei’s press release below. If we get any more details back, we’ll be sure to post an update.

Huawei’s Press Release:

Indonesian mobile phone brand, IMO, is beginning to give more attention to educational institutes as a form of branding strategy. IMO’s producer, PT Konten Indomedia Pratama is partnering with Gunadarma University and Bina Sarana Informatika (BSI) School to provide students with scholarships to China.

Starting in June, 16 students from the universities will visit IMO’s factory in China. The scholarship program is exciting for students.

For four months, selected students will learn to design, test, and create a mobile phone product from scratch. They will also learn how to develop educational applications that runs on the mobile phones. These phones, created by students, will be introduced to the universities and sold to the fellow students.

I Made Wiryana (a Balinese name), Coordinator of International Cooperation Gunadarma University, hopes that students can learn to design and produce world-class products as they become technology entrepreneurs through this program.

In Indonesia, IMO’s occupies the middle range of the mobile phone market segment. Many IMO users are students and this scholarship program, I would say, is a good strategy to improve brand image and promotion among a targeted audience in Indonesia. IMO’s effort also helps Indonesian students to learn through this campaign/scholarship. Huawei, as we last reported, is also taking part in the education sector by providing a training center. Through programs like these, the telecommunications and mobile industry in Indonesia could strengthen while preparing the next generation for the upcoming mobile trend. It’s a win-win situation and hopefully more technology companies will follow suit.

via Kompas

Realizing the value of that market, Lenovo has set a target that 25% of its overseas sales will be from Indonesia. The Chinese maker has already launched four low priced mobile phones, and will continue its push launching five devices this month, all priced below 1 million IDR (US$ 115). Among these will be an Android-based touch smartphone called LePhone. Lenovo’s hybrid tablet, LePad, is a 10-inch tablet that can run either both Android OS or Windows.

Acer, well known for its notebook and netbook products here in Indonesia, has also turned its focus to tablets. The company launched the Iconia Touchbook last week, which features as i5 processor, two 14-inches screens made of Gorilla Glass, multi-touch, and movement reflect. Acer Iconia sports a new ‘ring’ interface on top of a Windows 7 OS. A user can choose between the items on the ring with a swipe of the finger. Iconia Touchbook can be purchased for around US$1,200.

While Dell is making a strong push in China, they are also rumored to launch the Dell Streak in Indonesia around April or May. Running Android 2.2, and featuring an NVIDIA 2 mobile processor, it will be tagged with at around $500 to $700 (US) price point. With a 7-inch WVGA screen, Dell Streak can access email, IM, and video conferencing. There will be a 3G version too, so users can text and send MMS on the go. The device is equipped with a 5 megapixel front-facing camera and 1.3 megapixel camera around back.

Huawei, another Chinese IT brand, will challenge for the tablet crown along with the Huawei Ideos S7. Running on Android 2.1, with a 7-inches WVGA screen, it has HD video and Hi-speed web browsing. Priced at US$350, Huawei is targeting a lower market. By working together with XL Axiata (one of the biggest local telcos), Huawei hopes to make the task of marketing this tablet a little easier.

For me, Apple with iPad and iPad 2 will still hold the upper hand because of its branding and wide selection of apps. While Apple is the clear favorite in the race, it still remains to be seen who will take the lower section of the market among the Android tablets.

Image Credit

ITB Dean, Professor Akhmaloka Ph.D stated that this new training center is a continuation of the ongoing partnership with Huawei since 2009, and gives students the opportunity to learn about developments in technology and telecommunications.

The training center was established as an initiative from Huawei to support education in telecommunication technology in accordance with their corporate social responsibility (CSR) program. ITB students were invited to the Training Center to catch live demonstration of Huawei’s latest products and applications.

“This kind of tour is an important initiative of our corporate responsibility program. Our continuing goal is to build close links with the leading center of learning and to help foster the telecoms industry leaders of the future here in Indonesia,” said Dani K. Ristandi, Deputy Director of Solution Sales PT Huawei Tech Investment on STEI’s website.

“Moving forward, with the enthusiastic feedback that we have received from the students, we will continue this particular initiative and collaborate with other reputable institutions in the country,” he added.

Besides Huawei’s involvement with Indonesia, we also saw Lenovo, a well-known PC vendor from China entered Indonesia’s mobile phone market through its mobile unit in the country.

Huawei’s training center in Indonesia will prepare the younger generation for future tech challenges. We would love to see more international technology leaders cooperating with educational institutions to prepare a more competent and global-thinking workforce in the Indonesia’s tech industry.