Etude de cas - Les raisons du succès de Huawei et sa relation tumultueuse avec les Etats -Unis

HUAWEI

THE REASONS OF ITS SUCCES AND ITS TUMULTUOUS RELATION WITH THE UNITED STATES

Table of contents

I.        THE REASONS OF HUAWEI’S SUCCESS        1

1.        Employees        1

2.                2

4.        Brand strategy: build global leadership for Huawei        3

5.        Marketing strategy of Huawei        4

Consumer - centric premium strategy        4

Price strategy        4

6.        Communication Strategy        5

II.        The War between Huawei and THE US        6

1.  A tumultuous relationship        6

2.        Reasons behind the trade war        7

3.        China’s reaction        7

4.        The positions of the other world economies        8

United Kingdom        8

France        8

Australia        9

Asia, a valued market        9

III.        CONCLUSIONS        10

Executive summary

Huawei is the world's largest telecommunications and smartphone manufacturing company and is the only Chinese company – out of the 91 other Chinese companies listed on the Fortune Global 500 list - generating more revenue overseas than in China.  The firm employs 180,000 people in more than 170 countries and regions worldwide. In 2017, Huawei generated over $90 billion US in revenue and $7 billion US in net profits. The company is currently poised to take advantage of the global roll out of 5G — or fifth generation —cellular wireless technology.

Huawei is focusing on differentiated strategies: in Indonesia, Saudi Arabia and South Africa, Huawei uses value based and user benefit positioning strategies depending on the products offered to the customers. Huawei invests a lot of money and a very high percentage of its revenue in its marketing and R&D departments in order to have a technologically sophisticated models at an affordable price and distributes its technology worldwide with an excellent reputation and after sales services ;

However, Huawei should eliminate the United States market from its international development, many problems between Huawei and US from long time ago mainly because the US has identified it as a security threat as early as 2012, The US prevents the use of technology of Huawei in the core of superfast 5G wireless networks that started to be built in its territory. Despite the pressure from the US to the giant telecom equipments, Huawei, as one of the cheapest and most reliable telecom equipment manufacturer, remains in demand in many countries around the world.   

Introduction

Today, Huawei is facing an international scandal: suspecting the Chinese manufacturer of espionage and therefore of a breach of national security, Donald Trump has decided to ban Huawei by prohibiting American telecommunications networks from using its equipment. Trump urges other powers to follow the example of the United States. This is the beginning of a battle between the two powers, each using pressure tactics against the world's major economies. On the one hand, the United States threatens to stop collaborating on intelligence projects. On the other hand, China warns countries of the economic risks they face if they interrupt their collaboration with the telecom equipment giant.

The history between Huawei and the United States has been complicated since the creation of Huawei in 1987 by Ren Zhengfei, who belonged to the Chinese Liberation Army (founded by the Communist Party). Zhengfei is still a member of the Chinese Communist Party, which fuels concerns about Huawei's potential links with the Chinese government. The United States criticizes a real lack of transparency on these links between government and Huawei's activities.

From the 2000’s, Huawei's international expansion accelerated. After setting up in Africa and Europe, Huawei tried to penetrate the American market. But its competitor in the telecommunications network market, Cisco, sued it for patent infringement and accused him of copying. Facing these accusations, Huawei decided to withdraw from the market on its own. It was only after reaching an agreement with Cisco that Huawei tried again to enter the American market at the end of the 2000’s. But in 2012, a parliamentary report recommended that the administration and private companies should not equip themselves with Huawei because of a risk of espionage. A law banning the purchase of Huawei equipment by American administrations has even been passed.

In parallel, the US Department of Justice opened an investigation in April to determine whether the group violated US sanctions against Iran by selling products to it. It was as part of this investigation that Meng Whanzou, the group's CFO, was arrested in Canada.

Through this report, we will discuss the reasons of Huawei’s success as well as the origins and consequences of the war between the US and the Chinese telecommunications equipment and consumer electronics manufacturer.

1. THE REASONS OF HUAWEI’S SUCCESS

1. Employees

Huawei stresses that the best way to acquire opportunities is through hard work. In the early years of the organization, each new worker was given a blanket and a sleeping pad. A large portion of them would work late into the night, then rest in their workplaces, maybe taking a catnap amid lunch again the following day. A devoted and committed work- force makes organizations more focused is not a difficult concept to comprehend. The best approach to boost dedication and make it acknowledged by its workers is sometimes an impossible feat. Huawei does it to some extent with its incentive performance system. Huawei is not a public organization, and is truth be told owned by the workers. According to Huawei’s 2014 Annual Report, Ren Zhengfei's shares represent about 1.4% of the organization's total. Ren Zhengfei wants to share both, responsibilities and benefits with his employees.  As he puts it, he needs everybody to act like the manager. It should however be noted that, only those who perform well enough qualify to participate in the common stock option arrangement.

...