Marconi Next on Chinese Takeaway Menu

"Troubled" UK telecoms equipment supplier Marconi is in early talks which may lead to a takeover by its Chinese partner, Huawei Technologies, for more than £600m, said the Sunday Times.

Though neither firm has commented on the talks, most believe that "Huawei would be the front-runner in any auction of the business," said The Independent, due to its partnership with Marconi, which allows the two firms to sell each other's products.

Huawei, now China's biggest telecoms equipment company, was set up in 1988 and is largely independent of the Chinese government.

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A successful buy-out, which follows the takeover of UK car maker MG Rover by China's Nanjing Automobile "would reignite soul-searching about Britain's industrial future" and emphasises the growing power of China in the world economy.

The news comes shortly after Marconi posted a slight fall in first quarter turnover, from £289m to £285m, while losses on continued operations rose to £36m.

As industrial conglomerate GEC, Marconi was a "stalwart of the FTSE 100" added The Independent, before the move to focus on telecoms during the internet boom lead to its near-collapse in 2001.

The group seemed to be "on a slow road to recovery", said Reuters, but it received a massive blow in April, when telecoms giant BT failed to select it as one of the eight main suppliers for its £10bn upgrade of the UK telecoms system. The group has since announced that 800 jobs are to go and "has effectively been up for sale since", said The Telegraph.

"Ironically," said The Scotsman, Huawei did succeed in winning part of the BT contract.