Huawei recently told the Financial Times that it would make use of vendor financing to help customers buy its equipment. It described itself as 'acting as a bridge' between telcos and Chinese banks. That maybe the case, but last year Huawei's finance charges rose fivefold to $971 million.
Huawei declined to speak to Telecom Asia to clarify the charges, but a spokesman told the FT.com that the company followed 'standard international industry practices' in obtaining financing solutions "&brkbar; The credit line would be determined by the bank.'
Would that be the international practice that foreign suppliers followed during the tech boom‾ Lucent incurred an estimated $1.6 billion in debts, Nortel $1.4 billion and Cisco $625 million, according to one estimate. These were the kinds of miscalculation that helped push Nortel, Alcatel and Lucent into declines from which they haven't recovered.
There's no sense that the Chinese vendors have been infected with that kind of madness. But their foreign rivals can only hope.