Huawei Case Study Solution

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Further, we discuss the interesting case of the telecom company Huawei and try to establish how the government stepped in to help companies and businesses like Huawei not only to create a niche in the Chinese market for itself but also acquire a large consumer base for itself worldwide. Huawei is the second largest communications equipment company worldwide in terms of revenue with over 140 offices which span across various nations and it is poised to become the largest. It was founded in 1988 as a distributor for phone switches. However, Huawei has grown as comprehensive telecommunications company with network devices , mobile broadband devices , handsets and convergence devices. Further, it is now entering into offering customer solutions…show more content…
Even though the government role was absent during the time of founding it played the crucial role in company’s early survival. By about the 1996 the Chinese government explicitly began supporting the domestic telecommunication firms with less support now to the import policies for telecoms equipment. Further, the government support was pretty evident from the fact that made loans worth 3.9 billion in order to cover the loans for government – affiliated institutions which were not paying Huawei enough for its services. Had there been no government support i.e had there been no government policy to protect(nationally owned company), Huawei would not exist. Further there was a lot of military influence for Huawei as it received important projects such as building of telecommunications for the military which helped it develop further as a…show more content…
Some of the changes which can be and of late have been about in include to attract the right kind of FDI. A more selective approach needs to be adapted which emphasises on not only the technologically advanced but also environmentally sustainable, energy efficient industries. Further, the FDI policy implementation should not become a cause for red tapism and corruption. Then, comes the case of the recent slowdown of China’s economy even though many believe that the prime reason for the slowdown of China’s economy is the China’s real estate bubble but another prime factor is the manufacturing sector wherein the near term growth is constrained by the prevalence of zombie firms , the large state-owned enterprise have negative cash flows because their profit margins are destroyed by the excess capacity. As a matter of fact the Chinese firms are working at only 70% of their capacity in comparison to a healthy 80% in the US. Keeping the zombies on life support will lead China to a situation to that like of Japan’s stagnation. Also, there are certain gaps which can be identified and these gaps provide businesses to develop in China, one of the major gap is that there is no wholesale distribution chain for restaurants like Sysco in US and the restaurants still purchase most of their

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