"It seems that Huawei has obtained substantial market traction that will be hard to slow," said a research report of BDA. "But the company will have a long way to go before it poses a real threat to Ericsson."

Huawei's rise to tele-stardom has not been without risks. The appreciation of the renminbi against the U.S. dollar and other currencies led to a loss of $776 million in foreign-exchange settlement for the company in 2008. Worse still, their low-pricing policy put a squeeze on its profit margin, which remained at a low 6.28 percent in 2008, a sharp decline from 19 percent in 2003.

Meanwhile, rapid increases in accounts receivable are mounting pressures on Huawei's balance sheet, forcing the company to take on short-term debts to support business expansions.

As an unlisted company, Huawei enjoys the flexibility to operate at lower margins without coming under shareholder pressure, but questions were eventually raised concerning the financial distress rippling throughout the management processes. The company's average number of days' sales in inventory, a measure of how long it takes a company to turn its inventory into sales, was more than 13 weeks in 2008, compared with 10 weeks for Ericsson and Alcatel-Lucent.

"We are grabbing bigger orders outside China these days, but sometimes even I have no clue whether they are making money," said Ren at a corporate meeting in early 2007.

In response, Huawei in June 2007 initiated a sweeping restructuring plan in an effort to streamline corporate management and shore up its balance sheet. It farmed out non-essential businesses to focus on core products with higher added value, while strengthening the management of its supply chain and risk control.

While this helped the company set up a firewall against financial risks, what really set Huawei apart from its fellow vendors was a deep-rooted commitment to innovative technological competence and product quality.

To this day, the company insists on spending 10 percent of its revenues on research and development, which involves 43 percent of its 87,500 member staff. These stiff efforts have rewarded the company handsomely with a comprehensive product portfolio—from optical switching technology capable of maintaining tens of millions of lines through one fiber cable, to the SingleRAN (single radio access network), a wireless network that allows mobile operators to save costs by operating separate networks.

In November 2009, Huawei beat Ericsson and Nokia Siemens to score a deal with Norway's largest telecom operator, Telenor ASA. Under the six-year contract, which includes services and maintenance, Huawei will provide the Norwegian carrier with telecom equipment based on fourth-generation standard, known as Long Term Evolution (LTE), which offers cheaper operating costs and supports faster data uploads and downloads for mobile devices.

"This is the biggest upgrade of the mobile network in Norway we have ever carried out," said Ragnar Kaarhus, CEO of Telenor, who attributed the choice of Huawei to "technical quality and reliability of large-scale operations."

Goldman Sachs predicted that Huawei, with its world-leading LTE technologies, will bask in the glow of the worldwide transition to 4G.