Marconi break into Chinese market

Telecoms equipment group Marconi has clinched a major deal allowing it an inroad into China and the rest of Asia.

The recently rejuvenated group, which secured a life-saving financial rescue package in 2003, is teaming up with China's Huawei Technologies.

Under the agreement, the two companies will sell certain products from each other's product portfolio to their respective customers. The pair will also work on developing Huawei's position in Europe.

Marconi described the deal as a "long and mutually beneficial" partnership that will give the company a low-cost and low-risk entry into the Chinese market.

Meanwhile, the deal will accelerate Huawei's international ambitions, following on from a similar strategic alliance signed recently with Germany's Siemens.

The two groups also plan to develop new products for mutual distribution by pulling together their research & development resources and technologies.

Marconi will distribute some of Huawei's carrier grade data products to its customers, while Huawei will complement the arrangement by distributing Marconi's next-generation radio transmission products. These are used for moving mobile calls from a base station to the nearest fixed telecoms exchange.

"This is an important first step in what we believe will be a long and mutually beneficial working partnership," said Marconi's chief executive officer Mike Parton. "The next stage of our relationship will be to develop jointly new products that would then be sold through our mutual distribution channels."

Marconi's revival was confirmed in November last year, when it posted second quarter losses of £29m, down from £62m a year earlier. More importantly, the company is now debt-free, having wiped out its remaining debt ahead of a 2008 deadline set by creditors.

Successor to the old GEC industrial empire, Marconi nearly collapsed at the turn of the century when the technology bubble burst.

Marconi's new partner is one of China's rising technology stars, with impressive sales growth and ambitious export targets for 2005. The company is twice the size of Marconi in terms of annual sales and will enable Marconi to compete with greater gusto against rivals such as US networking equipment giant Cisco.

Only last week, Huawei IT successfully won the bidding contest for a 3G network contract in Thailand, valued at £98m. Back in December, it secured its first major deal in Europe building the 3G network for Telfort worth up to £276m. Huawei has been successfully competing with rivals such as Motorola, Ericsson and Nokia by offering cheaper prices.

But the company has struggled to break through into major markets, with most of its sales so far being confined to developing regions in Africa and the Middle East.

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