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Case Details

Case Code: BSTR523
Case Length: 16 Pages 
Period: 2011-2015   
Pub Date: 2017
Teaching Note:Available
Price:Rs.600
Organization :Huawei Technologies Ltd.  
Industry :Telecommunications 
Countries : China and the US
Themes: Globalization/International Business National Security
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

Can Huawei Overcome Roadblocks in its Quest for Global Markets?

 
Winner of the Nominated Case Award in the 2016 Global Contest of the ‘Best China Focused Cases’ co-organized by CEIBS, the Shanghai MBA Case Development and Sharing Platform and the Global Platform of China Cases.

ABSTRACT

 
This case discusses the challenges faced by Shenzhen-based networking and telecommunications equipment and services company, Huawei Technologies Ltd. (Huawei) in the global markets of the US, Australia, and the European Union for its telecom equipment. The countries alleged that Huawei had entered their establishments through the back door at the behest of the Chinese government, giving China a chance to spy on the US. The allegations had their roots in the past association of Ren Zhengfei (Ren), Huawei’s founder, with the People’s Liberation Army (PLA), the unified organization of the armed forces in China. Huawei’s culture of secrecy, lack of openness and transparency, and Ren’s unwillingness to give public interviews only strengthened the opposition the company faced. Amidst concerns related to national security, Huawei was banned from bidding for telecom equipment projects in both Australia and the US.

Huawei had consistently denied all espionage accusations and the allegations that it had links with the Chinese military. The company fought relentlessly for several years to shed its image as a company controlled by the Chinese state, despite its private ownership structure. Since Ren’s past experience in the PLA was often cited by overseas media and officials to suggest that Huawei was collaborating with the Chinese government, Huawei took the help of global public relations firms, advertisers, and strategic consultants to try and erase this impression. Despite spending a huge amount of money on lobbying activities in the US, from 2012, the company had to lower its presence in the US telecom market.

Industry experts pointed out that Huawei had not made an aggressive push to tackle its woes in the US telecom market. Some analysts suggested that Huawei should proactively develop relationships with the policy makers in the US at the federal as well as the state level. They suggested that to turn its fortunes around in the US, Huawei should invest properly in a US-based marketing and PR operation. Some experts felt that Huawei should also lobby the way Americans did.

However, the questions whether Huawei’s efforts were adequate to address the security concerns and whether the company could successfully overcome the roadblocks it faced in its global expansion still remained. The company might have to reinvent itself if it had to negotiate these obstacles.

 
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Issues

The case is structured to achieve the following teaching objectives:
  • Analyze the effectiveness of Huawei’s lobbying efforts for tackling espionage accusations against the company.
  • Design a cohesive global corporate communications program to proactively address media speculation about Ren’s close ties with the PLA..
  • Prepare a roadmap for Huawei to tackle concerns related to lack of openness and transparency at Huawei..
Contents
INTRODUCTION
HUAWEI – FROM SHENZHEN TO GLOBAL MARKETS
HUAWEI’S INTERNATIONALIZATION STRATEGY
CHALLENGES IN THE GLOBAL TELECOM MARKETS
THE CHALLENGES CONTINUE…
LOOKING AHEAD
EXHIBITS

Keywords

Huawei Technologies Ltd,Ren Zhengfei,People’s Liberation Army,Chinese telecommunications market,National security,Espionage,Wolf culture,Cyber security,Lobbying,Aggressive pricing,Internationalization strategy,National broadband network,5G wireless network,Cisco,AT&T,Verizon,T-Mobile,Spring Nextel,ZTE Corporation,US Congress,Committee on Foreign Investment in the US (CFIUS)

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