206  Part II  Deciding which markets to enter
Exhibit 6.1
Huawei Technologies Corporation: the role of home government
in the internationalization process – good and bad
Huawei is rapidly penetrating the Asian ­markets
for smartphones
Source: Ivan Garcia/Shutterstock.com.
By 2018, Huawei Technologies Corporation had
become the largest telecom vendor in China.
Government-run corporations remain the main
driver for the Chinese national economy. Historically,
the telecommunication sector in China has been
closely controlled by the central government through
the Ministry of Information Industry (MII). However, it
is apparent that the Chinese telecommunication sec-
tor is in a process of transformation from a centrally
controlled sector to a semi-capitalist industry. China
has opened up to more foreign investments. But
China’s central government will continue to play a
central role in stimulating technical progress through
alliances, mergers and acquisitions. Also Huawei
receives plenty of state support, including soft loans
to help with its international expansion.
The MII has also continued to encourage local
Chinese operators such as China Mobile and China
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Telecom to purchase telecommunications equip-
ment from Chinese manufacturers [e.g. Huawei, ZTE
(Zhongxing), Datang and Great Dragon].
Sources: based on www.huawei.com and other public sources.
Financial activities
Through the membership of international financial organizations such as the International
Monetary Fund (IMF) and the World Bank, the national government can assume its role as
an international banker. The granting of subsidies is another financially based promotional
activity of national governments.
Hollensen, Svend. Global Marketing EBook PDF, Pearson Education, Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/hull/detail.action?docID=5994693.
Created from hull on 2021-05-24 04:23:11.
So the key future challenge for Huawei is com-
peting in two market environmental structures – one
local and the other global.
The development in 2018 shows that the close
connection to the Chinese government can also
have a negative effect on the internationalization
of Huawei. The company plans to dominate the
next generation of wireless communications called
5G, but its hopes are threatened by governments
around the world, which are restricting the compa-
ny’s prospects and even banning it from operating
in some areas. In mid-August 2018, the US Congress
prohibited US government agencies from purchas-
ing or using telecommunications and surveillance
products from Chinese companies like ZTE and
Huawei. The US intelligence agencies also recom-
mended Americans not to use Huawei smartphones
or other equipment from the company. This kind of
ban for using Huawei was followed up by similar
initiatives in Australia, Canada, UK, Japan and New
Zealand.
The reason for these actions in 2018 is the inter-
national concern that the Chinese government has
asked Huawei and other companies under Chinese
government influence to assist with intelligence
gathering, in order to spy on them, stealing corpo-
rate, government or military secrets. In this connec-
tion Huawei is closely tied to the government, as the
founder, Ren Zhengfei, is a former technologist in
the People’s Liberation Army.
Huawei denies all these allegations and says
there is no evidence for these. At the beginning of
December 2018, CFO of Huawei (and daughter of the
founder), Meng Wanzhou was arrested in Canada
with allegations that she had violated international
sanctions against Iran.