Globalization strategies of Chinese companies

SUMMARY Globalization has been an established term academically for two decades; research within this field has expanded from globalization of markets to globalization of culture, trade, finance, of almost anything, in accordance with the increasing pace of globalization in today's ever-more interconnected world. Previous global strategy research has focused on companies based in developed economies, due to their dominant positions internationally. Current studies of transnational companies based in developing countries are few in numbers and not strategy-related in nature. This paper aims to fill this particular academic void by focusing on the global corporate strategies of the two largest telecommunications equipment companies based in China – Huawei and ZTE. The high level of globalization of the underlying market is an essential precursor for the existence of transnational companies implementing truly global strategies. An assessment of the global telecom equipment market using Yip's 19 globalization forces was conducted within the framework of this study. The result demonstrated a considerable amount of pressure for globalization in 14 of the forces, indicating the telecom equipment market and industry to be globalized to a large extent and degree. The global characteristics of the entire industry have facilitated the international expansion of Huawei and ZTE. Both have been pioneers among Chinese enterprises in terms of internationalization of sales and operations. As a matter of fact, these two Chinese companies' international presence does no longer represent mere internationalization; it is rather part of a coherent global strategy in order to achieve global corporate competitiveness. Four distinctive features were discovered after scrutinizing the corporate global strategies of Huawei and ZTE; ƒ China-centric: Substantial portion of Huawei and ZTE's sales and revenue are generated from the domestic Chinese market. Chinese nationals are also accounting for half or more of the companies' overseas staff. ƒ R&D focus: The telecom equipment industry is a highly technology intensive one. These Chinese companies have successfully enhanced their R&D operations by taking advantage of low-cost development in mainland II China combined with advanced research and expertise in developed countries. ƒ Foreign partnership: Huawei and ZTE have actively sought cooperation with renowned foreign corporations in numerous aspects ranging from management practices to auditing to technology research, as part of their globalization process. They have also energetically participated in various industry-related international standardization bodies. The partnerships with foreign firms are a crucial component in ensuring Huawei and ZTE's product competitiveness and organizational excellence; the cooperation …