3. What constraints do Huawei face in its internationalization? How does it deal with Them?
For this case, we could divide constraints that Huawei faced during its internationalization into 2 main layers, unfamiliar formal and informal institution of the host country. Constraints of Formal Institution: Regulation
Eventhough Huawei were successful in their local market, they failed to enter the US market during 2001 to 2003 as being careless of the regulation in the host country. By that time, Huawei challenged CISCO’s telecommunication products with high quality and low price strategy. They launched a fierce marketing campaign and hit CISCO hardly with 30% lower prices. This strategy would be successful if Huawei recognized that they had not registered its patents of such products in the US market. Finally, CISCO countered back by suing Huawei for intellectual property rights infringement. Eventhough Huawei tried to reduce the impact by joint venturing with 3Com to build up a bargaining power toward CISCO, they had to withdraw almost of its product from US market. Another case is that Huawei tried to take over 3Com in 2007 by being a partner with Bain Capital. Unfortunately, the acquisition is failed due to the Committee on Foreign Investment view that it is harmful to national security. This is normal as the government always ban foreigners from owning assets in certain strategic sectors. Constraints of Informal Institution: Culture, and Brand Perception
Huawei’s military culture of sensitive nose, aggressiveness, and persistence on attack led to a huge success in their local market. On the other hand, it was too aggressive when dealing with US Market. During a fierce competition with CISCO, even though CISCO tried to compromise by divided a market share into 2 segments; low-end and high-end and let Huawei occupy the low-end market, Huawei refused such negotiation. In other perspective, if Huawei cooperated with CISCO as a strategic alliance, they might be...
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