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Thu Sep 24, 2020, 06:36 AM

How Huawei grew to dominate the world

From its earliest years, the telecommunications equipment industry has been considered strategic by the governments of highly industrialized countries. As such, national champions have emerged including Alcatel in France, NEC in Japan, Siemens in Germany and Ericsson in Sweden.

In the US, the AT&T monopoly had its Western Electric unit that supplied equipment exclusively to its operating units and became the largest telecom equipment company in the world.

In recent years a new Chinese national champion, Huawei, has emerged. Since it started in the late 1980s, Huawei has grown to dominate the industry, while Lucent, the equipment company that originated from Western Electric after the breakup of AT&T, no longer exists.

Huawei, with current revenues in excess of US$100 billion annually, dwarfs its remaining competitors Ericsson, Nokia and ZTE. Huawei combines an aggressive product investment strategy with global sales at prices lower than its competitors.

But underpricing competitors would have been futile if its products and the associated implementation services had not been excellent. How did such an industrial upheaval happen?

Economist Robert Atkinson, author of “Who lost Lucent?” in the American Affairs journal’s Fall 2020 edition, attributes a great part of this success to the financial support of the Chinese government and preferential access to the local market.

That is true, but while government support was essential, the company also benefited from outstanding management. Assembling excellent talent, the company channeled investment in a timely manner to deliver the products needed by the global carrier industry.

The company started with a strategy of emulating products of competitors and serving the local market, but technology leadership was the long-term objective as resources were added.

Recognizing that research resources were limited in China, the company recruited talented engineers globally, left them in place and integrated them in its product development programs. Huawei now has more than 100,000 engineers globally.


It helped that US economic policy deliberately destroyed Western Electric.

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