Huawei and America

Today we learned how transitioning from China to the United States market can be challenging aside from the differences in culture and language. Huawei is a telecommunications firm based out of China that is in many developing international markets (India, Russia, South America, Africa and the Middle East) as well as a few developed markets (European Union and the United States). Although the company is the number one telecommunications supplier in China it earns about 75% of its revenue outside of China in other countries. Professor Bing Ren did a very good job of explaining the challenges that Huawei has experienced entering the U.S. market which Cisco and Juniper currently have somewhat of a duopoly. The major challenge in the United States has been avoiding patent lawsuits from Cisco and the blocking of business deals by the United States government.

The class engaged in a short discussion of possible strategies that Huawei could implement in order to enter the United States market as a competitive force. Brian suggested that they go public with an IPO for a number of reasons. First to show the U.S. government that they can adhere to international accounting practices and becomes transparent and trustworthy for operations in the U.S. Another reason to for an IPO is to have the company publicly traded and get their name out and advertised better to create a positive public image with American companies and consumers that fosters trust. We later learned that many Chinese firms that IPO often have problems due to this choice. I suspect this has a lot to do with the culture in which a Chinese firm operates, with power usually centralized and a few top leaders making the right choices for the firm's success. When an IPO occurs you now shake up this structure with individual stockholders having ownership rights. This change in corporate structure and power has often led to problems for newly IPOed Chinese firms.