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1、Huawei: Ciscos Chinese Challenger1. Global market entry strategies1.1 Joint VenturesFor many MNCs that want to expand their global operations, joint ventures prove to be the most viable way to enter foreign markets, especially in emerging markets. In many instances, local governments(e.g., China) di
2、scourage or even forbid wholly owned ventures in certain industries. Under such circumstances, partnerships are a second-best or temporary solution. As Chinas market grew, most of leading global telecom equipment firms started operations in China in the 1980s and 1990s. Due to ownership restrictions
3、, most foreign firms entered the market by setting up joint ventures with local Chinese companies (like，Motorola, Siemens, Nokia, Alcatel, Lucent Technologies and Ericsson).Huawei has actively sought cooperation with renowned foreign corporations in numerous aspects ranging from management practices
4、 to auditing to technology research, as part of their globalization process. The partnerships with foreign firms are a crucial component in ensuring Huaweis product competitiveness and organizational excellence. The cooperation also provides much-needed legitimacy for the Chinese firms in developed
5、markets. Huawei had actively undertaken joint R&D laboratories with foreign companies, including Texas Instrument, Motorala, IBM, Intel etc. To Huawei, these joint development efforts were used as a complementary approach to enhancing its innovation capabilities.Six months after setting up its subsi
6、diary in the US, Huawei was sued by Cisco for having allegedlly infringed a number of Ciscos patents and copyrights. In the midst of the legal proceedings, numerous sales contracts that Huawei was trying to clsoe were killed. In November , Huawei entered a joint venture with 3Com in China and Japan,
7、 called Huawei-3Com, in which Huawei held a 51% stake.1.2 Wholly owned subsidiariesMultinational companies often prefer to enter new markets with 100 percent ownership. As with the other entry modes, full ownership entry entails certain benefits to the MNC but also carries risks. Cisco opened its ow
8、n subsidiary in China, Cisco Networking Technology Co. Ltd and Huawei also entered US market by opening its own subsidiary. But the results are opposite, Cisco succeeded and Huawei failed.1.3 Strategic AlliancesTo move into new market segments, Cisco formed extensive strategic alliances. Cisco used
9、these acquisitions and strategic alliances as a way to accommodate the rapid market shifts in the exploding IT sector. To meet global demand for its products, Cisco made alliances with local original equipment manufacturers and distributors, but maintained a centralised management structure by regio
10、n. The Netherlands, for example, was chosen as Ciscos regional headquarter to manage its European, African and Middle Eastern markets.Ciscos strategy in China was to focus on recruiting and training employees to service the high-end markets of telecom service providers and enterprise markets. Instea
11、d of forming joint ventures with local partners, Cisco opened its own subsidiary in China, Cisco Networking Technology Co. Ltd, to promote education, demonstration and development of network technology. Recognizing the large, low-cost and skilled labor force in China, Cisco made further commitments
12、to invest in a new R&D centre in Shanghai.1.4 entry sequenceFor the global entry sequence, multinational companies often firstly choose to enter the countries culture similar and region close to themselvse and then enter the unfamilar market. Huawei began considering international expansion in 1996
13、when it looked for diverse sources of growth beyond the Chinese market. To avoid head-to-head competition with its international rivals such as Cisco and 3Com, the company made its initial overseas move in the markets of developing countries. When Huawei succeeded, it transferred to enter the develo
14、ped countries. Cisco entered to developed countries and then transferred to developing countries.2. Competitive strategy2.1 Cost Leadership competitive strategyIn cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage varied and depend on the
15、structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. If the achieved selling price can at least equal (or near)the averag
16、e for the market, then the lowest-cost producer will (in theory) enjoy the best profits. Occasionally, a low-cost leader will also discount its product to maximize sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can further increase its market share. Huawei entered the low-end intenational markets, supplying routers that were 40% cheaper that its competitors in . It boasted the annual revenue of US$6.7 bil
