HUAWEI IN CANADA: CAN IT BECOME A TRUSTED PLAYER? Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

HUAWEI IN CANADA: CAN IT BECOME A TRUSTED PLAYER? Case Solution

Introduction:

A former engineer from Chinese People’s Liberation Army, RenZhengfei, founded Huawei in 1987. Huawei was formed to manufacture phone switches with a small initial capital of Rmb 21,000. Most of the Chinese telecommunication equipment makers were engaged in copycat manufacturing, as they had very little technological know how.

China opened up for multinationals for the first time in decades in late 1980s. Many of the international companies rushed to China because of its cheap labor and low production costs. Huawei was registered in a southern Chinese city, Shenzhen, to benefit from the Chinese Globalization policy.

Most of the Chinese telecom operators imported their equipments from global vendors, and there was a demand for telephone switches and many other telecommunication equipments. Foreign companies operating in China had a competitive advantage of advance technology, as they were not shifting their knowledge of core technologies to the local Chinese partners.

Ren Zhengfei opened up his own business of developing telephone switches with a vision of having a homegrown telecom equipment technology in China. China did not fund its private companies as its economy was controlled by the state.

After a decade, Huawei faceda decline in its growth strategy because of the low spending growth of Chinese Telecom operators. Its spending shifted from 25% to 2.1% annually. The price war between the Telecommunication equipment vendors was at the peak. With the increasing competition and low market growth, Ren wanted to enter into the Global Market with an approach of modern management practices.

The company has established its presence around the world as well asithas partnerships with companies in Asia, Africa, Russia and Europe. Huaweiwas ranked third in the Global Telecommunication equipment market at the time itentered the Canadian market as a full-fledged multinational. Huawei dispersed its operations in a wide range that 36 of the world’s largest 50 telecom operators were customers of Huawei.

Huawei’s focus was its R&D and it spent $80 million in its Research and development in Ottawa, Canada. When Huawei entered Canada, it proposed itself as a Canadian company. Huawei had several contracts of high-speed network infrastructure with the local Canadian companies.

The company established two more offices with the launch of its new headquarters at Ontario by 2011. The staff of Huawei was increased from 70 to 450 with nearly half of the total staff involved in operations of Research and Development. In a very little time, Huawei was about to become a primary player of telecommunication industry in Canada.

Problem Statement:

The US Congress released a press report claimingnational security risks in using products of Huawei. The Congress banned the equipments of Huawei in October 2012. With this regard, the governments of US, Australia and India proposed a lawsuit against Huawei to participate in bidding on government projects.

The Governments also proposed the private companies to avoid collaboration or partnership with Huawei. Huawei was losing its potential in the project deals in North America. The question aroseon Huawei’s commitment to Canadian telecommunication industry. Different analyses have been done to see the potential of Huawei to become a trusted player in Canada.

Analysis:

The telecommunication industry has gone through many changes to stand out in the competitive business world. The telecommunication industry has experienced a steady GDP growth during the last five years. The subcontinent’s economy is expected to grow shortly over the next five years. A PESTEL analysis of the telecommunication industry is one of the great strategies which has helped to understand the industry for many interested investors.........................

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