“Africa & Latin America, it’s all Huawei”: End-to-end manufacturing drives the cost down

A rival tells me how hard it is to compete with Huawei because they manufacture so many products. “We had a good opportunity at one customer. Our software is just right for them.

“They wanted to buy a complete system. We bundled our software with $4 million of equipment and bid aggressively at $7 million. Huawei came in with a bid of $4 million for hardware and software combined. They manufacture their own servers at a much lower cost than he could buy servers.

Then Huawei brought in the Chinese banks who offered low-interest rates on long-term loans. Some companies would drop the price, even to an unprofitable level, knowing more contracts would likely follow. He couldn’t afford to take the long view.

“Africa & Latin America, it’s all Huawei,” he said.

Financing from Chinese banks is an important advantage. The US has talked a lot about offering to finance and did in Vodafone Ethiopia. But I’ve seen few deals. Finland gave a loan to AT&T! to buy Nokia gear. Samsung financed Jio in India for Samsung. But no country comes close to the offerings from the Digital Silk Road.

A $20 billion research budget is paying off. Huawei is making early shipments of Digital Massive MIMO, the “next big thing” in wireless. The Harmony replacement for Android is working well for hundreds of millions of people. It would probably have a billion users if not for the US blockade.

Huawei abandoned price undercutting a decade ago. It wasn’t necessary once the industry learned Huawei has good equipment and some of the best service.

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