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The growth of the Chinese economy over the last three decades has been staggering. It was until recently, most of the growth in China was attributed to labour-intensive, low-value-added products and goods. However, today, China has gained a higher level of competitiveness which is no longer confined to low-end production (Huang, et al., 2012). However, the Chinese policymakers have shifted their focus and have recently been interested in assisting Chinese companies to build brands that are internationally recognizable to commensurate the Chinese global growth. As such, a number of Chinese companies have over history emerged to challenge the traditional dominant firms in the global market. One such company is Huawei. This report highlights Huawei’s history, the company’s growth, its expansion abroad, performs a SWOT analysis and provides a recommendation for the company.
In the 1980s, when China opened itself to the world, it was quite difficult for a private company to thrive. However, Ren Zhengfei, a veteran of China’s Liberation Army was able to beat the odds when he started Huawei Technologies Inc. (hereafter Huawei), which is currently a world leading ICT solutions provider and also a world’s largest telecommunication equipment maker (Ke, 2015). Ren Zhengfei started the company as a one-man sales agent who was selling Private Branch Exchange (PBXs). Huawei served as the main provider to different local establishments such as local companies, hospitals and schools. The company operated in the midst of giant companies such as Nokia, IBM, and Ericson which made it difficult for Huawei to compete favourably in the beginning. However, Zhengfei was willing to learn and grow within this tough environment (Bakry, 2015). The company was able to gradually expand and included enterprise business as well as telecom carrier network and manufacturing of electronic communication devices.
By the year 1993, Zhengfei was able to build a Research and Development (R&D) team and it was able to develop Huawei’s first digital PBX. The company started delving into the overseas market in the year 1995 (Ahrens, 2013). Today, three decades later, Huawei has been able to reach a sales revenue of over US$92.55 billion and has gained a strong presence in over 170 countries. In the year 2017, the company was able to ship 153 million smartphones accounting for a 10 percent share of the global market (Protiviti, 2017).
Since Huawei was started, the company has focused on delivering quality products to its customers across the globe. Huawei has been delivering quality phones that suit business and personal needs. For example, Huawei produces P Series phones which are suited for photography, fashion, and design (Ahrens, 2013). On the other hand, Mate X phones are meant for business purposes. Other products offered by Huawei include laptops, tablets, smart watches, talk bands, free buds, and portable Bluetooth speakers. Further, the company also takes care of business needs by providing products such as switches, routers, WLAN, and servers among others. Additionally, it also provides business solutions such as cloud data centre, intelligent computing, and enterprise networking among others.
Over the years, Huawei has laid a strong emphasis on “the power of thinking.” They believe that the most valuable and important thing is the ability and power to think. As such, the company ensures that they bank great efforts in facilitating intellectual exchange routinely (Cremer & Tao, 2015). The company urges its executives to keep reading books beyond their areas of expertise. Further, they ensure that every office is stacked with books that one can read whenever the opportunity arises. Furthermore, the company has maintained a culture where new ideas are communicated frequently to all employees by executives and the founder and CEO Ren Zhengfei. According to Cremer and Tao (2015), the company values feedback and they always invite feedback across the company to ensure that they improve the ideas generated. Mainly, they see these ideas as the ultimate propellant to Huawei’s ability to achieve its future vision.
Huawei operates in an environment that is subject to a plethora of changes such as political, economic, and social. To thrive in this environment, the company has built itself a strong entrepreneurial culture that has acted as the backbone to its growth. Further, the company has embraced the technological advancements that have been fundamental in achieving higher growths. Since the 1990s where the company only had about 500 employees, the company has been able to grow its employee’s base to over 170,000 in 2017 (Protiviti, 2017). Further, these employees have been the same people who have helped Huawei deliver excellent services and products to its customers across the globe.
Further, to expand its external operations Huawei has been consistently developing strategic activities intended to propel the company to its success. That’s the reason why Huawei has been willing to collaborate with A-list celebrities with the intention of selling its brand and any new product they need to be introduced to the market. According to Bakry (2015), the company has carefully showcased its cutting-edge technological innovations and products on large-scale exhibitions allowing it to have a strong grip on both local and international markets. Further, with the flourishing widespread use of social media, it has become easier for the company to reach its customers. Surprisingly, Huawei has been able to transform itself from an imitating company to a technology leader.
Initially, Huawei’s market was only in China’s rural countryside. During this period, the company was determined to expand its circle to the cities. Later in 1995, the company started its international forays which included Russia, Southeast Asia, Latin America, Africa, and Europe. The company has been able to tune and adapt its expansion strategy to capture the developing countries first and then the developed countries (Zhu & Jones, 2014). By doing this, the company has been able to gain traction within the global market and helped the company to transform itself and gear its organizational structure towards establishing a global presence. Since the year 2004, the Huawei’s overseas sales have been surpassing their domestic market. Currently, it has most of Europe’s giant corporations as part of its customers. Further, the company wants to feed the underserved market in Europe. More so, Huawei needs to increase its stronghold as Western Europe does not have strong competitors.
Since Huawei set foot on the global market, it has continually relied on its core strengths of the robust and sizeable anchor market alongside its ability to meet its customers’ expectation of high-quality products at a low cost. Right from Huawei’s home market, the company has been able to set a strong foothold in the robust and sizeable telecommunication market (Zhu & Jones, 2014). Such advantages have allowed the company to scale to greater heights, and at the same time, enabling the second strength, the ability of the company to deliver quality products at a very low cost compared to their competitors such as Apple and Samsung. Huawei enjoys greater economies of scale which is attributed to the strong foothold in the domestic and global market thus improving the economic stature of the company.
Further, the company has been able to set a continuous and consistent trend in the line of production through differentiation. Through differentiation, the company has been able increase value for consumers resulting in higher satisfaction levels (Huang, et al., 2012). These efforts lie in the company’s philosophy which lays a greater emphasis on bringing real value to customers through excellent products. For example, Huawei has two smartphones which have hit the market by surprise: Mate and the P-series. Huawei designed Mate with a focus on business and increasing efficiency (Protiviti, 2017). On the other hand, the company has consistently improved its p series to incorporate design, photography, and fashion. Therefore, the company has been able to captivate more customers with more choice.
Further, Huawei has been quick in evolving and adapting to the needs of its customers. This can be demonstrated by its continued innovation and development. For example, the company developed Huawei Mate X, a phone which has a foldable screen. Additionally, the company has been able to demonstrate the ability to quickly adapt and offer green sensibilities and IP attributes. All these products have been greatly welcomed by their customers.
While Huawei’s rise has been rapid and done over a short period of time, the company’s tenure in the market is similarly short. The company was founded in 1987 and its landmark appearance has been felt in the last decade (Huang, et al., 2012). Huawei is not attached to a strong legacy nor history within the telecommunication industry compared to companies such as Apple and Alcatel. The legacy or tenure a company has gained offers a company an invaluable context and perspective that can help a company to anticipate disruptions or changes ahead. For Huawei, the effect can be felt in the technical focus of its solutions. Such a key area defines the steps that the firm should take in pursuit of its global leadership. From a geographical standpoint, the company is experiencing weaknesses in the North America regions (Yang, 2019). While the region is a mature market for Huawei, it still remains a stronghold for some of the top competitors Huawei has. Further, the United States has taken a leadership position in LTE technology making it an essential battlefield for next-generation wireless technology supply. Further, the company does not have a strong relationship with the U.S and it has affected its market hold in the U.S.
Recently, there has been an explosion in the mobile data traffic which is presently reprinting an essential opportunity to many telecommunication equipment vendors. This has brought a need to deliver great capacity networks infrastructures at a low cost per bit. The likelihood of this venture driving investments in next-generation products and technology offers great opportunities for companies such as Huawei (Pu, 2018). Further, opportunities not only reside within the network build-up, but it also entails the transformation of legacy systems powering communication infrastructures defined by mobility and IP.
Besides these transformations, there are many opportunities that Huawei can seize in delivering network infrastructures which is a market that is underserved. Further, the company has put great internationalization which have been fruitful and yielded strong dividends in key regions such as the Middle East, Africa, the Americas, and Asia (Ahrens, 2013). These regions have demonstrated a strong will to grow in the future compared to the already mature markets in Western Europe and North America. Additionally, the company can harness the cheap labour force present in its home country as well as in other countries to fuel its rapid growth.
A key threat to Huawei is growing political scrutiny. Currently, the company has not been at a position to expand its operations within the US market and other countries due to the ongoing political and scrutiny concerns. For example, the U.S government has been wary that the company might be used by the Chinese government to install a backdoor within the U.S 3G network and allow access to the network creating a potential for the Chinese government to cause a widespread disruption (Ahrens, 2013). As such, these political concerns have hurt the market share that Huawei holds in the U.S. Further, the company is facing continued threats from competitors as they have sought to consolidate their efforts. For example, in pursuit of economies of scale, Ericsson acquired Nortel’s LTE assets. By doing this, they were able to create a solidified and segmented position within the North American Market (Ke, 2015). These companies view this response as a defensive measure against the rapid growth of Huawei. These efforts are effective and they certainly make Huawei’s efforts towards building traction within this region more complicated.
Huawei is a well-renowned company in telecommunication equipment production. The company has been able to gain a strong grip within the global market and currently ranks as the second largest company after Samsung. With such rapid growth in its niche, the company has to ensure that it remains in that position or even grows to rank as the best. To achieve that, Huawei has to take care of some essential areas, especially in its marketing strategy. Huawei needs to work on its digital marketing. As Wymbs (2011) informs, every company is taking its game higher in digital marketing. As such, Huawei needs to revamp its website to meet its current and future marketing needs. Additionally, Huawei also needs to engage in product localization. Amuah (2013) indicates that this strategy is fundamental in reaching a plethora of customers located across the globe. It makes customers feel that the company had the user in mind when producing the good. As such, adapting the products to specific markets is very vital for the continued growth of Huawei. Finally, Combs, et al. (2004) advices that such a company should engage in franchising. In particular, Huawei should strive to offer its franchises its products at a lower cost to help expand its market outreach.
Since Huawei was founded in 1987 as a simple sales agent for companies that used to sell switches. Since then, the company has grown to an international organization that has been able to continually thrive besides the storms within the market. Guided by its strong culture and philosophy, Huawei has remained innovative and ensuring that it delivers quality products that meets all customer needs at a lower cost. Through the SWOT analysis, the company has many of its strengths that has helped remain highly competitive. However, it also needs to work on its weaknesses and threats to ensure that the rapid growth is not short-lived. As recommended, Huawei should work on its marketing strategy to be able to thrive in the highly competitive market.
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