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Huawei.. The success story of a Chinese giant that began with $3500
Huawei is the world’s largest Chinese telecommunications equipment manufacturer, with its products distributed in more than 170 countries worldwide. In 2010, it was ranked among the Fortune Global 500 by the American magazine Fortune.
Huawei was founded in 1987 in Shenzhen, southern China, by Ren Zhengfei, a former engineer in the People’s Liberation Army, with a capital of 21,000 Chinese yuan, an amount not exceeding 3,500 US dollars. The former engineer established a domestic Chinese telecommunications company capable of producing telephone exchange switches without relying on joint ventures for technology transfer from foreign companies; thus, Huawei was founded. The beginning dates back to the late 1980s when several Chinese research groups moved to purchase and develop telephone exchange technology, which was typically done through joint ventures with foreign firms because telecommunications technologies in China at that time were imported from abroad.
Huawei’s headquarters is located in Shenzhen. It also established its Middle East regional headquarters in Bahrain more than ten years ago, and its workforce totals approximately 170,000 employees.
The company’s business model initially focused on selling private telephone switches imported from Hong Kong. However, the company strengthened its investment in research and development (R&D) to manufacture its own technology. By 1990, it had about 55 employees in R&D and began manufacturing its own switches, targeting hotels and small businesses. In 1996, when the Chinese government adopted a strict policy to support local telecommunications equipment manufacturers and restrict the use of competing foreign products, the Chinese company established several more R&D offices.
Between 1998 and 2003, Huawei contracted with the American management consulting firm IBM, making fundamental changes to its management and product development structure. It accelerated its expansion into global markets, achieved international sales exceeding 100 million dollars, and established its first R&D center outside China in Stockholm, Sweden. In 2010, Huawei appeared for the first time in the Fortune Global 500 list after its annual sales reached 21.8 billion dollars with a net profit of 2.67 billion dollars.
Huawei is considered the world's largest producer of telecommunications equipment, the third-largest smartphone supplier, the owner of a massive number of R&D offices, and the holder of tens of thousands of patents. As of December 31, 2013, Huawei had filed more than 44,000 patent applications in China, approximately 19,000 applications outside China, and about 15,000 applications under the Patent Cooperation Treaty (PCT); nearly 37,000 of these applications were granted.
Since 2010, the company has also held the largest share regarding the quality of LTE/LTE-Advanced (4G) patent standards. Specifically, 466 of the company's proposals regarding this technology were approved as essential standards, enabling it to rank first and capture nearly 25% of the approved proposals globally. Huawei's products and solutions are present in more than 170 countries, and R&D is a fundamental pillar supporting its commercial projects, with more than 70,000 employees working in this field—representing about 45% of its total global workforce. In 2013, the company invested 5.4 billion US dollars—14% of its total sales revenue—in R&D programs.
Huawei is considered one of the earliest companies active in R&D dedicated to the future of 5G networks, with its investments in this field exceeding 600 million dollars through 2018. By the end of 2013, the company had joined more than 170 international organizations specialized in setting standards and benchmarks for the telecommunications and information technology sector.
