Description of Event
Huawei is a Chinese telecom giant which is currently expanding its international presence. The Economic Times reports that the corporation is actively cooperating with “oil-rich Gulf nations, despite being criticized in the United States and Europe as a potential security threat” (“Huawei, controversial in the West,” 2021). It is highlighted that Arab Gulf countries are currently making massive investments in technological development in an effort to diversify their economies. The article notes that they are strategic partners of Washington, which is pushing a number of sanctions against Huawei. The United States believes that the corporation has ties to the Chinese military, which uses its equipment for international espionage.
Although the corporation denies the allegations, its activities are also suspended in Europe. However, the Gulf countries, particularly the United Arab Emirates and Saudi Arabia, are partnering with Huawei not only to spread 5G technologies but also to develop smart cities. This activity implies the expansion of population surveillance, which, as noted in the article, is more similar to the values ​​of China than Western countries (“Huawei, controversial in the West,” 2021).
The concerns of Europe and the United States about the security of the partnership with the corporation were not taken seriously in the Gulf countries. The article further lists numerous recent episodes of Huawei’s expansion in Saudi Arabia and the UAE. In particular, the opening of stores, joint work on artificial intelligence, as well as the development of applications for Muslim pilgrims are presented. Thus, the corporation did not find success with its Western partners but is actively expanding to the East.
Connection to International Business
First of all, the international expansion of Huawei’s activities can be considered from both the western and eastern directions. The integration-responsiveness framework offers several strategies which are based on the adaptation of local and national characteristics of companies for effective global expansion (Chapter 7). In particular, local responsiveness requires a company to respond to the needs and rules of the country in which it operates.
Huawei is a Chinese company where the concept of population surveillance and information security regulations are completely different from the European or US markets. In this case, expanding to the western Huawei did not take into account the local legal framework that needed to be changed. In this case, it can be determined that the company used a home replication strategy to repeat the patterns of its activities in a new region. However, it is noted that the main disadvantage of this strategy is the low local responsiveness (Chapter 7). Thus, it is more suitable for expanding into markets with a dominant number of domestic customers.
When Huawei had problems with partnerships in the West, it turned its attention to the Gulf countries. This decision was extremely reasonable for a number of causes. First of all, the company focuses on the development of communication technologies, which have high demands in Saudi Arabia and the UAE. Moreover, China and the Gulf countries have similar views on cooperation goals and security aspects. Thus, Huawei can use the same strategy when expanding to the West. However, in this case, the home replication strategy will function correctly since the local features of the market are similar to those in China.
As noted in the article, the company is also developing an app for Muslim pilgrims that appears to be an effort to increase local responsiveness. Thus, it can be concluded that Huawei is more committed to transnational strategy now. The company is trying to transfer the Chinese features but adapt them to the local market (Chapter 7) Thus, Huawei will not have to change the nature of its activities much due to similar conditions. However, for a successful expansion, they will focus more on the needs of the Gulf countries and adapt their operations to them.
How Others Benefit/Learn from Situation
The situation described best illustrates the application of multinational strategies and the factors which influence their structure. First of all, it should be noted how inflexible Huawei is in relation to international partnerships. Using this company as an example, other organizations can learn to evaluate the local market to which they are seeking to expand. As Huawei’s experience shows, it is not enough to offer its services; it is also necessary to consider various market specifics, including legal ones. China accepts completely different security standards than Western countries, which prevents it from effectively cooperating with them. For international expansion to another part of the world, it is important to completely revise the strategy and adapt it to global requirements.
Huawei’s example also shows that there are easier ways to expand in any market segment. Thus, the company found a partner in the form of the Gulf countries, where it will be comfortable enough for it to establish its presence. Thus, the experience of Huawei also demonstrates that it is worth focusing efforts on the markets with the most favorable conditions, where the obstacles are minimal, and the benefits are maximized. Other organizations can learn from this situation that international cooperation requires flexibility from the company. However, if national values ​​are extremely important, then it is necessary to consider a market with similar needs; otherwise, the expansion will be impossible.
References
Huawei, controversial in the West, is going strong in the Gulf. (2021). The Economic Times. Web.