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HUAWEI: Ciscos Chinese Challenger

Presented By: Shrimant (093) Neha Singh (094) Pradeep Singh (095) Dhara Sodha (096) Sumit Srivastava (097)

Time Line
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1960,1970: Few network equipment suppliers.

1980: Introduction of Digital Technology. 1988: HUAWEI was incorporated as a private enterprise. 1990: Commercialization of internet & Privatization of telecom service providers.

1994: CISCO entered Chinese market.

2001: Dotcom bubble burst. American companies accounted for 75% of telecom

equipment market in China within which Cisco accounted for 62%

2002: China became largest telecom market surpassing US.

2002: HUAWEI Overtook Shanghai Bell, an Alcatel joint venture. (Become dominant

supplier of digital switches and Routers in China)

2005: Huawei became largest Chinese telecom equipment manufacturer, annual

Revenue of US$6.7 billion.

2006: Among the rank of Chinas national champions.

www.huawei.com

Huawei Technologies
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An

innovative and customer-oriented ICT company established in 1988 and fully owned by its staff. more than 10% annual revenue invested in R&D.

Over 35,000 staff members (over 48% engaged in R&D);

Full

product portfolio including wireless products, network products, application and software products and terminals. 100 countries, including the US, the UK, France, Portugal, Russia, Brazil, Singapore and Thailand, and serving 28 of the worlds top 50 operators.

A leading global supplier with products deployed in over

Contract sales amounted to US$6.2 billion in 2005. over

58% of which (US$4.8 billion) was from international markets.

Also called as CISCO of China.
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www.huawei.com

Vision and Mission

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VISION To enrich life through communication MISSION To focus on our customers challenges and needs by providing excellent communications network solutions and services in order to consistently create maximum value for customers.

w ww. h u a wei .com

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Continuous Growth
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Serving 28 of the worlds top 50 operators Strategic partner with BT, Vodafone, Telefonica, etc.

Contract Sales 9 USD1 billion

8 7 6 5.58

8.2

5
4 3 2
5

3.83 2.67

1 0
2002 2003

2004

2005

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Human Resources
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R&D:48%

48%
38%

Marketing, Sales and Customer Service : 38%

6% 8%

Administration: 6%

Supply Chain: 8%
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Total staff: Over 35,000 employees

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Global Presence
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Huawei Technologies (Headquarters)

Sweden Russia Netherlands Poland Germany France Ukraine Romania Kazakhstan Bulgaria Portugal Kyrgyzstan Spain Italy Turkey Uzbekistan Greece Tunisia Turkmenistan South Korea Morocco Bangladesh Algeria Egypt Pakistan Shenzhen Nepal UAE Vietnam Saudi India Thailand Philippines Arabia Nigeria Cambodia Malaysia Sri Lanka Kenya Singapore UK Indonesia

Canada USA

Mexico

Venezuela Colombia Ecuador Peru

Brazil

Zimbabwe Australia South Africa Chile Argentina

8 regional headquarters, 85 branch offices outside China 3-level customer service system (HQ, regional, local)

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Management Transformation
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Huawei works with top management consultancies to bring world-class expertise to the company, provides customer end-to-end delivery with high quality .

consulting

Integrated Product Development and Integrated Supply Chain Human Resources & ESOP

Financial Management
consulting

Quality Control

Organization Transformation

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Global R&D
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Adopts asynchronous development, unifies product commercialization and speeds up response to market.
Global R&D Stockholm, SwedenBase Station architecture and system design, Radio technology and RAN algorithms ASIC technology and CDMA algorithms Dallas, USA Bangalore, India Software technology/platform Moscow, Russia Algorithms and RF Shenzhen, China CN, service platforms RAN, terminals, ASIC chipsets Shanghai, China Packet CN, GW, Terminals Beijing, China BOSS, 3G services Nanjing, China

Four R&D divisions (Central software division and institutes in Bangalore, Shanghai and Nanjing) have been
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awarded CMM level 5 certification.

www.huawei.com

Industry Position
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3G
World-leading wireless network supplier, 18 commercial UMTS networks

NGN
No.1 in global VoIP market.

Intelligent Network
No. 1 in global market (21.6% of users)

Optical Network
No.1 in global market.

Access Network
No.1 in global market. No.1 in global market .

Data Communication
No.3 in worldwide service provider routers (Gartner)
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www.huawei.com

Business Operation Models Face Transformation

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How should operators and equipment suppliers adapt to a more customerfocused business operation model?

Network-focused

Service-focused

Customer-focused

Network layout Technology updates Homogeneous services Service quality

Service provisioning capability

Converged network Converged services Industry chain restructuring

Service marketing Customer increase

Integrated information services

80smid and late 90s

Mid and late 90s early 21st century

21st century
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Strategic Alliances
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Nov 2003: JV with 3Com called Hauwei-3Com. (Huawei 51% stake)

- Aimed at selling to Corporate customers.

- JV captured about 35% of Chinese corporate market.

- Expected to overtake CISCO to be the largest equipment provider in china.

- Entered into JV to leverage 3Coms strong brand.

2003: Formed a 3G research JV with Japans NEC and Matushita. Early 2004: JV with Siemens, called TD-Tech

Signed a global framework agreement with VODAFONE Group to

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supply mobile phone network to any Vodafone company worldwide.

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CISCO STORY
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In 1984 two Stanford computer scientists ,Len Bosack and Sandy Lerner started Cisco. By 1987,the company managed to secure a sizeable venture capital from Silicon Valley for its large-scale expansion. In the early 1990s,with the growth of internet , Cisco expanded from a one product company into a service based leader in networking business. From 1995,Cisco took a series of acquisitions to broaden its service and product portfolios.

To move into new market segments ,Cisco formed extensive strategic alliances with companies in the networking value chain.
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By the end of 1990s,Cisco had become a virtual manufacturer of networking products , running network of outsourced operations.

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CISCO STORY (cont.)

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In order to meet global demand for its products ,Cisco made alliances with local OEMs and distributors. Cisco entered China in 1994 with the opening of its first office in Beijing. In 1998,the company began to focus its attention on China to expand its business. Cisco opened its own subsidiary instead of forming Joint Ventures with local partners. Cisco also embarked a number of education initiatives to develop favorable relations with Chinese authorities.

It launched its new R&D center in Shanghai in 2005.

Cisco became the largest telecom networking company in the world , with 35000 employees and an annual revenue of US$22 billion in 200304.
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www.huawei.com

SWOT Analysis
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STRENGTHS
International expansion provides company with access to many customers Low operating costs (low cost engineering) that support low-cost pricing strategy Broad portfolio of products to support end-to-end solutions Ability to leverage power and influence of government of China Installed base of Tier 2/3 telecom operators in emerging markets Inexpensive and highly qualified R&D workforce Undertaken joint R&D laboratories with foreign companies Early and heavy investment in 3G mobile communications technology
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www.huawei.com

SWOT Analysis (cont.)

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WEAKNESS
Ties to Chinese government could limit international investment opportunities Lack of strong global presence, including in US and Europe Lack of credibility with Tier 1 telecom operators Strained relationship between U.S. employees and Huawei executives Difficult to adopt foreign accent for Chinese employees Failure of low price strategy in U.S. markets

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www.huawei.com

SWOT Analysis (cont.)

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OPPORTUNITIES
Expand rapidly into high-growth geographies Expand rapidly through strategic alliances in Tier 1 accounts Become a top leader in professional services

THREATS
Partnerships and alliances are unsuccessful due to lack of experience in managing relationships Looming European recession could have a global effect and negatively impact product sales Immature organization implodes due to stress of rapid expansion
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www.huawei.com

SUGGESTIONS:
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Image changeover: -- From low cost image to reliability. Improving track record in U.S markets by: -- Accruing firm having sustained and consistent emphasis on R&D and Innovation. Creating brand awareness in U.S. through positive marketing and promotion by: -- By concentrating more on CSR activities.
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www.huawei.com

SUGGESTIONS:
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More focus on network security. It should raise IPO to increase its funds in order to enhance its technical strengths.

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Huawei Technologies Co. Ltd. : Current Status

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www.huawei.com

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Comparison of Cisco Systems & Huawei technologies Co. Ltd. (2010 statistics)

Parameter
Revenue (USD) R&D investment R&D investment as a percentage of Revenue Number of employees

Cisco Systems
43.21 billion 6.04 billion 14 % 110,000

Huawei
29.14 billion 2.60 billion 9% 71,825

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www.huawei.com

Product Portfolio Comparison

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Huawei Technology Co. Ltd.

Mobile and fixed broadband networks
Consultancy and managed services Multimedia technology Smartphones Tablet computers

Cisco Systems
Networking Device
Network Management Cisco Software Interface and Module Optical networking Storage area networks Wireless, Telepresence Datacenter
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www.huawei.com

Huawei Technology India Private Limited (HTIPL)

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1988 - Huawei established its R&D center in Bangalore

Huawei has set up one of the largest R&D centers in Bangalore, to develop a wide range of telecom software Currently employing 2000 R&D center. Has invested USD 200 million till date. CMMi level 5 certified organization Huawei's largest and fastest growing R&D center outside of China
end-to-end ownership of products

HTIPL's activities span

Growing Customer base in India

testing and delivery to enhance the core competence for the global market. Huawei Indias clientele includes Top 10 telecom service providers such as Bharti Airtel, MTNL, Vodafone, Reliance, Tata Teleservices, Aircel, BSNL and other new operators.

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www.huawei.com

Cisco India
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Cisco India commenced operations in 1995 Cisco has 7 Sales Offices in the region - New Delhi, Mumbai, Bangalore, Chennai, Pune, Kolkata and Hyderabad. India headcount is 7600+ including R&D, sales and business support staff Cisco Global Development Center is in Bangalore, this is the largest outside of the US
Joint Development Centers with Wipro Technologies and Infosys Technologies in Bangalore; HCL Technologies in Chennai and Zensar Technologies in Pune
www.huawei.com
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THANK YOU

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