China’s Huawei Technologies expects its Brazilian unit’s revenues to reach $5 billion by 2016, with its enterprise business making up $1.5 billion of the total. This would be a jump compared to its 2012 forecasted revenue for Brazil of $2 billion. Sales estimates were released on May 31 by Huawei’s president for South America, Li Ke, during a press conference in São Paulo, when the company announced it has invested $61 million (R$123 million) in a bigger Latin American distribution center in Sorocaba, Brazil.
The growth of both operations and enterprise business in Brazil should help Huawei to achieve its ambitious goal of reaching $20 billion in enterprise business revenues by 2016. In a recent story, RCR Wireless News noted that the onus was on Huawei’s enterprise business group to make up the difference required to meet the company’s overall growth target—estimated at $100 billion in the future—since the company’s carrier network division grew at just under 3% last year while representing 73% of the company’s total sales.
Globally, Huawei grew 11.3% in 2011, and it is projecting top line growth of 15-20% in 2012.
In Brazil, the increase from the $2 billion forecasted for 2012 to $5 billion by 2016 will be based on growing the enterprise market, which could represent 30% of total revenues. “We will leverage our technical knowledge to enhance our offers focused on the corporate market,” Li Ke said. The sectors Huawei said that it will target include financial, business, government, utilities and education.
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Huawei has had a local presence in Brazil for 13 years and currently has six offices across the country located in the cities of São Paulo, Rio de Janeiro, Brasília, Curitiba, Manaus and Recife.
Since 2004, Huawei has invested $363 million in Brazil. Over the last five years, the company has contributed $700 million in taxes, and in the last year alone, Huawei spent $310 million in the local acquisition of inputs. Huawei’s products are manufactured by Flextronics through a complete knock-down and an incomplete kit, known as SKD or semi-knocked-down.
This type of manufacturing might attend LTE auction requests, since Brazil’s telecom regulation agency has determined national technology percentages for the procurement of goods, products, equipment and systems for telecommunication and data networks. According to the bidding document, the percentage for the acquisition of goods and products with national technology will be 60% from 2012 to 2014, 65% from 2015 to 2016, and 70% from 2017 to 2022.
Huawei also plans to manufacture cellphones and tablets via a partner in Brazil. Li Ke said the company will release further details by the third quarter of this year. The consumer business group is important to the growth of the Chinese company. “We aim to launch two lines of 2G, 3G terminals,” he said.
Distribution center
The new distribution center consolidates seven former sites in Brazil. In Sorocaba, Huawei now has one large center that will serve Brazil as well Peru and Chile. The center’s capacity was designed to the meet demand for up to 10,000 units per month, which is almost double the current rate of 5,800 units per month. In addition to the Brazilian center, Huawei also has a distribution center in Mexico.
