Huawei’s Quest for Global Markets

Abstract

This case discusses the challenges faced by Shenzhen-based networking and telecommunications equipment and services company, Huawei Technologies Ltd. (Huawei) in the global markets of the United States, Australia, and the European Union for its telecom equipment. These countries alleged that Huawei had entered their organizations through the back door at the behest of the Chinese government, giving China a chance to spy on them. The allegations were rooted in the past association of Ren Zhengfei (Ren), Huawei’s founder, with the People’s Liberation Army (PLA), the unified organization of the armed forces in China. Huawei’s culture of secrecy, lack of openness and transparency, and Ren’s unwillingness to give public interviews only strengthened the opposition the company faced. Amid concerns of national security, Huawei was banned from bidding for telecom equipment projects in both Australia and the United States. Huawei had consistently denied all espionage accusations and allegations that it had links with the Chinese military. The company fought relentlessly for several years to shed its image as a company controlled by the Chinese government, despite its private ownership structure. Since Ren’s past experience in the PLA was often cited by overseas media and officials to suggest that Huawei was collaborating with the Chinese government, Huawei enlisted the help of global public relations firms, advertisers, and strategic consultants to try and alter this impression. Despite spending a huge amount of money on lobbying activities in the United States during 2012, the company had to reduce its presence in the U.S. telecom market. Industry experts pointed out that Huawei had not made an aggressive push to address its woes in the U.S. telecom market. Some analysts suggested that Huawei should proactively develop relationships with U.S. policy makers at the federal and state level. They suggested that to turn its fortunes around in the United States, Huawei should invest in a U.S.-based marketing and PR operation. Some experts felt that Huawei should also lobby the way U.S. companies did. However, the questions of whether Huawei’s efforts were adequate to address the security concerns and whether it could successfully overcome the obstacles it faced in its global expansion still remained. Industry analysts felt that the company might have to reinvent itself to successfully overcome these obstacles.