Years before China’s Belt and Road plan got its name, Huawei was driven to seek emerging-market contracts
Published in 27 April, 2020
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When Jacky Gao Kexin put his hand up for his first overseas assignment in 2004, the young Huawei engineer had just completed three years of after-sales customer service in Henan and Jiangsu provinces in his home country.
Finding himself halfway around the world in Lagos, a megacity of 16 million people in Africa’s fourth-largest economy, it would take Gao countless long weekends and sleepless nights – including being robbed at gunpoint, twice – to make headway in Nigeria.
VMobile, a local network operator with close to 1 million cellular phone users, approached Gao with a problem that its vendor had left unresolved. Gao worked through a weekend with his technicians and came up with a solution, displacing the then vendor Alcatel, and eventually Ericsson, as VMobile’s hardware and software supplier in Nigeria. VMobile was eventually sold to Kuwait’s Zain Group, which in turn was taken over by India’s Bharti Airtel in 2010.
By 2007, when Huawei promoted Gao to head its business in Yaounde, the company’s share of central Africa’s telecoms market had risen to an estimated 40 per cent, including its first US$100 million contract in Cameroon.
A decade later today, Huawei counts Africa as its third-biggest sales market as it rides on the explosive growth in mobile phone usage to dominate the sale of telecoms backbone equipment and software on the continent, operating in 40 of Africa’s 54 countries.
Gao’s Lagos experience would be a common lore in Huawei’s emerging-market sales offices from Southeast Asia to South America: a mixture of grit, chutzpah and dogged devotion to customer service that catapulted the Chinese company from a low-budget vendor of small telecoms networks into a challenger to Ericsson and Nokia. With 2019 sales growing 19 per cent to US$123 billion, Huawei is five times bigger than its two European rivals in revenue and many times more profitable.
“We didn’t take over their market; instead, they lost it themselves,” Huawei’s founder Ren Zhengfei said during a March 24 remote interview with South China Morning Post, drawing a corollary with how his company came to dominate China’s domestic market. “With persistence and decades of hard work, we have gradually come out on top.”
Huawei is now in the cross hairs of the White House, during an escalating US-China tech war where cybersecurity, intellectual property rights as well as the supply of vital components and software are the tactical manoeuvres for a strategic vantage point.
To detractors such as the one-time Republican presidential hopeful and Florida Senator Marco Rubio, Huawei is a “state-directed telecoms firm” used by the Chinese Communist Party to fulfil “malign foreign policy objectives, like the Belt and Road Initiative,” he said in his email reply to a query by the Post.
The belt and road plan,formally unveiled in 2013 by Chinese President Xi Jinping, is an investment and development strategy conceived to involve 70 countries from China to Europe and Africa. The strategy emanates in two directions from China: an overland route that traces the ancient Silk Road – the ‘belt’ – through Central Asia, and the maritime route – the ‘road’ – via Southeast Asia.
The ambitious policy, which would pull nearly six dozen countries into China’s sphere of influence, raised alarms in Washington DC, especially since China overtook the United States in 2009 as Africa’s biggest investor and trading partner, with US$91.09 billion in Sino-African commerce, from a mere US$10 billion in 2000.
Reality may be more benign. “Huawei’s contracts are usually for short-term projects and involve much smaller sums of money” than the infrastructure megaprojects along the belt and road such as seaports, transboundary railway links, or gas pipelines, Ren said.
“We sign small contracts with our customers [where] the investment required is much smaller. Therefore, we have no connection with the initiative.”
Huawei was active in emerging markets for two decades before the belt and road strategy even had a name. By 1996, when the company was barely 10 years old, Huawei executives were already searching for business opportunities as far afield as Brazil, Russia and Africa.
Huawei’s first Africa sales office opened in the Kenyan capital of Nairobi in 1998. Ren himself would visit the continent several times as he travelled the globe to meet customers, including a trip to Nigeria in 2004 and Cameroon in 2007.
The push abroad was not unlike how Huawei got its break on its home turf. As an upstart in the highly capitalised telecoms industry during the late 1980s, Huawei struggled even at home against larger rivals who had the technology, the products and the brands to woo China’s nascent telecoms operators.
Read More in: South China Morning Post