Huawei, Chinese business culture and the Art of War

 

The first thing is how aggressive Huawei’s strategy is to try to beat Cisco, and not just in the short term. It literally has a 15-20 year plan to penetrate North America, and Huawei is very patient. Then there’s government help and available capital. What you have to understand about China in general is that any company that earns more than a certain amount of revenue gets money from the government to help fund international installations and is encouraged to expand.

 

Then you see that in North America, Huawei is taking advantage of some of the economic implosion that’s going on. It goes into small cities where there’s high job loss and puts in factories. Some of these factories are actually Chinese-owned, and in the U.S. what tends to happen is that for every 10 employees hired, the company gets a $1,700 tax credit from the U.S. government for creating additional employment. So those are some of the dynamics going on. A few years ago, revenue of Chinese companies in the U.S. was about $500 million; last year it was $5 billion.

 

 

In China, when you get hired by a company, you are hired for the good of China first. You get hired for the good of that company second. And number three is for the good of yourself. It’s literally the opposite when you get hired in the U.S. So in essence, companies here are competing with all of China. That’s the concept.

 

 

It’s a wolf-pack mentality. Even the way Huawei structures deals is more for the good of the country than for the good of Huawei. The reality is that if Juniper, Cisco or Alcatel-Lucent are working on a deal, there may be optical, mobile and security pieces. In the U.S., we have individual line-of-business managers arguing with each other about where they’re going to compromise on profit margin. Huawei doesn’t do that. Huawei looks at it holistically in sort of an Art of War type strategy. And because Huawei isn’t a public company, it can structure deals and contracts in ways that public companies can’t.

 

 

One of the concepts is to surround the perimeter and attack. So executives at some companies might say Huawei’s MPLS solutions are bad. That’s exactly what Huawei wants them to think because they don’t want our vendors to worry about them.