Huawei's growth path: relying on its own growth strategy to win the world
On January 21, Reuters published an analysis article "Huawei's Growth Road: Hitting the World by Its Growth Strategy", thinking that "Huawei's history is mixed with mystery, giving the impression that it is unscrupulous to obtain technology. But Huawei Technologies today Relying on its own strategy of orderly growth has become a signpost for many emerging market companies. "
The following is the full text of the article:
The history of China ’s Huawei is mixed with mystery, giving the impression of acquiring technology by any means. Today, Huawei's strategy of growing in an orderly manner has become a roadmap for many emerging market companies.
China Lenovo Group purchased the IBM PC business four years ago, and its subsequent performance has not been satisfactory. Huawei, founded in 1987, has been immersed in building its own business.
Although there are many criticisms during its growth, Huawei based in Shenzhen has established itself in the international market. Global communication network operators from Dubai to Nigeria to Latin America are now dealing with Huawei, and they have left behind rumors of Huawei's military connections and commercial espionage. Huawei's business partners currently include Vodafone, Deutsche Telekom, and computer system security and services company Symantec, which also formed a joint venture with Huawei.
Huawei's most impressive performance to date is: In December 2009, it won an agreement to build next-generation networks for major mobile operators in Norway and Sweden, successfully defeating rival Ericsson, and this is still on the other's territory.
Such operations have successfully promoted Huawei from an unknown company to the world ’s second-ranked telecommunications equipment manufacturer last year, surpassing Alcatel-Lucent and Nokia Siemens ’communications technology equivalents and currently lagging only behind Ericsson.
Both Huawei and ZTE, which focus on emerging markets, have self-growth strategies. Compared to mergers and acquisitions, they are more inclined to self-growth.
Self-growth
Huawei ’s self-growth strategy is in stark contrast to Lenovo ’s acquisition of IBM ’s PC business in 2005. Lenovo's breakthrough acquisition proved to be overdone in many ways.
The biggest problem is the fusion of two fundamentally different cultures. Lenovo's goal is the fast-growing Asian consumer and small business market, while IBM personal computers are mainly aimed at the high-end notebook business of professionals. Therefore, the Lenovo-IBM transaction had to first resolve the issues raised by the opponents concerning US national security. The final solution is to implement an unrealistic joint CEO mechanism and jointly manage the company from China and the United States.
On the contrary, Huawei has so far avoided growth through mergers and acquisitions, but before that Huawei also tried to acquire US network equipment supplier 3Com, but ultimately plans to fall through.
Charles Guo, an analyst at JPMorgan Chase, pointed out that self-growth works for companies like Huawei, because their products are not aimed at consumers. "ZTE and Huawei manufacture equipment for operators, and do not directly face consumers. If you need to target consumers, you need to build a brand, market, and build brand reputation."
Scale advantage
Of course, with China as the backing, Huawei and ZTE can easily rely on the domestic market and adopt a gradual development strategy.
Analysts and industry observers attribute Huawei's early price to at most 20-30% lower than its international peers, due to Huawei's advantage of sufficient and cheap labor in China. Many competitors complain that Huawei and ZTE have also received huge subsidies from the Chinese government. Due to the growing market share, it is unnecessary for Huawei to launch new products at too low a price.
JP Morgan's Charles Guo said, "Telecommunications are strategic, and the Chinese government must understand the importance of telecommunications. This makes a huge difference."
The second favorable factor facing Huawei and ZTE comes from the government's support for the domestic telecommunications market. To build a third-generation (3G) mobile communication network, China Mobile, China Unicom and China Telecom have invested more than 60 billion US dollars.
Joseph Ho, an analyst at Daiwa Securities, said, "The three major telecom operators in China each have their own networks. This has created a good domestic market for Huawei and ZTE, and they can develop domestically first. Eventually they can use their technology to go overseas. . "
In the last century, similar market developments have nurtured huge communication equipment suppliers in the United States and Europe. This time, the process was compressed into ten years.
The pain of global growth
As Huawei better understands the role of the media, reports of corporate spies that have been frequently seen in newspapers, as well as the slanderous voices of opponents linking Huawei to Chinese military power, have gradually faded.
At the beginning of this century, Huawei was caught in a long-term dispute with its most terrible rival, Cisco, because it was accused of stealing some designs. In 2004, Fujitsu also alleges that a Huawei employee tried to steal product information at the Chicago Trade Show. These may indicate that Huawei has a shortcut in realizing its global ambitions, but these accusations are also the blind eyes that large companies usually use to prevent new competitors.
Competitors tried to discredit Huawei's business and technological achievements or failed to stop Huawei's growth, but Huawei also found that going overseas meant integration into the global economic cycle. Its sales growth slowed sharply last year, from 43% the year before to 17.5%.
Barry French, Nokia Siemens Networks Marketing Director, said, "Last year ’s decline in Huawei ’s foreign operations shows that Huawei and other infrastructure suppliers face the same market reality, and it is clear that Huawei has received preferential treatment in the Chinese market."
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