How is Huawei’s internationalisation endeavour a good success story example for other companies wanting to pursue global growth?
Huawei Technologies Co., Ltd. provides telecommunications equipment and solutions to operators in China and internationally. The company’s products include wireless and networking equipment, applications and software, and terminals; smartphones for French users; and metro services platforms, which help operators to build broadband metro area networks. It also offers mobile network, broadband network, IP-based and optical network, and telecom value-added services. Huawei Technologies Co., Ltd. has strategic partnerships with IBM, the Hay Group, PwC, FhG, Intel, Texas Instruments, Freescale Semiconductor, Qualcomm, Infineon, Agere Systems, Microsoft, Sun Microsystems, and HP. Huawei Technologies is a Chinese company. It was established in1988 by Ren Zhengfei, a former People’s Liberation Army officer and telecom engineer. Huawei’s headquarters site, of modern and impressive building fittings, is situated in Shenzhen, southern China (Guandong province). In 2006, Huawei Technologies was among the ranks of China’s “National Champions”, along Haier, Lenovo TCL, and the Wanxiang Group, poised to compete with global leaders in the international market place. Huawei has also been dubbed as the Cisco of China. It is thus a multinational corporation with branch offices in 100 countries which serves over one billion users worldwide. The question is then begged as to why Huawei is so competitive? What were and could be the challenges the Chinese-based company faces? What are the implications of Huawei’s strategy? In this paper I will attempt to analyse Huawei Technologies strategy to internalisation by taking in account the company’s starting point in China, and by setting the stage for the comparison of Huawei’s to that Cisco’s strategy. I will then proceed with some recommendations on what a Chinese company could have done to better prepare for competition in the US telecom industry. And conclude with some remarks on the progress made by Huawei since 2006, when the case study on which the analysis is based was compiled.
From its very beginnings, the company’s vision has been to become a lighthouse of innovation which would successfully enable it to compete first in its home market, and then proceed with international expansion. When the company was still operating only in China, Huawei’s methodology around its goals, to not be set up in joint ventures with foreign companies, to pursue global cutting-edge technologies, persist on self-development, and expand internationally, largely consisted in extensive investment in research and development (R&D) capabilities, and hiring a highly-qualified workforce from China. Huawei was created almost single-handedly under the strong vision and leadership of Zhingfei. He fostered a unique and rigorous management culture, by building a “pack-of-wolves enterprise”. He instilled a management philosophy within the company which meant to view competition and market opportunities with a keen smell, react to with an aggressive push and always confront both in unified groups. Under Zhengfei’s lead, who had been successful to create and manage a large relationship network, few other competitors could match, the company had relied on big contract orders from the military to secure a foothold in the telecom network market in its early years. Moreover, extended army and government ties had provided the company with relatively easy access to financing. Huawei was undoubtedly the largest Chinese telecom equipment manufacturer, with annual revenue of US$6.7 billion in 2005. Market capitalisation was estimated to be up to US$10 billion. In China, Huawei’s major customers included all the big names such as China Telecom, China Mobile, China Netcom and China Unicom. Huawei’s networks in China served over 400 million...