In April 2016, I bore witness to Huawei’s strategy for Africa in action. The invitation for a recruitment event that would be held in a hotel in Central Beijing made its way into the “South African Students in China” and “Africans in Beijing” Wechat groups that I am a member of. The invitation encouraged individuals to send their CV to an HR manager at Huawei, and to indicate what operational area they felt best suited for; “IT engineer, Site design Engineer, Project Manager”. The vibrant, colourful, music playing invitation was impressive; Huawei was actively searching for top African students with experience in China to work in their businesses in China or Africa.
A series of particularly encouraging headlines dominate the first page of Google news results for the search phrase “Huawei in Africa”.
The rise of Huawei in Sub-Saharan Africa has its humble beginnings in 1998 when Huawei established operations in Kenya on the basis of its reputation as a “preferred low-cost, yet high-quality mobile network builder”. In the 18 years since its entry into the region, Huawei now conducts activities in over 40 countries across Africa and is among the top three telecommunications companies with operations in the region. The company’s reputation is indicative of its effectiveness in shaking off the longstanding negative perceptions of Chinese business in Africa.
In the early stages of its international expansion, Huawei targeted developing countries as key sites for growing its business operations. It specifically focused on the benefits of expanding into countries and regions “whose GDP per capita was either the same as China or lower than China’s”. It is thus unsurprising that the company has focused so intensely on establishing and growing its business in the African region.
Huawei’s strong reputation and penetration into African countries is typically identified as resulting from three core strategies that guide its business in the region. These are; strategic pricing; relationship building ethics across relevant stakeholders; and the introduction of ecological and power saving equipment that operates with wind and solar energy.
The core of Huawei’s pricing strategy has been to ensure lower prices than most of its competitors, without pricing too low that it would either comprise quality or put the quality of its products into question by appearing to be “yet another low-cost Chinese provider”. It, therefore “prices itself only 5%-15% lower than its European competitors, Nokia and Ericsson”. Huawei is often commended for how successfully it has been able to tailor its prices and products to the African market.
The company has also been particularly good at nurturing intermediaries in the region in order to allow for localised innovation to be better voiced. When establishing operations in African countries, Huawei has generally opted for joint ventures in which it partners with local network operators in order to gain a better knowledge of a specific market it will operate in.
Local partnerships play an important role in accelerating innovation at Huawei by allowing the company access to the kind of information that enables it to tailor its products and services to local realities faster. In this regard, Huawei has gone as far as establishing R&D centers in a handful of African countries, including Nigeria, Egypt, Angola and South Africa. The company’s stated purpose in this regard has been to pioneer “local and customized solutions”.
Commenting on the R&D center in South Africa, Paul Wu, the CEO of Huawei South Africa, said; “Our research and Development Centers are the engine of our business [and] we are looking forward to bringing [our] international expertise to pioneer local, customized solutions to South Africa’s telecommunications industry”.
The hiring of local staff is also a hallmark of Huawei’s business in Africa. In terms of its employment profile in the region, the company currently has between 4500 and 5800 employees, with more than half being estimated to be local hires in different countries. Huawei claims that its R&D strategy in Africa is driven by a commitment to “working on the ground and hand-in-hand with local partners to bring about solutions that are tailored to specific requirements based on the demand and needs of the local customer”.
Compared to many other Chinese companies that have sought to build strong international brands, Huawei has demonstrated a willingness to take risks in its operations in African countries. Where other Chinese and Western companies have avoided undertaking low-profit and risky operations Africa, Huawei has shown a keenness to engage. It has seized “the opportunity to grab market share early for future competitive advantage, as well as the chance to build corporate reputations”.
A few weeks after the Beijing recruitment event, after CVs had been reviewed and interviews had been concluded, I had a conversation with a friend from South Africa who was working in Beijing. He had participated in the recruitment drive and had been made an offer to work at Huawei. In our brief conversation, he spoke about how strange it was that he was negotiating the terms of his potential contract on Wechat, and how he hoped that he would be placed in Beijing and not in South Africa, at least not immediately. In many ways, this friend’s experience was living testament to the headlines that commend Huawei’s successes in Africa, its training of 1000 South Africans in China, its investment in African markets, its broadening reach. While certainly not a perfect company, Huawei continues to do an impressive job of solidifying its place as a top smartphone and network infrastructure provider in African countries.