Established in 1988 in Shenzen, China, Huawei Technologies Co., Ltd. has been ranked not only as one of the fastest growing companies.( Huawei media release) but also as one of the fastest growing telecommunications network providers globally.(ZDNet Asia 2006) Armed with very strong cost leadership, there is no stopping of this upward trend which the company is currently exhibiting. Huawei Technology’s. vision has been to “To enrich life through communication” with a mission to “focus on its customers' market challenges and needs by providing excellent communications network solutions and services in order to consistently create maximum value for customers” (Huawei Corporate Information-Huawei Media release). Undoubtedly it is not just the cost leadership which complements its growth and mission but Huawei Technology’s continuing investment of 10% of its global revenue in R&D (Business week, 11th September 2007) has established it as an emerging market leader in technical innovation too. Huawei Technologies technical diversification of its portfolio and value addition to its existing products is highlighted by Huawei being ranked amongst the top 5 in the world in terms of essential UMTS patents. By June 2008, Huawei had filed 30,569 patent applications. (Huawei Corporate Information-Huawei Media release).The big inclination towards R&D and strong cost differentiation has enabled Huawei Technologies to achieve what the other dominant players in the telecom industry have been struggling to achieve- customization! .This strong customer focus is also the face of Huawei Technologies projected through its brand logo. The Huawei Technologies brand logo reflects its core principles of “customer-focus, innovation, steady and sustainable growth, and harmony, conveying Huawei Technologies sincere commitment to helping its customers realizing their potential to launch a variety of competitive services through continuous innovation and an enterprising spirit.” (Huawei Corporate Information-Huawei Media release).The Huawei Technologies logo was recently changed and modified to reflect harmony as also one of its key elements, so as to convey its social responsibility. (Huawei Corporate Information-Huawei Media release). This has brought in the much needed image change required by Huawei Technologies primarily being seen as a Chinese vendor.
Figure1: Huawei Contract Sales (Source Huawei Corporate Information-Huawei Media release)
Opex & Capex leverage which Huawei Technologies has been able to offer its customers has enabled it to demonstrate cost leadership which is evident as 72% of its contract sales were from overseas market in 2007. Let alone in 2007, it had 45% increases in its contract sales revenue. See figure 1. (Huawei Corporate Information-Huawei Media release). The strong hold which Huawei Technologies is being able to maintain also comes from the socio-political environment it works in as the labour cost in China is one sixth of that of United States or Europe. Thus it has become a key external environmental factor .Internally Huawei Technologies has capitalized on human resource and R&D. But has the cost differentiation been enough, will it still promise growth and more market share? These are the biggest questions which need to be addressed for a guaranteed continuous growth. This question has made Huawei Technologies rethink its marketing strategy towards value proposition, and to value chain analysis (Porter 1985) for a bigger market share. Before that however lies another hurdle of poor quality perception a question mark on the quality of Chinese branding.
Issue 2- The dragon brand wagon.
With the FMCG market taking blows after blows because of adulterated Chinese raw materials, the general consumer perception on Chinese quality is struggling to establish a stand. Though it specifically affects as said the FMCG market or the business dealing in B2C but the general perception affects all including B2B. And...
Financial Times Articles
Huawei Technologies Co., Ltd., media release.1998-2008. (www.huawei.com)
Huawei Technologies Co., Ltd., Annual Report 2007
Light Reading.com “Huawei Reports 2007 Revenues of $12.5B” Light Reading.com Ray Le Maistre
Porter, M. (1979) "How competitive forces shape strategy", Harvard business Review, March/April 1979
The Economist Archives
Please join StudyMode to read the full document