unmet needs. Despite the company’s market acceptance in Europe, though, it has been seriously stymied
in its efforts to break into the telecommunications
equipment market in the United States. Although
Huawei has had cooperative research relationships
with major U.S. companies including IBM, Intel,
Microsoft, and Qualcomm, it has faced questions
about its policies about intellectual property and
about the potential for espionage by China. In
particular, it has faced suspicion from the U.S. government on national security grounds. 23
In 2008, a U.S. government panel rejected Huawei’s attempt to acquire 3Com Corp., a maker of
internet router and networking equipment, citing
concerns about national security. 3Com made anti-hacking computer software for the U.S. military,
among other things, and Huawei is thought to have
ties to the Chinese military. 24 Similarly, Huawei was
forced to abandon plans in 2011 to purchase 3Leaf
Systems Inc., a U.S.-based company specializing in
server virtualization solutions. 25 Although Huawei
executives including CEO Ren have consistently
denied espionage allegations, saying that Huawei
has no ties to the Chinese government and that it
has never received a request from the Chinese government to spy on the United States, security
concerns continue to limit Huawei’s ability to sell
network equipment to U.S. companies.
Lately, Huawei has been making a strong push to
expand beyond telecommunications equipment
into consumer products. After several years of supplying operators such as Vodafone and Orange
with unbranded handsets, Huawei in 2011 set up a
division to launch branded smartphones and, more
recently, smart watches. 26 By the summer of 2016,
the company’s consumer division made up more
than 30% of revenues, and in 2015, it was the first
Chinese company to sell more than 100 million
smartphones in a year.
The extent to which the U.S. intelligence concerns will influence Huawei’s position with other
governments remains to be seen. Australian government officials, for example, have voiced security
concerns and raised the prospect of prohibiting the
use of certain Huawei products in its network
infrastructure. 27 So far, Huawei has attempted to tie
its brand closely to innovation and economic
development within the markets in which it does
business. How well it will be able to continue with
this strategy going forward remains to be seen.
Manuel Hensmans is a professor of strategy and
innovation at Solvay Brussels School of Economics
and Management in Brussels, Belgium. Comment
on this article at http://sloanreview.mit.edu/x/58219,
or contact the author at email@example.com.
1.“Asia Becomes the Top Region for Corporate R&D
Spend, According to the 2015 Global Innovation 1000
Study, From Strategy&, PwC’s Strategy Consulting Business,” press release, Oct. 27, 2015, www.strategyand
. pwc.com; also see S.K. Jha, I. Parulkar, R. T. Krishnan,
and C. Dhanaraj, “Developing New Products in Emerging
Markets,” MIT Sloan Management Review 57, no. 3
(spring 2016): 55-62.
2. See, for instance, S. Awate, M.M. Larsen, and
R. Mudambi, “EMNE Catch-Up Strategies in the Wind
Turbine Industry: Is There a Trade-Off Between Output
and Innovation Capabilities?” Global Strategy Journal 2,
no. 3 (August 2012): 205-223; and S. Awate, M.M.
Larsen, and R. Mudambi, “Accessing vs. Sourcing
Knowledge: A Comparative Study of R&D Internationalization Between Emerging and Advanced Economy
Firms,” Journal of International Business Studies 46,
no. 1 (January 2015): 63-86.
3. D.J. Teece, “Explicating Dynamic Capabilities: The
Nature and Microfoundations of (Sustainable) Enterprise
Performance,” Strategic Management Journal 28, no. 13
(December 2007): 1319-1350.
4. K.M. Eisenhardt and J.A. Martin, “Dynamic Capabilities: What Are They?” Strategic Management Journal 21,
no. 10-11 (October-November 2000): 1105-1121.
5. “Thomson Reuters Names the 2014 Top 100 Global
In 2008, a U.S. government panel rejected Huawei’s attempt to
acquire 3Com Corp., a maker of internet router and networking
equipment, citing concerns about national security.