Huawei, Chinese business culture and the Art of War

Kate Gerwig
03 Jan 2011
It wasn’t long ago that the telecom industry stumbled over how to pronounce Huawei, while dismissing it as the low-priced Chinese telecom equipment provider. Now the telecom equipment industry is getting jittery as Huawei Technologies wins deals one by one, no matter how small. Huawei has Chinese government backing and access to an enormous amount of capital to help service providers finance equipment. Then there’s its not-so-public interest in the enterprise networking market.
So many unknowns surround this privately held company that ACG Research spent months researching Huawei to separate folklore from reality, interviewing dozens of global telecom carriers and industry consultants in different countries about how Huawei structures its equipment and solutions deals. The goal was to figure out who Huawei really is, its short- and long-term strategies and whether vendors’ increasing anxiety over Huawei’s place in the equipment market is well-founded.
ACG Founder and Managing Director Ray Mota talked to executive editor Kate Gerwig about how Huawei’s strategy is right out of The Art of War, the definitive sixth century Chinese military treatise that advocated quick and appropriate responses to changing conditions along with deception-based warfare. In part one of the Q&A, Mota talks about Chinese business culture and what makes Huawei a tough competitor. In part two, Huawei vs. network equipment vendors, Mota talks about Huawei’s enterprise networking aspirations and how it positions itself with service providers compared to Western vendors.
What was the motivation behind doing such exhaustive research on Huawei?
Mota: If you look at reports from the analyst and consulting community, Huawei is the only vendor out there with a delta ranging from 40% to 100% differences on its share of various market segments, particularly carrier routing and switching. That doesn’t happen with other vendors. Sometimes the numbers Huawei provides are somewhat inflated, so the differences come from total estimates because Huawei hasn’t always been able to back up its claims. We wanted to know what’s going on and the threats for other telecom equipment vendors in terms of Huawei’s go-to-market strategy. The other issue is that there are so many folktales about Huawei. I’ll hear that Huawei has 50,000 working at one carrier and 10,000 at another. We wanted to clear up the smoke.
How did you find out what’s going on?
We couldn’t look at everything, but we looked at six countries -- China, India, Brazil, the U.S., the U.K. and Germany -- where we were able to work with local consultants who had good pulses on the carrier side to give us that insight. We talked to more than 40 carriers, and we got tremendous clarification. But at the same time, some things popped up that I wasn’t expecting.


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