As Chinese Companies Conquer Global Telecom Equipment, Other Industries Are Bound To Follow

August 8, 2012 - http://seekingalpha.com/article/789791-as-chinese-companies-conquer-global-telecom-equipment-other-industries-are-bound-to-follow

Q2 2012 was another terrible quarter for the global telecom equipment industry. China's Huawei, the last of the leading firms to report, posted a 22% percent decrease in net profits for H1 2012. Huawei's local rival ZTE (ZTCOY.PK
) published preliminary half-year profits that were down 60-80% year-on-year. The global market leader, Ericsson (ERIC
), saw net profit fall by 61% in Q2. Alcatel Lucent (ALU) and Nokia Siemens Networks, the joint venture between Nokia (NOK) and Siemens (SI), continue to struggle, both reporting losses. While a sluggish global economy is partly to blame for the poor results, deteriorating industry profitability is not a new development. The sector has struggled for more than seven years. The main contributing factor: the emergence of Chinese competitors Huawei and ZTE on the global stage.
In this article we look at how the new Chinese competition completely altered the competitive dynamics of the sector and the impact this had on the profit margins and share price developments of the global incumbents.
The Emergence of Chinese Telecom Equipment Vendors: From the Chinese hinterland to developing markets