Huawei Technologies Co. has made a name supplying networkequipment to clients world-wide, but the Chinese company's emphasis on research and development over manufacturing its own hardware is a lesser-known fact.

Huawei has been ramping up its R&D spending in recent years. Last year, the company spent about $4.7 billion, or about 13% of its total group revenue, on R&D. The company actually doesn't do much hardware manufacturing, outsourcing more than half of the work to contract manufacturers. In fact, about half of Huawei's world-wide workforce is in R&D, and the majority of Huawei engineers work on software, not hardware.

At Huawei's R&D center in Shanghai, more than 10,000 engineers are working on products that can address problems in various aspects of wireless network technology: How do you increase the capacity of base stations? How can telecom carriers move from third-generation networks to 4G Long Term Evolution networks more easily and at a lower cost? If carriers want to selectively offer a better connectionenvironment to customers who pay extra money, what technology do they need?

The research center, located in Shanghai's Pudong district, is a large and extremely long building -- half a kilometer long. It takes up a total area of 277,000 square meters.

At first glance, it looks very much like a conventional office. But complex drawings and charts pepper spaces between desks as software engineers get down to work. There is a massive cafeteria on the lower ground floor, which is divided into different sections for different types of food. The food there is better than the cafeteria at Huawei's Shenzhen headquarters, one employee said.

Huawei has charted solid earnings to back its spending on research, with net profit up 32% last year. Its recent growth has outpaced western rivals such as Sweden's Ericsson and France's Alcatel-Lucent.