Can Huawei Overcome Roadblocks in its Quest for Global Markets?
Case Code: BSTR523
Case Length: 16 Pages
Pub Date: 2017
Teaching Note: Available
Organization: Huawei Technologies Ltd.
Countries: China and the US
Themes: Globalization, International Business, National Security
Abstract Case Intro 1 Case Intro 2 Excerpts
Huawei's Internationalization Strategy
In the mid-1990s, the Chinese domestic telecommunications networking equipment market was dominated by giant international telecom equipment companies. Their dominance led to Huawei having a relatively weaker position in China. Ren believed that the Chinese telecommunications market was the largest and among the most open markets in the world attracting global telecommunication giants to the country. As a result, he felt, “The best food has all been eaten up by the global giants and what we can do is to have those leftovers.” This prompted Huawei to consider entering international markets. Commenting on its international expansion, Ren, said, “We were forced to go into the international market for our very survival.” ...
Challenges in the Global Telecom Markets
Though Huawei achieved huge success in several global markets, the US was a different story altogether. Despite bidding several times since the company first entered America, Huawei failed to win a single big contract from top-tier carriers such as AT&T, T-Mobile, and Verizon. The US telecom companies had had long relationships with home-grown suppliers such as Lucent, Motorola, and Cisco. Moreover, the US telecom majors felt that while the telecom equipment manufactured by Huawei was fine for emerging markets, it was not reliable or suitable for the 24/7 service required by networks in the US. Though by 2011, Huawei had developed some of the most innovative and fastest equipment in the telecom industry, it continued to face resistance in the US...
The Challenges Continue...
While Huawei was making several efforts to crack the global telecom markets, in July 2015, Malcolm Turnbull, Communications Minister, Australia, stated that amidst security threats, telecom companies in Australia had been barred from using equipment from Huawei and ZTE. This meant that Huawei would lose its existing business in Australia since it provided equipment for consumer devices and backend networks for Vodafone and Optus. There could also be more trouble in store for Huawei with the Pentagon and the US military announcing plans in October 2015 to ban the use of Huawei equipment...
In November 2016, when the US telecom market announced its plans to build the nation’s 5G wireless network, Huawei was also gearing up to roll out its 5G wireless network by 2020. Though Huawei had earlier stated that it had given up on the US market, Ren hinted that the company had not given up on the country permanently and that it planned to make a “glorious” return to the US. However, Huawei stated that it would not focus on the US market currently but would concentrate on other global markets. According to Ken Hu (Hu), Huawei’s CEO-in-rotation, “For our 5G strategy, we currently focus on markets like China and Japan among others. In the US right now, we’re not making significant progress and we don’t have big plans for that market.” ...
Exhibit I:Huawei’s Milestones
Exhibit II: Huawei’s Five-Year Financial Summary
Exhibit III: Timeline of Huawei’s Globalization
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