The Toyota of telecommunications

Huawei Technologies seems to be doing everything right in the telecoms market. However, hard questions will need to be addressed as a global future beckons.

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By  Sathya Ashok Published  June 25, 2007

It is not often that you come across an IT company that compares itself with or sets achievement targets based on stalwarts of the automobile industry. Almost equally rare is any IT company that accepts, candidly, that it is not as near to the top as it would wish to be.

This month, I had the opportunity to visit Huawei Technologies at the company's headquarters in the south China city of Shenzhen.

Sprawling across 1.3 kilometres, the campus houses the administrative, manufacturing and R&D facilities of the firm and plays host to around 3000 of its employees who live in subsidised accommodation.

During my visit I had the chance to meet senior executives from divisions of the company including the director of the terminal marketing department and the firm's chief marketing officer. (Read NME in July for a detailed look at Huawei's strategy across the telecoms industry and enterprise sector).

The company has grown consistently from a small base to become a networking vendor of note in the markets it plays in. It has done so with an interesting mix of foresight, strategy and management, where the company competes and establishes itself in emerging markets before addressing more developed ones.

Consequently, while having a negligible market share in the US, the company has established itself as a name in markets including China, India, the Middle East and parts of Europe.

Giving it an edge in these markets is its attention to R&D and intellectual property development. Huawei devotes around 10% of its revenues to development regularly and more than 40% of its worldwide staff are involved in the work of creating new products and solutions for the company.

While it may seem to be doing everything right, Huawei is often accused of being a company that wins deals based on price.

The company is trying to combat this perception, working towards its self appointed goal of becoming the ‘Toyota of telecommunications'. It is aggressively pushing ahead with its strategy of being more international, setting up more regional operations and adding to its already considerable number of employees in these regional locations.

However, while you can take Huawei out of China, you can't take China out of Huawei - much of the communication to and from its headquarters is still conducted in Chinese. There is a continued focus on team work and the pace is deliberately slow and measured. Management is largely centralised and there is a palpable respect for the seniors in the company.

Some of these cultures will be challenged as the firm grows and becomes more of an international entity. Decentralisation and a mix of languages to communicate with headquarters will become necessary as Huawei sets up offices in more locations outside of China.

But this is at least three years down the line; as the company itself agrees, it has quite a gap to fill in terms of growth before reaching the next phase of development.

Nevertheless, it is going to be fascinating to watch how Huawei navigates crossing the gap and motors towards its Toyota future.

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