Huawei Technologies Co, China's top telecommunications equipment maker, aims to continue building on its strength for innovation and expanding cooperation with worldwide patent holders.

Founded in 1988, the Shenzhen-based company has quickly grown into a leading player in the global telecom industry and a rising star in intellectual property protection.

Huawei's contract sales reached $30.2 billion in 2009, a 30 percent year-on-year increase. It became the second-largest telecommunications equipment maker that same year, beating Nokia, Siemens, and Alcatel Lucent, behind only the Stockholm-based Ericsson.

Intellectual property provides Huawei's core competitive edge, company officials say. In 2008, it surpassed companies such as Panasonic and Philips, applying for more international patents under the Patent Cooperation Treaty (PCT) than any other company.

Huawei was second worldwide in patent applications under the PCT in 2009, according to the World Intellectual Property Organization. By the end of 2009, it had applied for a total of 42,543 patents worldwide, and it acquired 11,339 patents in China. It also acquired 215 patent rights in the United States and 1,282 in Europe.

"Compared with companies such as Ericsson, Huawei is still falling behind when it comes to intellectual property," said officials at the company who declined to reveal their names. Despite its many patents in China, its number in Europe and the United States is relatively small. Huawei concedes it lacks experience in patent applications in those areas and said its ability to develop and use intellectual property in overseas markets must improve.

The cooperation on intellectual property with other companies is a necessity, Song Liuping, vice-president of Huawei Technologies Co, said at an intellectual-property protection forum in Beijing.

Song, who emphasized that Huawei needs "to open up innovation", said that no company can exist solely on the strength of its own technologies.

"On the one hand, we develop and enhance intellectual property in some core areas, and on the other, we respect other companies' intellectual property rights," Song said.

Huawei strives to create a harmonious business environment by paying patent fees or cross licensing with other companies when it needs outside innovations.

It has signed agreements with almost all the major patent holders in the telecom industry, including Ericsson, Nokia and Qualcomm, for permission to use their technologies. The amount of patent royalties Huawei should pay increases proportionately with its rising revenue, company officials said. But they say patent fees are still relatively small, when compared with Huawei's annual sales.

(China Daily December 14, 2010)