Chapter 5: When Global Technology Meets Local Standards: Reassessing China’s Communications Policy in the Age of Platform Innovation
By Eric Thun and Timothy Sturgeon
At the other end of the spectrum was Huawei, an equipment maker that demonstrated little early interest in investing in TD-SCDMA [a 3G standard]. While some observers attributed Huawei’s lack of enthusiasm for TD-SCDMA to uncertainty as to whether and how strongly the government would support the standard (Gao 2014), this misses the crucial point: Huawei’s orientation was explicitly global and the firm did not want to be distracted by a Chinese standard.
In contrast to Datang, Huawei was not state-owned and received little state support during the firm’s early years of development. When 2G networks were being installed in the 1990s, Huawei had few opportunities to sell its equipment in the domestic mobile market, and thus looked to sell abroad. China Mobile did not believe in the quality of Huawei equipment and relied on foreign suppliers for its network; China Unicom and China Telecom invested in personal handyphone systems (PHS) that allowed them to get around not being granted a mobile license, and this was not a technology that Huawei had developed (Interview, July 23, 2012). So the only choice for the firm was to seek opportunities in export markets. Consequently, at the same time that Datang was leading the domestic push for TD-SCDMA, Huawei was concentrating on global expansion. In 1999, Huawei made its first major foreign sales (in Yemen and Laos); three years later international sales were 18 percent of total sales and domestic sales were declining by 21 percent a year. Five years later exports were 40 percent of total sales. By 2005, the company was providing internet and telecom switching equipment to thirty of the world’s top fifty telecom operating companies (Nie et al. 2012, pp. 71–2). (pp. 190-191)
In Policy, Regulation and Innovation in China’s Electricity and Telecom Industries. Loren Brandt and Thomas G. Rawski, eds. Cambridge University Press, 2019.