Telecom giant's quiet route to success

Huawei, a success after 10 years behind the scenes in the Czech Republic, looks for greater recognition

Within a decade, Huawei has become the Czech Republic's largest telecommunications equipment and service provider, and supplier to O2, T-Mobile and Vodafone, the country's three biggest operators.

That may come as a surprise to many Czechs who have never heard of Huawei, let alone realized the Chinese telecoms company's relevance to their everyday lives.

But Huawei's brand will not be unknown forever, as after a decade of success the company is putting brand-building at the forefront of its business strategy, says Daniel Zhou, managing director of Huawei Technologies (Czech) s.r.o..

"Having achieved considerable market share in our carrier business, we will now focus more on our device and enterprise businesses," Zhou says. "As these businesses are more consumer-facing, we are focusing on building our brand."

In the carrier business, Huawei provides telecoms technology, devices and services to Czech operators. Its device business includes Huawei's own smartphones and dongles - plug-in devices that allow access to services - and its enterprise business is focused on individual business or government customers.

"I am confident that in the next three to five years we can follow our group's global strategy by turning Huawei from a telecoms company into an information and communication technology company," he says.

Huawei was founded in 1987 in Shenzhen by Chinese entrepreneur Ren Zhengfei as an employee-owned corporation. In 2012 it overtook Ericsson as the largest telecoms equipment maker in the world, and last year it had revenue of 240 billion yuan ($39 billion; 30 billion euros).

Despite tremendous success in China, Huawei's journey to go global has also been challenging, and the Czech Republic has been no exception.

"When we initially knocked on the door of some of those main customers in 2004, nobody opened," Zhou says. "We had to work with local partners, and eventually we received our first contract - a nine-month deal to provide fixed access service to an operator."

The first contract went well, and from there Huawei won many more. Its revenue in the Czech Republic in the past five to eight years has grown at an annual rate of 20 percent, and in this financial year its revenue has reached $130 million.

To achieve sustainable growth, Huawei has been investing about $20 million a year in its Czech operations, mostly on training for its own workers and its customers' employees, Zhou says.

One major way Huawei has revolutionized the Czech Republic's telecoms industry is by becoming the provider of first-line maintenance service to the three big Czech operators, which led to a big reduction in costs for those operators.

Previously, each of the three big operators had their own teams for first-line maintenance service, but after they outsourced the task to Huawei, the three teams were in effect combined into one. Huawei now provides the service with this team as a resource pool, strengthening its service by sharing their experience and knowledge.

"In the Czech market, competition between operators is tough, and the they are all finding ways to cut costs, so we help them," Zhou says.

"We proved that we are a good company. We don't just sell boxes, but we provide a service to our customers and help them be successful in their business. We do the same job and provide 20 percent savings." The innovation, good service, localization and hard work are key to Huawei's success, he says.

"Our research and development investment gives us leading technology in the market. We are a customer-first company that is good at localization."

Huawei's service to Czech operators fits well with its global strategy, as the operators are all global businesses that Huawei also serves in other countries, he says.

At the same time, Huawei in the Czech Republic is run very much like a local business, with 347 of its 365 employees having been hired locally. Its R&D, equipment assembly and additional services support teams are all done in Europe.

Equipment for the European market is assembled in Hungary, R&D is carried out across eight different centers in Europe, and online technical support is based in Romania.

"It's what our president, Mr Ren, says: Our strategy is to make Europe our second headquarters. We want to show that the European market is important for us, and we want to keep on investing in Europe," says Zhou.

Huawei chose Hungary for assembly due to its abundance of talent and relatively central geographical location that eases transportation of devices to other European countries, he says.

Romania's service center helps each European country's own service team with troubleshooting that they do not have the ability to address, Zhou says.

As a part of its localization strategy, Huawei has also done a lot of corporate social responsibility work in the Czech Republic, including sponsoring a Czech ice hockey team and setting up research laboratories for top scholars.

Zhou, who oversees all this, had some international experience before working in Europe. He was born in Jiangsu province in 1981 and went to New Zealand in 2000 to study. After graduating from Auckland University of Technology with an MBA, he worked with two local councils' IT teams in New Zealand, helping them upgrade and manage IT systems.

In 2007 he wanted a new challenge, and on the suggestion of a former classmate, he joined Huawei. After a few months' work at its headquarters, he was posted to Prague to work as a sales manager.

Having done a good job there, he was promoted to deputy managing director of Huawei's Czech subsidiary in 2009, before being sent to manage Huawei's Austrian subsidiaries in 2010.

In 2012, internal restructuring encouraged closer collaboration between Huawei's teams in the Czech Republic, Austria, Slovakia and Slovenia. It was about then that Zhou moved back to head Huawei's Czech team.

"I was given a choice, but I decided to come back to Prague because it is where I started my career with Huawei, and I find the local employees in the Czech Republic very enjoyable to work with."

His group organizes yearly activities, often focusing on outdoor sports, to build teamwork. Photos of the fun are posted on the wall in the Huawei Prague office hallway.

Zhou's staff also work closely with the Chinese embassy and the Czech China Chamber of Collaboration to help build business links between the countries.

Huawei is one of the key sponsors of the China Investment Forum, which took place this year in August at Prague Castle - the ninth-century residence of the Czech Republic's president - and was attended by a delegation of around 700 government and business representatives from China.

Zhou says Chinese companies still face many challenges when expanding into the country, including language barriers and Chinese brands' poor image in foreign markets.

But "dedication and hard work" are the keys to overcoming those challenges and proving the quality of a company or product, he says.

"When you knock on the door of your potential customers, it may not open. But we do it 10 times or 100 times, showing them our latest technology and taking them to visit our headquarters. At the same time, we invest in Europe to show that we are a strong company and are here for the long term."

cecily.liu@chinadaily.com.cn

(China Daily European Weekly 10/10/2014 page20)