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Huawei
The Cause of Emergence and Rise of the Firm
As indicated, the transformations in the ICT sector and the liberalization of the market have led to the emergence of the private companies in the ICT sector including Huawei (Richter, 2000). Factors such as the Chinese large market for telecommunication equipment, strategic positioning and investments in research and development explain the reasons for the success of the company (Cheung, 2001). Being one of the pioneer companies in the telecommunication equipment manufacturing, Huawei quickly emerged as the largest company in the sector capturing both the Chinese and the Asian market. In addition, critical strategic decisions including the development of own technologies and increased competitive advantage also contributed to the company’s growth and development (Segal, 2003). The main objectives of strategic decisions were to increase the share of Chinese market, expand internationally and increase competitive advantage over the foreign-based companies.
The Problems Facing Huawei
During the initial stages of establishment, the firm had problems of raising funds for development and expansion since it could not access government subsidies. In addition, existing stiff competition from established companies both domestic and foreign-based slowed the company’s growth in terms of market share. Both domestic and international markets are becoming highly competitive with emerging firms claiming some share of the market (Lu, 2000). Besides, the ever-changing technological advancement poses a greater challenge to the company. New products are being developed constantly requiring the company to invest heavy in the research and development to maintain its competitiveness in the market.
Global Competitiveness of the Firm
The main objective of the company is to increase its market share both domestically and internationally. In other words, the objectives enabled the development of strategies that enhanced international expansion of the firm. Moreover, the international expansion strategies combined with innovative products have facilitated the firm to capture sizable global opportunities within the telecommunication industry. Further, the capabilities in terms of products development and finance as well as market share have increased the company’s global competitiveness. In fact, Huawei is the Chinese company that is capable of competing with other global firms in the international ICT market. Currently, the company has established subsidiaries in European, North and South American markets. Moreover, the company is currently one of the major global telecommunication equipment providers and continues to expand globally amid increased competition (Wang & Zhang, 1995).
The Chinese Industrial Policy Drawn from the Analysis
The Chinese government policy on the ICT sector that encouraged the alterations from controlled to market liberalization has led to the rise of privately owned firms such as Huawei in the first phase category within the ICT ecosystem. In addition, reforms by the government in the telecommunications industry that encouraged development and growth of ICT sector led to the establishment of platform, content and application provider companies including Huawei.
China Telecom
The Cause of Emergence and Rise of the Company
China telecom is one of the government-owned companies that was created from major reforms in the telecommunications sector. Based on the policy, the Chinese government executed reforms in the ICT sector, opened up its market for new firms and did away with production forces that created obstacles hindering the development and growth of firms in the sector (Brown, 1998). The reforms in telecommunications sector led to the creation of structures that enabled the emergence of China Telecom (Amiri et al., 2013). Being a national company, China Telecom enjoyed full government’s protection and accessibility to cheap loans that funded most of its operations. However, the firm was encouraged to collaborate with foreign companies to borrow technological capabilities that fostered its growth and development while sustaining the considerable sub-standard production (Zhang, 2003). As expected, the firm quickly benefitted from the multi-stage path policy and rapidly built a modern communication network, which enabled it to compete effectively not only within the domestic market but also internationally.
The Problems Facing the Company
Currently, the company is facing several problems ranging from motivation to deployment. The technological know-how and factors related to environment are within the spectrum. In terms of technical skills, the company faces protocol incompatibility and the problem of transition experience. The huge numbers of service platforms as well as giant network require substantial material and human resources. In addition, there is lack of mature experience and examples of network management, services flows and products development to learn from. Moreover, the company faces the problem of long life cycles of returns on investments.
The Global Competitiveness
The firm’s global competitiveness can be explained from the policy perspective and the firm’s competencies. Due to the developed capabilities, the firm has grown into an excellent organization offering variety of products that favorably compete with multinational corporations in the sector. According to Xia (2010), the firm has undergone huge transformations from a sparsely stretch of network system to a multinational firm that competes with larger world corporations. In addition, the company has followed the multi-stage strategy to build and expand the modern infrastructures, which increases the prospect for the company future growth and global competitiveness (Nolan, 2001). Currently, the firm is skillfully attracting partnerships with foreign companies transferring enough technology that would increase its competitiveness in both domestic and international markets (Ning, 2009). As such, the firm has developed capabilities that enable its global competitiveness.
The Chinese Industrial Policy Drawn from the Analysis
The success of the company can be attributed to the government’s policy on the telecommunication sector. In fact, the government’s policy, which promoted the application of imported equipments and supported joint ventures with foreign companies and finally nurturing national corporations, has encouraged the growth and expansion of firms within the sector (Segal, 1999). In most cases, companies within the telecommunications sector were encouraged to follow the path indicated by the government policy to grow into global corporations that can compete favorably in the international market. The conclusion that can be drawn is that while advancing a liberated and vibrant competitive market, China’s economic and regulatory industrial guiding principles have been successful in the rapid establishment of a modern communication network that rivals those of advanced countries (Lardy, 1998).
Baidu
Reasons for Emergence and Rise of the Firm
Baidu emerged because of new reforms in telecommunications industry and liberalization of the market. However, the establishment of the company also originated from continued quest of the Chinese government to have its own search engines. The rise and growth of Baidu depend entirely on the large Chinese market. In addition, the capabilities of the firm to offer web services in Chinese language have contributed to its increased growth within the Chinese market. Besides web services, the company’s unique products including multimedia content, wireless application protocol, personal digital assistant and mobile search have also contributed to its expansion. Further, the company is currently expanding into social networking market where the business expects to grow rapidly due to its capabilities in offering services in Chinese language.
The Problems Facing Baidu
The major problem facing Baidu is competition. In fact, the web services market is highly competitive with both domestic and international firms claiming some share of the market (Steinfeld, 1998). However, the capability of the firm to offer web services and search engines using Chinese language provides an increased competitive advantage over international firms. The other challenge the firm faces is tight control over its operations by the state agencies. Baidu is one of the most restricted and censored online firms. Further, the government-controlled program contributes to its slow expansion both within domestic and international markets since the company can offer limited web services in relation to international companies (Lardy, 2002).
Global Competitiveness of the Firm
The prospect for international expansion of the firm is limited given the type of services the company offers. The main target markets are Chinese nationals having the capabilities of understanding the contents of services offered by the company. In addition, the web and related services offered by the firm are highly competitive with most multinational and well-known brands such as Google dominating the world market. The domination of the world market by international companies decreases the worldwide expansion opportunities for Baidu. However, the developments of new products by the company have enabled Baidu target international markets particularly within Asia.
The Chinese Industrial Policy Drawn from the Analysis
Even though the market is liberalized, the services offered by firms in this industry category are highly regulated. The regulations have led to the slow growth of firms in the industry category. Conversely, the government support for the establishment and development of the content and application provider companies has been critical for the growth of domestic firms including Baidu.
References
Amiri, S., Campbell, S. D. & Ruan, Y. (2013). China’s Government Expenditures, Policies, and Promotion of the ICT Industry. International Journal of Applied Science and Technology, 3(1), 9-17.
Brown, R. A. (1998). Chinese business enterprise. London: Routledge.
Cheung, T. M. (2001). China’s entrepreneurial army. Oxford: Oxford University Press.
Lardy, N. (1998). China’s unfinished economic revolution. Washington, D.C: Brookings Institution.
Lardy, N. (2002). Integrating China into the global economy. Washington, D.C: Brookings Institution.
Lu, Q. (2000). China’s leap into the information age: innovation and organisation in the computer industry. Oxford: Oxford University Press.
Ning, L. (2009). China’s leadership in the world ICT industry: a successful story of its “attracting-in” and “walking-out strategy” for the development of high-tech industries? Pacific Affairs, 82(1), pp.67-91.
Nolan, P. (2001). China and the global economy: national champions, industrial policy and the big business. Basingstoke, Hampshire: Palgrave Macmillan.
Richter, F. (2000). The dragon millennium: Chinese business in the coming world economy. Westport, Connecticut: Quorum Books.
Segal, A. (2003). Digital dragon. High-technology enterprises in China. New York: Cornell University Press.
Segal, G. (1999). Does China Matter? Foreign Affairs, 5(78), 24-36.
Steinfeld, E. S. (1998). Forging reform in China: the fate of state-owned industry. Cambridge: Cambridge University Press.
Wang, Y &. Zhang, J. (1995). The emerging market of China’s computer industry. Westport, Connecticut: Quorum Books.
Xia, J. (2010). Linking ICTs to rural development: China’s rural information policy. Government Information Quarterly, 27(2), 187-95.
Zhang, Y. (2003). China’s emerging global businesses. political economy and institutional investigations. Basingstoke, Hampshire: Palgrave Macmillan.
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