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China Approves 3Com's Huawei Joint Venture

November 18, 2003|From Reuters

SAN FRANCISCO — Network equipment maker 3Com Corp. said Monday that it had received approval from the Chinese government for a joint venture with Huawei Technologies Co. that analysts expect to challenge No. 1 network gear maker Cisco Systems Inc. especially in China.

Huawei-3Com Co. would be based in Hong Kong, have its principal operations in Hangzhou, China, and have sales offices throughout China and Japan for marketing networking gear such as routers and local-area-network switches, according to Marlborough, Mass.-based 3Com.

Analysts said the joint venture's goal was to grab some of San Jose-based Cisco's large share of the network equipment market by offering resellers better margins.

"The whole idea behind the 3Com-Huawei partnership is to develop a product line attractive to resellers," said William Becklean of Oppenheimer & Co.

"Cisco owns the market," Becklean said. "They have a 70% share."

The joint venture, announced in March, would sell its own and 3Com products in China and Japan; 3Com has rights to market and support the joint venture's products under its brand in other countries.

Shares of 3Com fell 12 cents to $7.11 on Nasdaq.

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