Author: Alexandra Harney • (Alexandra Harney) Friday, 14 January 2005
In June last year, Ton Ann de Stegge received a letter from a Chinese telecom equipment company in Amsterdam. The letter said that it would be a supplier of Dutch mobile operators Telfort. . As a CEO of Telfort, Mr. Ans Steig has never heard of this company that he has never heard of the letter, so there is not much consideration to its proposal.
But at this month, at the meeting of the R & D group of the Director, Mr. Ans Steig, the name of this Chinese supplier appeared again. This company is allegedly providing competitive technology with a far lower than the price, which has attracted interest in this CEO. He let his hand clear, this Huawei Technologies background.
First-class
In less than 6 months, Telfort chose Huawei to build its third-generation (3G) mobile phone network, and rejected Ericsson's report. Ericsson has been the main supplier of Telfort since 1998. Telfort and Huawei signed a contract in December last year, this contract marked the first victory of Huawei's competitive 3G market in Europe, also marked Huawei's first-class telecommunications equipment supplier.
"I completely believe ... After three years, Huawei will become one of the largest infrastructure suppliers in telecommunications," Mr. An De Stiig said. He has served as the CEO of Ericsson in Netherlands until 1999.
Huawei is China's largest telecom infrastructure equipment supplier. The company last year is $ 228 billion, it is working hard, I hope to increase this number to more than 10 billion US dollars 2008, and its low price, competitive products are attracting attention to global attention. Telecommunications equipment suppliers with competition continuously consult industry analysts and entrust relevant people to study Huawei's actions. Recently, a professor team from Harvard Institute spent a week, and studied cases in Huawei's superficial park in Shenzhen.
Threat to the industry
Huawei's rise has triggered some questions that have global significance. Can China climb on the value chain, repeating its huge success in the low-end manufacturing industry in the high-tech industry? If it can, how much is this threat to the old leading companies in high-tech fields? These companies include Alcate, Cisco Systems, Ericsson, Lucent Technologies and Nortel Networks.
Huawei, the status of China's Science and Technology Electronics, such as Lenovo and e-giant TCL, suggesting that the ambition of Chinese companies may reshape their industries in various ways. In 2003, TCL and French Thomson were jointly created the world's largest TV manufacturing company. In December last year, Lenovo acquired the International Business Machine Company (IBM) Personal Computer Business Message announced that this acquisition made Lenovo to use a world-renowned brand.
Huawei was found by the former People's Liberation Army officer, and in 1996 after 8 years, the company began to consider overseas expansion. At that time, Huawei is a leader in the Chinese market, and is currently looking for a diversified growth source outside the market. It has previously been sold to Hong Kong Telecom Operators and Hutchison Whampoa. At present, the company executives have arrived in Africa, Brazil, Eastern Europe and Russia and other countries to find business opportunities.
"The telecom industry is becoming more international," said Edward Deng, President of Huawei, said. "If the company wants to survive, you must do business around the world."
Active active tactics
Some people think that Chinese companies have cheap, unreliable products, and Huawei is a struggle. As a new enterprise, the company has always adopted a proactive tactics to win the contract. The price has always been one of its most useful means. The group relies on a group of engineers in China, while in China, people's salary is a zero head of more developed countries. To a large extent, the price of Huawei can be 30% lower than the old vendor. Belt Norberg, Ericsson Sales and Marketing Department, Recalls that when he first encountered Huawei in Laos and Cambodia three years ago, its price "lower than our bottom line price" . In order to win the contract, Huawei also provides some powerful stimuli. In 2001, the French Telecom Operator and Internet Service Provider Neuf Telecom has previously set some companies, and will invite them to bid and build a broadband internet network. At this time, a Huawei executive called call, asking Huawei also participated in the competition of this contract.
"We are very interested, but (them) in China, (we think) What is the ability to deploy the network in France?" NEUF's CEO Michel Paulin recalls. Huawei managers returned to bring a unmatched quote: they will build some networks and operate for 3 months so that Neuf engineers are tested - all free.
Huawei spent less than 3 months to build this part of the network, according to Mr. Palan estimated, construction cost is millions of euros. This Chinese company has won this contract and saves NEUF 10% to 20% of the cost of payment.
The customer describes that Huawei is happy to customize technology to meet the special requirements of our customers. "They listen to the requirements, then make a response," Mr. Palan said. When the Japanese company starts overseas, they will often send managers from the headquarters. Unlike Huawei, it managed to hire local people. "In the past, we will carry out recruitment activities in some cities every year, mainly in Shanghai and Beijing," Mr. Deng said, "But now, we are recruiting in Paris, London, New York, Canada and Australia."
Local employment strategy
In France, Huawei has enabling hardware installations to local partners. The company said that its sales and project managers are also hired from local, although the recent visit to Huawei's Office in Paris, most employees are Chinese. "Business development is not so difficult," Huawei European Business Vice President Patrick Wen said, "The most difficult part is service, so we have used many local engineers."
Huawei has been trying to make himself into a multinational company. It is so eager to adapt to the environment in Germany, so it is worn by the people under the note. "Soren Puerschel, the business development manager of Huawei Frankfurt Office," If a technician went to (customer office), wearing a suit, then Too suitable. "
These tactics help Huawei earned $ 1.05 billion in overseas contract sales in 2003, far exceeding the headquarters of Shenzhen's state-owned competitor ZTE (ZTE), ZTE's contract sales in China outside China is about $ 600 million . Although these numbers are still small compared to the standards of Telecom Equipment Industry Giants, Huawei and ZTE are in the entire industry.
"In order to reduce costs, make your prices more competitive, these multinational companies are carrying out restructuring and integration, and all part reasons are in that Chinese companies offer lower prices in the market," research institutions Gutner ( Tina Tian, Chief Telecommunications Analytics, Gartner.
As part of cutting cost efforts, global telecom providers are transferring more business activities to China to take advantage of China's low-cost engineering and manufacturing capabilities. Alcate has established joint ventures with Shanghai Bell and TCL, respectively. Shanghai Bell is a telecommunications equipment manufacturer, and TCL is an electronic giant company. The Nortel Network has allocated 3G mobile devices with China Putian, China Putian. Cisco system is investing a R & D center in Shanghai. Juniper Networks also built a R & D center in Beijing. Ross O'Brien, general manager of Telecom Consulting Company in Hong Kong, believes that Huawei's strategy provides a way for telecom operators, when they have to provide more complex service for customers. You can save money in this way. "From some sense, Huawei unveil the veil of the scientific infrastructure vision: things are getting more and more advanced, but the services provided by telecom operators) are getting cheaper. Huawei is the first company ... it (To the operator), okay, now there is next generation (technology), cheap, free. "
Huawei and other Chinese high-tech companies will affect their industries, but how much impact will depend on whether they have the ability to launch international expansion, but also staying ahead of foreign competitors in the domestic market.
Patent technology or copy patents?
Japan and South Korea will encounter a situation when it is involved in foreign markets, that is, their products are considered inferior, and like, Huawei will also encounter a kind of lingering concern, that is, people's innovation capabilities for Chinese companies Worried. A observers who stayed in Huawei said that many products in Huawei seem to be derived from the products of other companies in the industry, whether they are from "patent excavation" or from reverse design. The former is a legitimate procedure, carefully searching for various patent information to discover opportunities, and the latter includes the purchase of competitors, and disassemble it and designed a product on the design basis.
"I have never seen anything they make in the original technology," this person said. Huawei strongly denied this, and pointed out that 6,500 patents approved as of the end of last year can testify.
Huawei has encountered trouble in this regard. Two years ago, the Cisco system was prosecuted to Texas, called Huawei to theft its intellectual property rights and violated its copyright. After Huawei agreed to modify the product of the dispute, the lawsuit was only knotted. In July last year, at the Chicago Expo, Fujitsu NetWork Communications captured an engineer, when he was removed by Fujitsu's network equipment, photographing the photos of internal circuits. Huawei fired this employee later and said his behavior is not Huawei.
Some of Huawei's competitors said that Huawei has not followed the pace of innovation in the industry. "I noticed that Asian manufacturers have traveled behind these new technologies," said the Chief Operating Officer of Alcatel Mobile Communications Mark Rouenne. He refers to the service combined with high-speed Internet connection, voice and video on demand, and telecom operators are beginning to provide this package service.
Huawei refutes those who have the ability to innovate. "This is a nonsense," Xu Zhjun, executive vice president. He does not think about list a list of technical products, which are first launched by Huawei. "If you talk to our competitors, they will always say this. For them, this is the most effective strategy that blocked our market."
Financial resources
However, there are other Chinese high-tech companies for Huawei, sustained overseas expansion not only needs innovation, but also requires financial resources. Huawei's expansion cost is difficult to measure because it is not a listed company. Although Huawei is considering the first public release, it currently rely on cash reserves and bank loans to fund their growth.
In October 2001, the company sold an EMERSON ELECTIC in the price of about $ 750 million in cash. In November last year, the company won 29 billion US dollars loans, including the Netherlands Bank (ABN AMRO) and HSBC. Chinese state-owned banks also helped Huawei: Export and Import Bank of China has been discharged to Huawei 600 million US dollars for export credits from the end of 2006. In December last year, the National Development Bank (China Development Bank) will give Huawei and its overseas customer 10 billion US dollars in the next five years. Huawei seems to have no consideration in international expansion. The Group admits that it is excavated from overseas competitors with generous compensation. In overseas markets, the company's dependence on local service partners has also increased operating costs.
"If you don't spend your company, (in) in line with local standards, then you will not have a very stable local market," Mr. Deng said.
Although Huawei is approximately 10% of sales to R & D, the proportion of its competitors is equivalent, but the company is small, low cost, meaning that its R & D expenditure is still relatively small. Ms. Tian estimates that in 2003, Alcate's R & D expenditure was 1.8 billion US dollars, Siemens was $ 2.2 billion, and Huawei's R & D expenditure was $ 385 million.
Financial details
Those who are familiar with the company say that Huawei's cash is still sufficient, and in the current stage of development, companies prefer to carry out business without being reviewed by external investors. These people said that in a market dominated by listed companies, there is no need to disclose financial results because they don't have to disclose financial results. However, if its listed competitors make the same decisions, shareholders may not accept.
However, since the disclosure of financial details is so small, the rumor of Huawei has been constantly, such as the company may be associated with the Chinese People's Liberation Army and the Chinese government. There are also some rumors that are related to the company's president of the company. Although the company is working hard to improve its transparency, questions about its reputation may destroy the company's efforts to win foreign government contracts, and make companies have easily become the target of trade protectionist lobbyers.
Analysts and industry managers believe that Huawei will face the biggest test is that it has the ability to sell products such as Telfort, but also let the world's largest mobile phone and fixed-on -phone operators believe that its products and Services have a value.
Huawei is deeply aware of how big the front challenge is. When Mr. was sipped from time to time, I said: "We got the big chance in the Netherlands, but this doesn't mean that we have spread in Europe. We have to win the trust of different national consumers, we have a long, very Long road (going). "
Translator / Zhang Zheng
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