4.

Important differences in the politics, laws and economics of

the chosen market and home market.

An overview of Huawei’s market was done using some elements of the PESTEL
framework. Once the PESTEL framework was utilised we could move onto
identifying key differences between Huawei’s Chinese home market and the chosen
market being Asia.
Political Factors:
Huawei took the market by storm and became a leading brand, their base of
operation is in China seeing as this is where their manufacturing is done, yet their
products get sold within the global market. Providing an oversight of Huawei’s
markets it is crucial to understand that business relations across the various
countries will impact the sales of Huawei. Trade relations are vital to the success
within any given external market, Huawei faces a trade war with the US resulting in
Huawei having difficulties trading with other companies across various countries.
The longer the trade war persists the worse the result will be at the end of the day,
as the fight has gone on Huawei has been hit with huge tax imposition in terms of the
import/export market.
The Internal factors of a country greatly impact Huawei’s sales as well, the Chinese
Government imposes certain rules and regulations for companies to adhere to.
These rules and regulations are described as political conditions that influence
economic condition and in turn will impact the profitability of Huawei. One of the
advantages for Huawei to operate within their home market is because China in
investing large sum of money into the telecommunication sector. This presents
Huawei with the opportunity to receive government funding to further their research
and development efforts, the incentives for making use of regional manufactures will
also provide Huawei with opportunities
The Political Factors for Home Market (China)
Political Stability
National level authorities are selected by the Organisation Department of the
Chinese Communist Party, the National People’s Congress elects the executive
leaders which merely serve as procedural legitimisation. At a local level limited
village election, urban resident committees and village leaders are permitted. These
elections are privy to party control and manipulation regarding the candidates
nominated and so forth. All of these organisations do not form part of the formal
administrative structure.
With all of that said the government is utterly in control of country affairs and they
have stated they are going to crackdown on certain key industries. Regulations
relating to China’s digital economy including, "internet finance, artificial intelligence,
big data, cloud computing etc." will also be reviewed. The need for control has
spoked many investors, resulting in many Chinese companies’ shares falling rapidly.
The Chinese government has launched their anti-monopoly investigations, this has
and will continue to impact huge technology firms and a wide range of other
industries as well. This poses a great threat for Huawei and their overall revenue
performance.
Funding
Huawei has gotten tens of billions of dollars in financial help from the Chinese
government. Due to the constant support from the Chinese government Huawei
reshaped their whole business model, they would supply a variety of telecom
equipment to high end state buyers including the People’s liberation Army, security
departments and local police. Their financing was provided by Chinese state banks
as well.

Beijing ordered state entities to funnel financial support to Huawei through direct
subsidies, preferential tax policies, discount loans, credit lines and other funds that
have increased over time. The Chinese government had done this to achieve the
goal of producing foreign products at prices the foreign firms could not, to drive the
foreign firms out of China as a result.

The Political Factors for Chosen Market (Asia)

Political Stability
Within the Asian market there are many countries that form part of this region,
Malaysia is one of Huawei’s highest selling regions. They are known to have political
stability within the region. Their political stance pursues principles of peace and
neutrality when developing and implementing their foreign policies. However,
Malaysia is known for their corruption. Unfortunately many industries including
Huawei needs to pay something sweeter to ensure that their business gets done on
time.
Legal Factors:
Being a leading brand it is crucial for Huawei to understand and comply with legal
factors especially when it comes to their international markets. The factors include
environmental laws, labour laws, patent acts and tax rates. The patent rights need to
understand and followed precisely within each market to ensure they avoid any legal
issues that may arise if these laws aren’t followed correctly. Huawei is aware of the
severity that goes hand in hand with these laws therefore they have employed many
skilled employees in serval countries to ensure they deal with these laws correctly
and ensure that the brand Huawei follows them correctly.
Data privacy laws are a huge aspect that Huawei need to keep in mind. There have
been detrimental speculations made regarding the privacy of a Huawei user. They
need to ensure that they are especially complying with these laws in every country
are selling their products.
The Legal Factors for Home Market (China)
Labour Laws
The Chinese government has introduced a new labour protection law that has
increased the cost of labour in China. This law has forced Huawei to increase their
salaries of their employees in their home market. This in turn will affect the overall
net profit of Huawei as they now have additional expenditure on a monthly basis.
Data Laws
China has a variety of internet laws that Huawei would need to abide by, these laws
require tech firms to assist Beijing with any “intelligence work,” this could pertain to a
variety of things, but one thing could be to hand over network data collected. There
are two parts of a legislation that governments specifically interested in and they are:
the Counter-Espionage Law of 2014 and the National Intelligence Law of 2017. The
first law explains the necessity for organisations and to assist the government. The
law states that when state security investigates and understands a situation of
espionage and collects the necessary evidence and the relevant firms may not
refuse the government’s request for this information. The second law states that any
organisations or individual that cooperates with state intelligence work will be
protected.
The Legal Factors for Chosen Market (Asia)
Laws
Within the Asian pacific there are certain areas that lack the concrete laws for
protection of individual privacy and data. Without laws that protect individuals it
allows telecommunication companies can intercept communications under the
direction of ministers that will aid in a criminal investigation.
Economic
Economic factors have a major impact on the bottom line of the tech giant Huawei.
The world had experienced a major recession a few years ago and this has
eventually turned around, yet the effects have left their marks. Huawei’s financial
position is strong yet they have had to make use of a pricing model that is a
competitive pricing strategy to beat the oppositions pricing. Higher economic activity
means that Huawei’s customers have a higher disposable income they can make
use of.
The Economic Factors for Home Market (China)
Economic Growth
China’s economic growth goes hand in hand with their success story so far. This
provides constant opportunity for Huawei to expand within the Chinese market. This
allows Huawei to have the opportunity to diversify their products and price ranges.
This growth also increases their number of smartphone purchases.
The Economic Factors for Chosen Market (Asia)
Economic Growth
The Southeast Asian population is vibrant continues to stay one of the most dynamic
markets within the internet industry. Huawei states that the Southeast Asian market
is valuable at US$1.2 trillion, with an 80 million 5G service potential subscribers. This
is an attractive region worth competing for.
5. Important differences in culture between the chosen and
home market.

The Cultural Factors for Home Market (China)

Core Principles of Business Culture
Confucianism is a crucial part of Chinese business culture. This concept focuses on
Guanxi which implies that the networking relationships are vital and are based on
solidarity values, loyalty, modesty as well as courtesy. The importance of hierarchy
also needs to be understood. An individuals, organisations, and countries
reputations is of utter importance, there is this stigma of saving face on the Chinese
culture.
The Chinese are often risk averse; they have incredibly strict procedures exist
pertaining to the decision-making processes. Decisions are made by all relevant
parties after there are many meetings held pertaining to the situation. Decisions are
not made over night and if a decision is rushed then they are frowned upon by their
Chinese counter parts.
Chinese people seek to build a long-term relationship that last rather than to get
down to business and never speak again. Trust is a huge fundamental aspect of and
needs to be cultivated to ensure success business dealings are done.
First Contact
Distrust and suspicion are feelings associated with anyone they just meet; thus it is
essential to build up a relationship with potential business counterparts. An
intermediatory will help you get accepted quicker; this will allow you to obtain better
information on potential partners.
Time Management
Being punctual is valued by Chinese people, therefore one must arrive on time for
meetings. If you are running late to a meeting your Chinese counterparts will call you
out for being late and an apology is expected.
Gifting Policies
Giving and receiving of gifts is truly symbolic within eh Chinese culture. The gift
should not be too expensive and always needs to be wrapped. Gifts need to be
given directly to the intended person it is important to understand that they will not
accept easily yet the giver needs to be persistent. The receiver of a gift will very
rarely open their gift in front of you.
Dress Code
The dress code is very discrete and formal when it comes to business, yet the dress
code needs to represent success without being over the top.
Meetings
Business meeting are often long and occur multiple times to ensure that a
sustainable relationship is build that will warrant fruitful business dealings. If there is
a language barrier it is advised to have an interpreter that can aid the language
barrier.
Bargaining is found throughout the Chinese culture, with this being said it is vital to
avoid accepting a proposition without bargaining. This can be viewed as a
weakness, during negotiations one is not supposed to use psychological tactics,
negotiations need to be done without a hidden agenda. Only higher-ranking people
will represent the deal therefore it is vital to have an elderly person on your team.