Jiangxi, PR China

International Masters in International Business (IMIB)School of International Trade & Economics (SITE)

Course Title:Brand Strategy for Multinational Companies

Presentation On:

HUAWEI Success StoryHUAWEI Success Story(How HUAWEI becomes zero to billionaire)

Date: April 13, 2016

Presented To: Dr. SHU Jin

Presented By:

• Esther Mpiirirwe 31540031

• Saeed Ullah 31540046

• Md Ameer Hossen 31540049

• Mohammad Tawhidur Rahman 31540051

• Hortense Stephenson 31540055

• Jamshed Alam 31540057

OverviewOverview

Name : Huawei Technologies Co. Ltd. Type : Private (Employee-owned corporation )

Industry : Telecommunications equipment, Networking equipment

Founded : 1987

Founder : Ren Zhengfei

HQ : Shenzhen, Guangdong, China

Area : Worldwide

Products : Mobile and fixed broadband networks, consultancy and managed services, multimedia technology, smart phones, tablet computers, dongles

Start-up : $ 3000~4000 (1987~88)

Assets : $ 57.319 billion (2015)

Revenue : $ 60.839 billion (2015)

Employees : 170,000+ (2015)

How They StartHow They Start

• During the 1980s, China's government tried to modernize the country's underdeveloped telecommunications infrastructure.

• Ren Zhengfei, a former deputy director of the People's Liberation Army engineering corp, founded Huawei in 1987 in Shenzhen. Ren hoped to build a domestic Chinese telecommunication company that could compete with foreign competitors.

• HUAWEI is the official English transliteration of the firm's Chinese name (simplified Chinese:  华为 ). The etymology of the character   华 is derived form " 花 " which means "flower". This is hinted at in HUAWEI's logo.

• The company reports that it had RMB 21,000 ($ 3000~4000) in registered capital at the time of its founding. During its first several years the company's business model consisted mainly of reselling private branch exchange (PBX) switches imported from Hong Kong.

Key PersonnelKey Personnel

Mr. Ren ZhengfeiFounder, Deputy Chairman

of the Board & CEO

Sun YafangChairwoman of the Board

Xu Wenwei (William Xu)ED, President of the Company’s

Strategy Marketing Dept.

Initial JourneyInitial Journey

• By 1990 the company had approximately 500 R&D staff, and began its own independent commercialization of PBX switches targeting hotels and small enterprises.

• Huawei’s first major breakthrough came in 1993, when it launched its C&C08 program controlled telephone switch. It was by far the most powerful switch available in China at the time.

• By initially deploying in small cities and rural areas and placing emphasis on service and customizability, the company gained market share and made its way into the mainstream market.

• In 1994, Huawei gained a key contract to build the first national telecommunications network for the People's Liberation Army of China.

• Another major turning point for the company came in 1996, when the government adopted an explicit policy of supporting domestic telecommunications manufacturers and restricting access to foreign competitors.

• In 1997, Huawei won its first overseas contract, providing fixed-line network products to Hong Kong company Hutchison Whampoa.

• Huawei launched its wireless GSM-based products and eventually expanded to offer CDMA and UMTS.

• In 1999, Huawei opened a research and development (R&D) center in Bangalore, India to develop a wide range of telecom software.

• From 1998 to 2003, Huawei contracted with IBM.• After 2000, Huawei increased its speed of expansion into overseas markets.• In 2001, Huawei joined the International Telecommunications Union (ITU).  • In 2004 Huawei made a contract to build a third-generation network for Telfort, the

Dutch mobile operator. It was the first such contract for the company in Europe.• In 2005, Huawei’s international contract orders exceeded its domestic sales for the

first time. • Huawei signed a Global Framework Agreement with Vodafone. This agreement

marked the first time a telecommunications equipment supplier from China.

International ExpansionInternational Expansion

• In 2005, Huawei also signed a contract with British Telecom (BT).• In 2008, Huawei embarked on its first large-scale commercial deployment

of UMTS/ HSPA in North America providing TELUS's new next generation wireless network and Bell Canada with high-speed mobile access.

• Huawei delivered one of the world’s first LTE/EPC commercial networks for TeliaSonera in Oslo, Norway in 2009. The company launched the world's first end-to-end 100G solution from routers to transmission system that same year, to help meet the rapid growth of network traffic and enhance router efficiency and reliability.

• In late 2010 it was reported that Huawei is planning to invest around $ 500 million to set up a telecom equipment manufacturing facility in Tamil Nadu and $ 100 million to expand its R&D center in Bangalore, India.

• Huawei has over 70,000 product and solution R&D employees, comprising more than 45% of our total workforce worldwide. It has 16 R&D centers in countries including Germany, Sweden, USA, France, Italy, Russia, India, and China, and in 2014 invested $ 6.4 billion in R&D.

International Expansion International Expansion cont.cont.

At a GlanceAt a Glance

170+Countries

76,000R&D

Employees

16R&D

Center

45TrainingCenter

~170,000Employees

14Regional HQ

28Joint

InnovationCenter

HUAWEIA Global

Leading ICTProvider

Expansion Strategies Expansion Strategies (JV/ investment)(JV/ investment)

• From B2B to B2C– When willing to enter a country’s market,  Huawei will often sign contracts with

government entities,  to ensure their image of a reliable brand.– After several brand awareness steps Huawei finally sell their own brand of

handsets directly to consumers.• Then Huawei likes to operate as a partner or a vendor for the country’s

telecommunication companies – either for handsets or their network infrastructure, while studying the market and the culture of the country in the meantime.

• Huawei has joint venture/ investment with-– 3Com Corporation, USA (2003)– Siemens, Germany (2005)– Motorola, USA (2006)– Telecom Venezuela (2006)– Symantec, USA (2007)– Global Marine Systems, UK (2008)

• Grameenphone Ltd. Bangladesh and Huawei won the Green Mobile Award at the GSMA Mobile Awards 2009.

Expansion Expansion Strategies Strategies (partnership)(partnership)

• As of the beginning of 2010, approximately 80% of the world's top 50 telecoms companies had worked with Huawei. Prominent partners include:

– BT (British Telecom), UK– Vodafone, UK– Motorola, USA– Orange, France– T-Mobile, Germany– TalkTalk, UK– Portugal Telecom– Cox Communications, USA– Bell Canada– Clearwire, USA

• In May 2011 Huawei won a contract with Everything Everywhere, the UK’s biggest communication company, to enhance its 2G network. The four-year deal represents Huawei's first mobile network deal in the UK.

Key ProductsKey Products

MateBookSmartPhone

WiFi Modem RouterNetworking Switch

LTE terminal device

Brand StrategyBrand Strategy

• From the very beginning Huawei leverage Word-of-Mouth marketing strategy to build their brand. But from 2013, they realize proper brand requires a strategy with “multiple legs” such as advertising in different media and sponsorships.

• Consumer-centric premium brand strategy. In 2013, Huawei launched its "Make it Possible" campaign aimed at making the connected world a reality for more people.

• Huawei's award-winning Ascend-series of smartphones clearly illustrate how the company is working to change its image in the mobile handset market-from that of the low-cost alternative to one of a premium brand.

• Focused on innovation and globalization, Huawei strategically utilizes its resources according to market demand and has adopted a new marketing approach to enable this.

• Its work in partnering with telecom carriers around the world is being leveraged as a way to show people how much of a positive impact Huawei products have on their daily lives. 

• According to global market research company IPSOS, Huawei’s brand awareness reached 52% globally and 68% in China in 2013, a year-on-year increase of 110% and 113% respectively.

Brand CooperationBrand Cooperation

Huawei is the the Principal Sponsor of Royal Challengers Bangalore for IPL Season 7

Huawei has become the official smartphone partner of Arsenal FC

Since the beginning of 2014, Huawei has launched a series of promotional campaigns worldwide to build its ‘Make it Possible’ brand worldwide which includes sponsorship activities with leading football and other sports organizations.

• La Liga, Spain• AC Milan, Italy• Borussia Dortmund, Germany• Atlético de Madrid, Spain

• Arsenal Football Club, UK• Paris Saint-Germain FC, France• Galatasaray Sportif A.Ş,Turkey.• RC Bangalore, India

Brand PositioningBrand Positioning

Main positioning approaches of

the leading Smartphone

brands in the Chinese market

Features

Style/ Design

Durability

Performance/ Specification/ Customization

China’s telecom giant Huawei has established successful B2B businesses in more then 170 countries and their Smartphone divisions are fast expanding. Huawei is now become the 3rd biggest Smartphone brands in the world behind Samsung and Apple. With solid technical expertise, Huawei has been steadily pushing medium-low end smart phones to the Chinese and global markets.

AchievementsAchievements

• Brand Finance, a UK based consulting firm selected Huawei among World’s Top 100 Most Valuable Brands in 2016, ranked 47th.

• Huawei became the first Chinese company to rank in Interbrand's Top-100 Best Global Brands of 2015, at #88 and 2014, at #94.

• Huawei was also chosen by BrandZ in 2015 for its "Global Top 100 Most Valuable Brands," ranked 16th among science and technology brands.

• Huawei has been awarded 'European Consumer Smartphone 2015 - 2016' by the EISA for its latest flagship smartphone, Huawei P8.

• Huawei Ascend P7 won 2014-2015 EISA best product- consumer smartphone.• And many more awards around the globe.

Lionel Messi Joins the Huawei Family of Global Brand Ambassadors

Worldwide PresenceWorldwide Presence

• A household name in Asia and increasingly in Western markets, Huawei is also rapidly becoming a market leader in Latin America and Central Asia, and a major player in Canada.

• In 2015, Huawei achieved significant results from its focus on the pipe strategy. The company achieved sustainable growth in the carrier, enterprise, and consumer businesses. Its annual revenue totaled CNY 395,009 million, a 37.1% increase over the previous year.

ChallengesChallenges

• Lack of brand name recognition outside China. It is partly countering this challenge by focusing on consumer products.

• It plans to increase its enterprise business, while reducing its telecom equipment business.

• They also face challenges of quality issues with their smart phones. To overcome this, it is hiring talent from other global companies such as Nokia.

Challenges Challenges cont.cont.

• Biggest challenge is how to sell its consumer products in the USA. In the US, one gets a phone along with a contract, so people only know what the cellular service provider will sell them. Huawei has not figured out how to do the marketing or retail side of it. One way of countering this challenge is bringing in more foreign expertise, especially for marketing.

• Only quarters of its employees are foreigners and have no non-Chinese on its board of directors or in other senior posts.

• Another big challenge is 'fear of Huawei' that it is involved in industrial & communications espionage. USA and other countries have banned all kinds of Huawei equipment from its networks.

• Huawei is fighting these allegations by claiming the security concerns are unfounded & it has been caught up in a trade war between USA and China. In addition, it has offered these hostile governments with complete and unrestricted access to its software code and equipment.

Current StatusCurrent Status

Revenue

395,009CNY million

Net profit

36,910CNY million

Cash flow from operating activities

49,315CNY million

• A ROADS experience drives carriers'digital transformation.

• The MBB 2020 Strategy outlines anew blueprint.

• Entering the Gigaband era.

• The BDII guiding principle fuels innovation.

• Smart devices with an inspired experience.

• 4.5G helps carriers tap into vast new markets.

• Accelerating 5G development through extensive innovation.

• Building a cloud ecosystem.

• Actively supporting developers.

• Adopting a Product + Service strategy.

• Establishing partner alliances.

Key to be BillionaireKey to be Billionaire • To minimize management cost

– Huawei people, both managers and employees, used to work in a small office that also served as kitchen and dormitory.

• Worldwide market expansion – For being a multi-national company, it tried to meet the global demand. From

1996-2000, Huawei spent over US$150 million on its transition.• To ensure high quality output

– It is an important reason, while many other Chinese companies have not.•  Customer-First Attitude

– Huawei distinguishes itself as, its employees turning their eyes to the customers and their backs to the bosses.

• Employee Dedication– A dedicated and committed work force makes Huawei more competitive. In fact,

Huawei is not a public company, and is owned by the employees. The idea behind this is that he wants every official to act like the boss.

Key to be Billionaire Key to be Billionaire cont.cont.

• Long-Term Thinking– By setting the employee-ownership arrangement, Huawei is able to attract and

retain dedicated employees and to plan for the long term.• Gradual Decision-Making

– Ren Zhengfei avoids making quick decisions and forces himself to take time to think. His company shows these features as it keeps the decision-making power under its own control. In addition, Huawei stresses on “the power of thinking” which is considered as the most valuable thing for the company’s philosophy.

• Finally, see the slogan of Huawei’s helmsman. You can realize something how Huawei became billionaire!!

– Ren Zhengfei’s favorite slogan in the early days of Huawei is ‘we shall drink to our heart’s content to celebrate our success (ren sheng de yi xu jin huan), but if we should fail let’s fight to our utmost until we all die (ju gong jin cui, si er hou yi).

Global Leader: Behind the SceneGlobal Leader: Behind the Scene

THANK YOUTHANK YOU