Huawei Technologies

Huawei Technologies How is Huaweis abroadisation endeavour a good success story ensample for oppo grade companies wanting to enlist global growth? Introduction Huawei Technologies Co. , Ltd. provides telecommunicationmunications equipment and solutions to operators in China and internation solelyy. The familys products include wireless and vaneing equipment, applications and software, and terminals smartph matchlesss for French users and metro serve platforms, which help operators to build broadband metro range net profits.It also covers winding network, broadband network, IP-based and optical network, and telecom esteem-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 society. It was established in1988 by Ren Zhengfei, a former Peoples Liberation Army offi ce staffr and telecom engineer.Huaweis headquarters site, of modern and impressive building choketings, is situated in Shenzhen, southern China (Guandong province). In 2006, Huawei Technologies was among the ranks of Chinas National Champions, along Haier, Lenovo TCL, and the Wanxiang Group, poised to compete with global leaders in the international foodstuff place. Huawei has also been dubbed as the lake herring 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 militant? What were and could be the ch tout ensembleenges the Chinese-based companionship impudences? What are the implications of Huaweis outline? In this paper I will plan of attack to analyse Huawei Technologies system to internalisation by taking in account the callers get-go point in China, and by setting the stage for the comparison of Huaweis to that lake herrings strategy.I will then proceed with to a greater extent or less recommendations on what a Chinese company could grant make to break in prepare for tilt in the US telecom assiduity. And conclude with some remarks on the come near made by Huawei since 2006, when the grapheme study on which the analysis is based was compiled. Company Overview From its very beginnings, the companys mental imagery has been to become a lighthouse of innovation which would successfully enable it to compete world-class in its scale mart, and then proceed with international expansion.When the company was still operating only in China, Huaweis methodology around its goals, to non 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 enthronisation in interrogation and development (R&D) capabilities, and hiring a highly-qualified workforce from China. Huawei was created almost sin gle- plentyedly under(a) the sozzled vision and leadership of Zhingfei. He fostered a unique and rigorous management culture, by building a pack-of-wolves initiative.He instilled a management philosophy within the company which meant to view contest and commercialize opportunities with a keen smell, react to with an aggressive push and always confront both in unified groups. at a lower place Zhengfeis lead, who had been successful to create and manage a large relationship network, a few(prenominal) other competitors could match, the company had relied on big contract orders from the military to secure a foothold in the telecom network foodstuff in its early years. Moreover, extended army and government ties had provided the company with relatively easy entrance fee to financing.Huawei was undoubtedly the largest Chinese telecom equipment manufacturer, with annual revenue of US$6. 7 billion in 2005. food market capitalisation was estimated to be up to US$10 billion. In Chin a, Huaweis major customers included all the big names such(prenominal) as China Telecom, China Mobile, China Netcom and China Unicom. Huaweis networks in China served over 400 million people communicating across the country, occupied 25% market share in the industrious networks, and supplied 80% of all short messaging services from China mobile.Therefore, Huaweis strategy to focus on R&D to lead technological advancement, its attention to choose high-calibre and save in high-priced labour from China, as well as foster a consolidated sense of merged culture none but confirmed Huaweis stable, long-run oriented organic growth strategy. The companys competitive advantage in its home turf had built up to be low-cost engineering, enabling Huawei to compete with large indigenous and foreign competitors.Cisco, Huawei, and the International Market of Telecom Equipment and Services Cisco, which global presence spurred with the enlarging footprint of the internet across the globe in 1991, decided to focus its growth strategy in China by the end of the 1990s. Ciscos strategy in China consisted in recruiting and training employees to service high-end markets of telecom service providers and green light markets. Instead of forming joint ventures with local anaesthetic partners (like most of its international competitors did in China), Cisco opened its own subsidiary in China, Cisco Networking Technology Co. Ltd. to promote education, materialization and development of network applied science. Educational initiatives presented Cisco with an opportunity to develop favourable relations with Chinese regimen and to cultivate new areas of care within China. Moreover, recognising the large, low-cost and skilled labour force in China, Cisco continued its commitment in the country by investing in an R&D nerve centre in Shanghai. Ciscos CEO plans for the facility were to allow Cisco access to technology and local talent so as to leverage Ciscos newness to the integrated c ulture of China and be able for it to buy into the local Chinese local market.Ciscos goal was by all means to maintain its leadership position in cutting edge technology. While at the homogeneous time, Chinese competitors were using their aggressive pricing strategies to expand into the international markets, and were rapidly using their low-cost advantages to effort up the value chain. And Huawei was among the Chinese companies that were expected to make further inroads into international markets in the next few years, competing head-to-head with established Western players for the same global accounts.Internationalisation Phase 1 Having secured a strong foothold in its home market in China, Huawei started to look for diverse sources of growth internationally, in the prime(prenominal) half of the 1990s. However, it was able to conclude its premiere significant international contract only in 2000, in Russia. In order to avoid outright competitive confrontations with well-establi shed Western telecommunication multinationals, Huawei went global by number one entering growing markets in developing countries.Considerable contracts extended later on beyond easterly Europe, in South America (Brazils fixed line carrier) and Asia (Thai earthly concerns largest mobile service provider). Huaweis path toward the matured Western European markets, the companys next challenge, would not come without tradeoffs. In the early 2000s, Huawei was a new company competing for market share with established global communications technology suppliers. Chinese products were then suffering from a common perception of being cheap and unreliable, forcing Huawei to thus pursue aggressive tactics to win contracts.With 30% lower pricing points than established competitors, a commitment to offer trial periods for its products and hiring local personnel to tailor technologies and services to customers pauperisms, led the company to win contracts in tough-to-please markets such as France (Neuf Telecom, 2001). The biggest success, however, and the one that signified Huaweis break through in Europe, was in 2004 when the company was selected by a Dutch mobile operator to build its 3G mobile phone network, by then Huaweis assay-mark capability. Internationalisation Phase 2In order to highlight the key points of Huaweis internationalisation strategy, the case of the companys entrance in the U. S. calls for an analytical stop. The challenges Huawei faced in the North American market revolve around several axes, but overall the endeavour highlights the general lack of preparation and some strategic blunders which made the companys top management decide to update Huaweis strategy and draft one that caters to long term sustainable development. When it opened its first office in Plano, Texas, the company made every effort to blend into the local culture.It shared the building with law offices, realtors and the regional office of the lingerie company Victorias Secret. A Texas state flag and an American receptionist welcomed visitors on the first floor lobby. Shortly after the US-launch, however, the defect of not having carefully planned for cultural differences eventually surfaced. Chinese employees had a difficult time adapting to the Texas accent and other aspects of the local culture. Huawei executives also realised that Americans had difficulty pronouncing the companys name.They came up with a working name, Futurei, which although facilitated to a better pronunciation, only confused targeted customers even more, and Huaweis infant brand came under great shock. In the US telecommunications industry, a mature market where lower prices practically are not enough to land a deal, winning customers and contracts would demand for a lot more effort. Phone companies and equipment suppliers had long term ties with their equipment suppliers, customers looked for exceptionally leading-edge technology and a compelling reason to fracture.Moreover, trying to s witch to a virtually unrecognised brand in the US market meant that telecom service providers Huaweis classical customers would request exhaustive testing of equipment quality and reliability, lasting several months, before committing to buying it a common procedure for sourcing from an unknown company. Another hurdle Huawei encountered was a lawsuit Cisco launched, only sixer months after Huawei had set up its subsidiary in the US.Analysts observed that Huaweis steep discounting of low-end routers Ciscos products in its home turf, the US market, had prompted the lawsuit of alleged infringement of Ciscos patents and copyrights. This was Ciscos first talented property lawsuit despite its huge intellectual portfolio. Huawei ended up by agreeing to withdraw from the market place Quidway routers and other related products. Three years after its US launch, the company was able to land its first contract with a US wireless carrier in 2004, and subsequently securing other contracts wi th lesser wireless carriers.Huawei had serious intentions for the U. S. market. Yet cultural risk and Ciscos buying power in its home turf, led to a substantial delay of results, and thus loss of revenue and opportunity for Huawei. notwithstanding having a powerful and well recognised brand name, when Cisco started its venture into China (in 1998), it began by first building on local labour-skill capabilities and government network to leverage on its inexperience in the Chinese market and thus buy into market sales power among corporate customers. Huawei, on the other hand was literally unknown in the US market.And it was naive enough to assume that American corporate customers would be sufficed with high-quality low-cost equipments from an unknown Chinese company. Or that its organisation was rightly prepared to face global competition as aggressively and in the right way as it had done in China. Ciscos entry strategy into China was aggressive not because it offered low-cost high quality products, but expensive and exclusive technology, reinforced further via R centres spread across the country. Enterprises in China knew about and trust Ciscos product quality nd reliability. The same cannot be said about Huaweis products. In spite of success in winning deals in developing countries, Huawei could not reach US corporate customers if they would not pass that easily the wall of perception that Chinese products were cheap and merely copied versions of other recognised telecom equipment and software. Recommendation Recommendations, or lessons to be drawn from Huaweis experience, would capture the overall need for Chinese companies to acclimate to new surroundings first just as the foreign companies that entered China did .Acclimatisation, for Huawei could have proceeded by 1. Improving assessment of risk economic, political, regulatory, cultural, organisational to avoid cultural and regulatory (the lawsuit) blunders. Huawei could have also better prepared to b uild a network before out rightly starting to target enterprise and corporate customers. 2. Preparing better for the entry strategy in the US be it Greenfield, acquisition, merger or alliance.Cisco, to visual aspect its commitment for China, announced a US$100 million investment, stirring curiosity and interest among corporate customers and Chinese authorities. Huawei went into the US quietly opening a branch office 3. Developing global talent R investment and international top managers with a global experience and extended local market knowledge, in order to enhance buying power into the local market. 4. Creating a global brand to be accepted in the market place by using local industrial public relations companies can facilitate brand recognition in the initial stages. 5.Assessing and redesigning organisation and management bearing to one that caters four dimensions co-orientation, the temporal dimension being able to balance between short-term results for survival and long-te rm performance for sustainable profit growth co-competence, the relationship dimension persist on the dual will power of both transactional and relational competence co-opetition the capability to win market share through simultaneous competition and cooperation for reasons that range from brand name strengthening and market share growth o be ready and flexible to re-adjust to shocks efficiently, and flexible enough to re-balance short-term results with long-term performance, and co-evolution the pursuit of organisational adaptation to and proactive influence on the external environment facing a firm Huawei Concluding Analysis and Discussion The future of business is in its course to re-establishing itself in a somewhat changed order. The recent financial crisis has certainly tested the trump out and the beat out of yesteryear strategies and management styles.Thanks also to a revived wave of globalisation companies are in the quest for profit, at a time when there are possibi lities probabilities and uncertainty. The US market continues indeed to be a litmus test of endurance for non-American companies . Luckily, Huawei had sufficient financial cushion and top management light to learn quickly and be able to modify its corporate business model strategy to fit the demands of its targeted customers corporate clients. Huawei Technologies Co. , Ltd. announced it will unveil a new mobile broadband solution at Mobile World Congress 2010. This solution will become the tremendous increase in mobile broadband traffic, reduce the per-bit cost by over 95%, and make mobile broadband services more profitable for operators worldwide.Today, mobile broadband services are growing exponentially, but operators have not yet been able to convert this into significant revenue streams. Huawei estimates that global data traffic on mobile broadband networks will grow 1,000 times over the next decade, from the current 85 million Giga-bytes per month in 2009. As the number o f mobile broadband users continues to climb, subscribers will increasingly look for low tariffs with unlimited, high-velocity access and abundant mobile broadband service, turn operators will need network capabilities that allow them to accommodate the expansion pressures of mobile broadband network and profitable operation mode. Huawei would seem to be swimming in a blue ocean now because it has been able to grow in scale and revenue while keeping a low cost structure. The R investment and ability to simultaneously fill a gap in telecom infrastructure by putting forward a unique value proposition to telecom end user customers and telecom services suppliers. Mobile broadband users, growing exponentionally in numbers, are now being offered the possibility of low tariffs for unlimited, high-speed access and abundant broadband services. In turn, operators will need network capabilities that allow them to accommodate these expansion pressures on the mobile broadband network and retain profit margins.The case of Huawei Technologies certainly reflects a good example of success story in dealing with all the above issues. Chinese-based companies planning to become global may well benchmark Huaweis management structure and organisation in turning around the focus from high-tech products to customer-centric high-tech products and services, under an internationally accepted brand label. Huaweis top management certainly took a step bandaging after the initial limping performance in the U. S. It now believes that cooperating with customers, suppliers and leading players in the industry to face challenges together through a win-win strategy is essential in todays business world . Huawei has formed numerous partnerships with leading multinationals such as ADI, Agere, Altera, HP, IBM, Intel, Microsoft, Motorola, Oracle, SUN, TI and Xilinx to improve the time to market of products, and to incorporate the latest technologies and best management practices into the company. Such will enhance its position and brand image in key international markets, and improve its reaction speed and service advantages in the supply chain . As of 2010, Huawei has 87,502 employees, of whom 43% are dedicated to R&D. Huaweis most recently reported sales counted at US$18. 33 billion, a 75% increase from the 2006 sales, and with US$1. 15 in net profit.In 2009, it was named the worlds top patent seeker, it was the first Chinese company to head the United Nations World Intellectual Property Organization (WIPO) list, its contract orders rose 46% to US$23. 3 billion (75% of which came from overseas), overtook Alcatel-Lucent to become worlds No. 3 mobile network gear maker, and during the tertiary quarter of 2009, Huawei passed Nokia Siemens Networks for the No. 2 position in the global mobile infrastructure equipment (according to research firm DellOro)a sign of the changing fortunes of the two vendors . Huaweis change in the strategy style is noticeable right at its formul ation of the new vision it is now to enrich life through communication.The company continues to maintain a leading competitive position in the international industry of telecom technology and services, and only these days was elected 5th most innovative company in the World behind only Facebook, Amazon, Apple, and Google ________________________________________ Bibliography Business Week, retrieved 2 March 2010 from (http//investing. businessweek. com/research/stocks/private/snapshot. asp? privcapId=1259829) Zeng, M. and Williamson, P. (2003) The inexplicable Dragons , Haward Business Review, October. 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