"The Finnish R&D center will be a key driver in Huawei's research and development of new technologies for mobile devices," the company said in a statement.
It said the centre, which is to start with 30 employees and grow to 100 within five years, will focus on software development for smart phones, tablets and rich-media devices using Andriod and Windows Phone operating systems.
"The open and innovative environment in Finland is an ideal place for Huawei to strengthen our global R&D capabilities for devices, creating opportunities for both Huawei and the Finnish telecommunications industry," said Kenneth Fredriksen, Vice-President, Huawei Central, Eastern and Nordic Europe.
Finland is the headquarters of Nokia, until recently the world's top mobile phone manufacturer.
The company is shedding thousands of jobs as it restructures towards using Windows Phone 8 for its smart phones. Nokia previously had programmers developing its own smart phone operating system.
"I think this is another example on how other companies like Huawei can take advantage of the fact that Nokia is firing 10,000 people," said Magnus Rehle from the strategy firm Greenwich Consulting.
"There are a lot of highly skilled people who can help Huawei to make cheap Android-based smart phones for the growing markets outside Europe and the United States," he added.
Huawei announced in September it would invest USD 2.0 billion in Britain and roughly double its workforce in the country within five years.
The company currently has 7,000 employees in Europe and 70,000 involved in R&D worldwide.