Huaweis Domination in Latin America - Essay Sample

Over the past few years, the Chinese have managed to expand their firms in the telecommunication industries to Latin America. The relationship between the Chinese and Latin American countries has been of great benefit to both parties (Grudgings & Gardner, 2011). Many argue that Latin American heads of state view the Chinese as a secure source of investment capital, whereas others see this as a chance for the Latin American states to take a break from the dominance of the United States. Whichever the reason, Latin American relationship with the Chinese has bloomed significantly in the last decade. This has seen an increase in the exports from both parties. The Chinese mainly export high-end technological products such as automobiles, computers and mobile phones (Jintao & Jiabo, 2017). Recently, Huawei has become the most powerful telecommunication company in Latin America. This paper explains the activities and entry mode of Huawei in the Latin American market.

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One company that has enjoyed huge success in Latin America is Huawei, a telecommunications company that has operated in this region for nearly two decades now (Low, 2007). The producer of consumer electronics ranging from televisions, refrigerators and mobile phones has set out to partner with local firms in research and implementation of innovative ideas. Since 2014, Huawei has enjoyed terrific sales in Latin America, particularly with smartphones. Huawei currently serves over 50 operators in Latin America and has set up networks in the majority of these nations including Brazil, Peru, Ecuador, Mexico and Colombia (Huawei, 2017). Huawei is currently worth over $30 billion, operates in over 150 countries and has over 150,000 employees which go on to rubberstamp its credentials as a successful company (Low, 2007). Huawei owes its continued success to their ability to deliver quality telecommunication products at reasonable and affordable prices globally, and this explains their tremendous success in Latin America.

The company also values research and innovation. With a brilliant research team working behind the scenes, Huawei continues to launch new technology that sets them apart from their competitors, particularly with the setting up of high-end research institutes which carry out research by exploring possibilities based on either challenge in the technology world or even recent developments (Low, 2007). Moreover, Huawei has set up training centers whereby citizens from Latin American countries get the chance to train and after that become employees of Huawei. This goes a long way in showing that Huawei is looking ahead into the future and wants to dominate Latin America technologically. It also avails a pool of talent to the company leading to new customer-centered innovations.

Of these nations, Huaweis operations in Brazil have been the most successful in Latin America with the distribution center for the entire region situated in Sao Paulo (Grudgings & Gardner, 2011). This has been followed up by the investment in mobile phone 3G networks particularly in Android smartphones which they have also invested. Huaweis operations have further been made better by the fact that Brazil is among the fastest developing nations in the world and this has encouraged them to widen their technological investments. Huaweis future in Brazil and Latin America at large could not be brighter. Additionally, Huawei has gone out of their way to invest in countries that are deemed to be U.S business territories (Grudgings & Gardner, 2011). One such country is Mexico, which not only borders the United States to the South but also would be a cheaper investment option. Huawei has since launched Mexicos first Long Term Equipment (LTE) Network that serves the majority of Mexican cities and serves more than three-quarters of the countrys population which is mostly rural.

Since Huawei started producing smartphones, their devices received a warm welcome into the market especially due to their entry into foreign nations. There are three entry modes used by organizations to enter an international market. These include contractual entry mode, investment mode, and export entry mode (Wu & Zhao, 2008). Huawei has taken the three modes into account to promote its entry into the Latin America. To begin with, Huawei employs the export method as a way to enter the Latin American market. The company has also invested heavily in Latin American countries. Additionally, Huawei has forged several contracts that have solidified its entry into the Latin American countries. For instance, Huawei was one of two companies that were chosen by a Brazilian vendor to supply 4G Long Term Equipment (LTE). Such contracts create a long-term fixture for the enterprise in Brazil to help technological advancement (Wu & Zhao, 2008). Dominating contracts in Latin Americas most powerful country only spells success in the entire region as a whole for Huawei thus promoting further entry of the company into the area.

Huaweis success in Latin America has also been enhanced the support from the Chinese government. They get tax subsidies from the government as well as loans from the state because they are the national champions of technology (Low, 2007). This kind of support is something other telecommunication industries in other countries do not get. This encourages Huawei to implement their expansion plans to other nations. Additionally, The Chinese have a vast and cheap labor force that enables Huawei to have a relatively low cost of production as compared to other international telecommunication companies (Jintao & Jiabo, 2017). This allows them to offer their products at subsidized prices, and this attracts a wider market than their competitors.

Furthermore, Huaweis technological abilities have further boosted their quest for Latin America as they have been able to reach even the rural areas in these Latin American nations (Huawei 2017). This encourages most of the Latin American states to pursue business with Huawei since most of their population lives in rural areas. Huaweis unique approach to focus on the future need for communication in the countryside has certainly paid off, and as such, they are well ahead of their competitors. Another factor that has set Huawei apart from their competitors is the fact that they not only seek to expand in the powerful nations in Latin America such as Brazil but also the developing ones such as Trinidad and Tobago (Huawei, 2007). This shows that they are focused not only on the present but also the future. The reluctance of companies in The United States to invest in these Latin American countries has enabled Huawei to expand into this region without much competition.

Despite Huaweis success in Latin America, the company has faced some controversies that may tarnish its brand reputation. There have been accusations of manipulating smaller companies using their access and equipment to copy the information on their products which goes against intellectual property rights. The United has also been on red alert due to Huaweis association with their enemies, for instance, Iran and Cuba (Grudgings, S. & Gardner, 2011). They fear that Huawei could be paid off to access sensitive information in The United States. Besides this, some of their employees globally have been accused of corruption which further tarnishes their image as a telecommunications company (Wu & Zhao, 2008). Despite the allegations, there is no doubt that Huawei will continue to enjoy a lot of success especially in the Latin American region in which they have no serious competition. They have strengthened their research by collaborating with local companies, and in truth, their domination in this region will only increase.

References

Grudgings, S. & Gardner, S. (2011). Analysis: Rising China threatens U.S. clout in Latin America. Reuters. Retrieved 8 February 2017, from http://www.reuters.com/article/us-latinamerica-china-idUSTRE72F19C20110316

Huawei., (2017). Latin America - About Us. Enterprise.huawei.com. Retrieved 8 February 2017, from http://enterprise.huawei.com/en/about/branch/latin-america/index.htm

Jintao, J. & Jiabo, W. (2017). Chinese Interest in Latin Americas Growth. Coha.org. Retrieved 8 February 2017, from http://www.coha.org/chinese-interest-in-latin-americas-growth/

Low, B. (2007). Huawei Technologies Corporation: from local dominance to global challenge? Journal Of Business & Industrial Marketing, 22(2), 138-144. http://dx.doi.org/10.1108/08858620710730258

Wu, D. & Zhao, F. (2008). Entry Modes For International Markets: Case Study Of Huawei, A Chinese Technology Enterprise. Academia.edu. Retrieved 8 February 2017, from https://www.academia.edu/9312847/Entry_Modes_For_International_Markets_Case_Study_Of_Huawei_A_Chinese_Technology_Enterprise