Wednesday, November 26, 2008

Is Huawei to save the world, or China to save Huawei?

11/26/2008, Below artical is excerpted from Mr. Shi wei's blog in Chinese. I didn't translated the full article. Mr. Shi is a famous macro-economic researcher in a state-hold institute in Beijing. He wrote many articles about 3G communication industry in China.

I visited Huawei again this september, it is the 3rd time I visited this company in recent years. During this visit, we have a very serious topic to discuss with Huawei, Does the winter of Huawei really come this time?From this visit, I feel Huawei has not been the strong horse during the past years, it has changed to a fat elephant. Once high sensitive nerve center of Huawei has become slowly responsive. Huawei has already a kind of pride which is everywhere, which is cutting the connection of Huawei and her extendings.

In early year 2007, Huawei was still satisfied with her enough cash reserve, but in the 2nd half of year 2007, Huawei has fallen into the 2nd cash shortage since her birth. Huawei tried to sell her cellphone handset department with a half- suiside way, but they failed on this.

A high ranked officer of Huawei who met me several times told me this time:"I will not be suprised if Huawei die tomorrow." The huge fat body , the long market battle line, have become the unprecedented challange for Huawei. Their organizating ability, the method to fullfill the request of international market, understanding to modern competitation, cannot keep up with their leader, Mr. Ren,zhenfei's request. Thousands of employees, directors of Huawei have lost their once great Huawei sprit. A kind of laziness, lackness of responsibility has spreaded among the employees of Huawei. I am thinking, today's Huawei, maybe considered a saving power of telecom industry in the world, but maybe because of this power, Huawei forgets to save herself.
From my point of view, Huawei faces below crises:

1)Unequlized support from government: As a private company, Huawei cannot get the same support from government as the support for ZTE.

2)Huawei is success in overseas market based on their low price strategy, but this further make their financial burden heavier. Those international rivals of Huawei are becoming stronger. The profit of Huawei from 2006 to 2008 came more from costdown but not sales.

3) In 3G domestic market, Huawei has lost the leader position in TD-SCDMA market.

4)The financial situation of Huawei hasnot improved for a long time. They have not enough methods to find new money.

So based on all these analyse, I think the coming global financial crise will have more impacts on Huawei than their domestic rivals in China. The overseas market cannot save Huawei, only China's market can save Huawei. But How China save Huawei?

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