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BARCELONA (Dow Jones) --Huawei Technologies' opulent marketing splash at the mobile world's premier trade fair last month made it clear unlisted Chinese telecommunications firm is setting its sights on becoming a mobile technology heavyweight.
The Shenzhen-based multinational's brand was displayed in banners and advertisements across every concourse and the fair's central showpiece was a 19-foot winged horse built entirely of its latest smartphones.
But talking to Dow Jones Newswires in an interview, the Swedish head of Huawei's wireless marketing unit, Lars Bondelind, revealed the company is often hampered by a young and inexperienced workforce.
Over the past five years, Huawei -- pronounced 'woa-way' -- has added 50,000 employees to its staff, most of them straight from college. Half of its 140,000 workforce work within research and development.
With so many newly graduated Chinese engineers on board, the average age of Huawei's staff is just 29 years.
Bondelind, a former employee at Swedish mobile communications firm Ericsson AB (ERIC), said the young workforce is both a blessing and a curse.
"The engineers I work with have higher knowledge and skills than for example Swedish newly graduated engineers, but they are lacking industrial expertise," he said. "Most of the 50,000 employees we have been recruiting during the last five years come directly from university and don't have more than five years of working experience, so of course we are perceived as a very young and inexperienced company."
Instilling a Western management culture is a top priority at the firm, he said. So is bringing a Western approach to industrial processes and engineering practices. Out of the company's 23 research and development centers, 13 are located outside China. It has employed Western consultants from IBM Corp. (IBM) and KPMG to train its staff.
"Often when we meet customers, more than half of our representatives are young Chinese engineers, whose manners and way of presenting material isn't familiar to Western firms," Bondelind said.
At the company headquarters in Shenzhen, Guangdong Province, China's first Special Economic Zone, the management has brought in senior executives from the U.S. and Europe for key roles. Bondelind was one of them.
His brief when he established the company's Swedish research and development office 12 years ago was to introduce Western efficiency into engineering practices.
At the Mobile World Congress in Barcelona, Huawei was promoting its high-spec line-up of smartphones that run on Google Inc.'s (GOOG) latest Android software.
The Ascend D Quad handset, launched at the show, has a in-house developed quad-core processor, making it twice as powerful as most other smartphones, which run on dual-core processors. Industry analysts say Huawei's latest handsets put it on a par with the likes of South Korea's Samsung Electronics Co. Ltd. (005930.SE) and Taiwan's HTC Corp. (2498.TW).
However, with only a 2.9% smartphone market share, Huawei's mobile device business is yet to become a major part of its business. While the aim is to grow the handset business, the company's main focus remains its wireless network business, which makes the network technology used for mobile communication and contributes two thirds of revenue.
Huawei is due to release its full 2011 financial statement in the beginning of April, but it has said 2011 revenue was slightly above CNY202 billion ($32 billion), up from CNY185 billion in 2010. Bondelind said revenue for the wireless equipment unit was up roughly 20%.
"The fourth quarter was surprisingly strong," he said.
Benefiting from its low-cost structure and rapid technological advancements, Huawei has thrived at the expense of struggling Western network companies such as Alcatel-Lucent (ALU) and Nokia Siemens Networks (NOK SI).
The company has a fifth of the market for network equipment, up from virtually nothing a decade ago, making it the world's second-largest wireless network vendor, behind Ericsson's (ERIC) 38% share. The company is targeting 15% annual growth for its network business in the coming years and aims for annual group revenue of $100 billion by 2020.
But to grow, the company must build trust.
In the U.S, regulators have blocked Huawei's bids on network infrastructure projects as well as acquisitions of American companies, worrying that equipment from Huawei potentially could be used by the Chinese government to intercept U.S. communications over security concerns.
While the Chinese state has no stake in Huawei, a recent report from U.S. government intelligence body Open Source Center noted that Sun Yafang, Huawei's chairwoman, was employed at China's Ministry of State Security before joining Huawei. The White House and Congress are also concerned with the military background of Ren Zhengfei, the founder and president of Huawei. Prior to establishing Huawei in 1987, Zhengfei worked as a military technologist at the People's Liberation Army, where he led a military research institute.
"Zhengfei's military background means nothing for Huawei as a firm. He retired from the People's Liberation Army a long time ago, after having been made redundant," Bondelind said. "In most large Western companies, there are many examples of high-ranking executives with military background."
-By Sven Grundberg, Dow Jones Newswires; +46-8-5451-3098; firstname.lastname@example.org