Assignment 1- Research on the International Dimensions of

Business

1. Introduction
The current CEO, Ren Zhenfei, established Huawei in Shenzhen, China in 1987. The Chinese
technology company is an innovative multinational supplier of digital and intelligent equipment
in information and communication technology solutions.. The company has about 188,000
employees in 170 countries and three billion people worldwide use its goods (Huawei 2018).
Huawei has become the second-largest provider of smartphones in the world, according to
Dayaram (2020), leaving Apple to its head in the first quarter of 2020. At present, Huawei seizes
21% of the worldwide mobile market while Apple has just 18.7%. This is all great news for
Huawei and shows that their growth and potential can outdo that of Apple. The company also
made it to the Top 20 best large and medium-sized companies in China. The firm has been
working hard to improve its brand image. It has been pushing its innovation in many areas and is
focusing on ensuring their sustainable development by investing heavily in improving its
workforce and research and development. The company has also started exploring its US
expansion strategy. Huawei is looking to target high-tech industries like research, transportation
and cloud computing. And because of their success, the firm is hoping to venture into other
markets like Europe.
This paper provides insights from different studies on the operation of Huawei. This report
describes Huawei's current financial success, analyzes its national and international aspects
through international business theories and underlines Huawei's current global challenges.
2. Company’s investment and finance analysis.
Huawei (2020) reports that Huawei's total assets in 2020 was USD 133.8 billion, which is almost
USD 71 billion more than its total liabilities in 2019. The overall capital stock, on the other hand,
is worth US$ 110 billion. HUAWEI experience a 41 percent increase in earnings in the first
quarter of 2020 relative to the previous year (Kirton 2021). In addition, the share price of
HUAWEI declined sharply at the start of this year to the lowest point at CNY 3.38, then slowly
recovered. The share price of Huawei is registered at CNY 3.36 until 17 July 2019. (graph 1)
 3. Huawei’s R&D activities

The company is currently focused on further research and development operations. The firm
spends 10 percent of its sales in R&D per year, according to Huawei (n.d). R&D budget of the
company alone for 2017 amounted to USD 14.760 million, representing 14.1% of overall
revenues. More than 80,000 employees from Huawei participate in the R&D project that requires
over 45 per cent of the overall workforce to finance the operations. In fact, some of the R&D
activities included research on 5G and AI technologies. In addition, the company continues to
focus on expanding international markets and it has also formed the alliances with Qualcomm
and Ericsson in order to achieve such an aim.
Huawei's research and development activity spending from 2012 to 2018(in million CNY)
(Statista 2021)

In China, Huawei has made an advanced contribution to digital transformation(Global Times

2020). On January 11, 2018, Huawei made another groundbreaking achievement by successfully
connecting the first 5G base station in Belgium. On December 6, 2018, Huawei launched the
industry's first 5G phone in Barcelona. It is the world's first 5G device to be launched with the
chipset designed by Huawei. From now on, mobile phones will have the same access to 5G
networks as a high-speed fixed-line broadband connection, which will bring an economic boost
to countries that are at the start of their digital development (Martinus 2021).

4. International Dimension
4.1. Uppsala Model

With regard to the Uppsala model, Johanson and Vahlne (2006) states companies prefer to
internationalize step-by-step instead of making substantial foreign investments at a time because
of the concern for mental distance. The model suggests in particular that a company should first
carry out foreign business by selling its goods into a region, then set up a manufacturing division
and perhaps build the manufacturing chain in the host country.
The company agreed to apply the model in its production with reference to Huawei. Huawei was
first founded in Shenzhen in 1987, to clarify. Huawei concentrated more on local customers at
the time. The firm made local revenues of US$301 million in 1996 (InfoClutch 2019). Huawei
begins gradually to sell its goods across the world. With 200 million device units being delivered
worldwide globally, the company is the third largest smartphone manufacturer in the global
industry in 2020.
In 1998, Huawei developed the first R&D center in India to increase its position in the global
market. From then on, further research centers have been founded in Sweden and the United
States. In 2003, Huawei joined an American-owned company, 3Com. In 2008, Huawei found it
difficult to capture the 3Com share because the US government dropped the planned technology
contract because of security concerns (Xu, Wan and Pei 2008)). In 2004, another $100 million
joint venture has been confirmed to have invested in Siemens (Hui and Mengjun 2017). Huawei
had partnered with Symantec until 2007, and agreed in 2011 to buy this joint venture (Huawei
Symantec) for $530 million (Carew and Yee 2012).

In 2002, Huawei established its first American subsidiary, Huawei Technologies USA Inc.
(InfoClutch 2019). Huawei intended to build more production facilities outside the country next
to existing domestic factories after a major involvement in the global market. In reality, the
company is prepared to spend approximately $3 trillion in the next 5 years to construct a
production facility for its operations in Cambridge, UK (Annual Report 2019)). Recently, the
organization has an aggressive strategy as it tends to produce telephones in India, with the
objective to construct over 1,000 retailers throughout this country by 2021 (Khan 2020)
4.2. Global Factories Structure
Huawei is under considerable pressure to keep its customers branded as part of the globalization
background. In the other hand, globalisation, which catalyzes the innovation process by which
businesses can effectively achieve economies of scale by standardizing their mass production
chain, has tremendous advantages for the Chinese enterprise as Huawei(Cebon, Hauptman and
Shekhar 2008). In view of this, HIRSCH (2009) considers it necessary for companies to actively
innovate and improve their products and services to capture their market share, and to
significantly reduce the product's life cycle.

Tao and Jing ( 2019) also argues that international companies such as Huawei ultimately pursue
the structure of 'industrial factories' in order to incorporate their global strategies with
globalisation. In particular, Huawei is the original equipment producer under the 'world factories'
concept who is responsible for producing its own product. Huawei will search for foreign
vendors and production contractors to finance its activity. In reality, Huawei supplied Intel,
Qualcomm, Xilinx, Broadcom with chips and modules in the pre-commercial period.
 4.3. Porter’s Diamond Model
According to graph 2, in the first quarter of 2019 Huawei's global market share has risen
gradually from the third quarter of 2018 and is 10% higher than Apple's market share.
This pattern of growth makes Huawei the second biggest mobile manufacturer worldwide behind
Samsung. Porter's model would be used because of the Chinese company's popularity in foreign
trade. The model shows that Huawei has success in foreign trade because it has a national
strategic edge based on the four elements:
China has 80 per cent of the world's rare earth supply under factor conditions. This is a valuable
element for the manufacture of high-tech gadgets and smartphones (Dreyer 2020).
Huawei has 22 local Chinese providers among its 92 main global providers, according to Tao
and Jing ( 2019). Some of the local suppliers include BOE, Shenzhen Tianma and Lixun
Precision, which provides a good Huawei production industry.
As to local rivalry, while Huawei has always been the industry leader (Table 1), other mobile
players from around the world from 2019 including Vivo, Oppo and Xiaomi compete directly.
Regarding the 5G technology, the latest world’s biggest economies, including the US, Germany,
Japan and South Korea, are working together on 5G technology. In this regard, Huawei has two
important competitors in the 5G market. Huawei has five key competitors, including ZTE
(China), Nokia and Ericsson (both from Europe), Alcatel-Lucent and Qualcomm (both from the
US). These five key competitors are competing against each other over 3G and 4G technology.
5. Analysis of Challenges in Doing International Business
Keane (2021) adds, “US, citing security concerns, is fighting a global battle against Huawei’s
network equipment sales, even though Australia, New Zealand, and the UK have all barred its
telecoms equipment”. In the meantime, FBI has sent out letters to telecoms equipment makers
warning them against using Huawei products and server.

As of the end of November 2018, Huawei has been placed on the US’ second-level national
security threat list. Additionally, Australia also decided to ban the use of Huawei equipment
within their government’s data center. This is in accordance with the intelligence agency of
Australia, the Australian Signals Directorate, that they believe Huawei are posing as threat to its
national security. According to Blank (2019), the South Korean government and state-run
Korean Communications Commission recently decided to ban Huawei mobile phone models
from its telco networks over concerns about security risks

6. Conclusion
Based on the above review, Huawei has a national edge indicated by Porter's Model and is not
only a giant company in China but also a competitive global smartphony maker. The Chinese
company also practices a model of 'global factories' that lets it execute global initiatives
efficiently. The greatest challenge for Huawei in the future is therefore the US government's
trade war and scrutiny. This threat can lead to major challenges such as limitation of the
company's profits and its global impact directly.
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