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Huawei Technologies Corporation: from local dominance to global challenge?

Brian Low

Abstract
Purpose – ThepaperaimstoidentifythechallengesfacedbyHuaweiTechnologies,China’sbiggesttelecommunicationsequipmentmanufacturer,asit
makes the transition from an indigenously-owned business to a potentially competitive global giant.
Design/methodology/approach – This is an inductive, interpretative case study complimented by hands-on experience with the industry.
Findings – The paper finds that Huawei lies at a crossroads in a transitional telecommunication sector that is no longer isolated from global reforms
and advancement. Through internationalisation the company has learned to compete by adjusting their mechanisms, learning instruments and focus.
Originality/value – The paper is useful for practitioners in that it shows how indigenous companies in latecomer industrialising countries like China
canovercomethelatemoverpositioninsomeoftheadvancedmarketstheyhaveentered.Foracademicsithighlightstheroleofgovernmentinhelping
to construct competitive indigenous firms that could take on global giants.
Keywords China, Transition management, Telecommunication equipment
Paper type Case study

Huawei: a sleeping giant awakes?
Huawei was established in 1988 in Shenzhen, Guangdong as
a private enterprise during the peak of China’s economic
reforms and technological advancement. The company had a
humble beginning, and began by selling imported telephone
call switches before manufacturing them. It grew rapidly by
focusing on the relatively poor Chinese rural regions ignored
by larger companies, making and selling low-end, low-margin
switches and access equipment. Its product line has since
expanded to include high-margin optical network, data
communications networks, wireless networks, handsets and
terminals (see www.huawei.cn).
It is now the largest telecom vendor in China, with reported
2004 sales of US$5.58 billion. This represents an increase of
81 per cent compared to 2001 sales of US$3.08 billion (see
Table I). This growth has been achieved at a time when global
telecommunication giants like Alcatel and Lucent were
experiencing a sales decline, and Motorola experienced
minimal growth. Significantly, Huawei’s international sales
grew from US$330 million (or 10.7 per cent of total sales) in
2001 to US$2.28 billion (or 41 per cent of total sales) in
2004, a growth of more than 590 per cent (see Table I).
Huawei’s foray into international markets was initially
limited to developing countries in South-East Asia, Central
Asia and Latin America. The company then sought
international growth into Middle Eastern nations, before
turning their attention to developed nations, including theUK, USA, Sweden and The Netherlands. It has also
established 32 worldwide branch offices, and eight regional
headquarters, with established research institutes in Dallas
(USA), Bangalore (India), Stockholm (Sweden), Moscow
(Russia), Beijing and Shanghai in China.
In 2002, Huawei launched FutureWei, the company’s
wholly-owned US subsidiary, underscoring the company’s
commitment to international business and long-term
investment in the North American market. The company
has also actively participated in global research and
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