Networked for success

Chinese telecoms company eyes growth in Morocco

Though Chinese companies have a limited presence in Morocco, the telecoms company Huawei Technologies Co Ltd has managed to leave a lasting impression with its quality of service and products.

The Shenzhen-based company, which reported a turnover of $180 million (130 million euros) from its Moroccan operations in 2011, has an ambitious plan to post a turnover of $500 million from the region in the next three to five years, says Thomas Xu, general manager of Huawei Morocco.

Huawei, which entered the Moroccan market in 1999, now has market share of about 70 percent in the North African country.

"Our success in Morocco is much like the success we achieved in China, when we decided to surf the telecom wave as early as in the 1990s. We were able to cash in on the opportunities that came about when Morocco decided to revamp its telecommunications sector 10 years ago," Xu says.

Over the years, Huawei, the world's largest telecommunications equipment provider by revenue, has become an integral part of the information and communications technology networks across much of North Africa, Xu says.

"More than 60 operators in more than 20 African countries have deployed our solutions. North Africa is one of the fastest growing regions for Huawei, and Morocco is no doubt a key market for us in North Africa," Xu says.

"The attractiveness of Morocco does not rest with just market size and profits. Because of its proximity to Europe, Morocco's telecommunications industry has a higher level of development than other regions in Africa."

Buoyed by market prospects, Huawei is considering moving its North African headquarters from Egypt to Morocco, Xu says. The company is in discussions with the Moroccan government to be a part of Casablanca Finance City, a financial gateway for investors looking to get access to the fast-growing markets in Africa.

The move is expected to help Huawei get some special privileges, such as corporate tax exemptions for five years and a reduced rate thereafter, as well as simplified work permits for Chinese engineers and managers.

"Casablanca, which is Morocco's financial hub, is banking on its strategic location, near Europe and at the tip of Africa, to become a regional financial center of North Africa, and Huawei is looking to be part of that experiment," Xu says.

Huawei has three offices in Morocco, two in the capital, Rabat, and one in Casablanca. Xu says it is involved in providing telecommunications equipment, terminals and helping companies build corporate Intranets. The telecommunications business, is however, the mainstay accounting for more than 85 percent of its turnover.

According to Xu, Huawei clocked growth rates of more than 60 to 70 percent from 2004 to 2009 in Morocco. "In recent years, our annual growth has been a steady 10 percent. We will now focus on building corporate Intranets as we see it as a new engine to fuel our growth in Morocco."

Xu attributes Huawei's continued success in Morocco to its affordable, quality products and good after sales service. Apart from price advantage, Moroccans have also been bowled over by the efficiency of Chinese telecom contractors, he says.

"Chinese firms provide much quicker installation than operators from other countries," says Ali El Yaacoubi, acting investment manager of the Moroccan Investment Development Agency, a government body that facilitates foreign investment into Morocco.

"It's very impressive. It takes just a few months for Chinese operators to finish networking a project. For other operators it can take several years. Chinese operators are also more competitive in terms of the quality of their products."

Huawei has more than 400 employees in Morocco, about 300 of whom are local people, which Xu believes is important for an international company in its localization efforts. It has also helped add 3,000 local jobs through its Moroccan partners, subcontractors and distributors.

To meet the growing demand for talent, Huawei set up a training and certification center in 2012 in Rabat. Spread over an area of 1,000 square meters, the center is not only Huawei's first training facility in North Africa, but also its first in the world's French-speaking regions, as well as its third largest in the world.

"The goal of the project is to transfer know-how in new information and communication technologies to local telecom operators, and above all to assist businesses and industries in their development," Xu says.

"Thanks to this center, at least 1,500 students, local partners and businesses each year can get the most advanced training in the latest telecommunications technologies."

To achieve sustainable development, Huawei Morocco selects 50 to 100 local college students every year to work as interns, and sends some for advanced training at the company headquarters in Shenzhen. Best performers are also given scholarships and opportunities to work for Huawei after the internships.

Xu says Huawei has more than 17 local partners. Its biggest clients are the three largest telecom operators in Morocco, that all have business with Huawei, with INWI, the second-largest telecommunication company in Morocco, getting all of its equipment from Huawei.

"We plan to step up cooperation efforts with the local partners," Xu says.

This year, Huawei will also team up with a local railway company to help replace the current railway signal system, which is Huawei's first such order in North Africa.

ZTE, another leading Chinese telecommunications equipment maker, is also present in Morocco. It entered the country in 2003 and now has a 15 percent share of the local market, and is now Huawei's biggest competitor in Morocco.

"The Moroccan market is highly competitive and Chinese companies can no longer bank on price advantage to win orders," Xu says.

"Apart from maintaining technological leadership, companies also need to constantly look for new business growth points."

However, despite the success of Huawei and ZTE in Morocco, the presence of Chinese firms in the country is still limited.

Xu says he is optimistic about Huawei's investment in Morocco and believes more and more Chinese investors will consider investing in Morocco as they gradually realize the advantages that the North African country offers.

liulu@chinadaily.com.cn

(China Daily Africa Weekly 04/25/2014 page16)