1. Attacking Moves (Directed Investments) A) Huawei's first move was to identify attractive markets that would still be open to its products. Since 2014 sales in Russia (Europe's largest consumer market) had been growing annually at over 50%. Furthermore, Russian consumers don't rely on Google Mobile Services (GMS) as Yandex — Europe's biggest tech company with its own suite of voice, maps, ride-hailing, music and news apps — is Russian. This meant that being cut off from GMS would not be a deal breaker for locals.
B) Russia also offered Huawei a value added extra — an unenviable talent base in advanced maths, science and engineering making the country a great place to "source components and software, develop new technologies, and
attract high-quality talent".
Huawei had long been cultivating partnerships with Russian universities and research institutes — especially those focused on AI/machine learning, neural networks, and data storage — and even set up their own OpenLab in Moscow. But now, as partnerships with elite American universities were severed and those in other western countries came under pressure, Huawei re-directed $100 billion in R&D funding to Russia, significantly extended its R&D facilities in the country, tripled their staff and trained 50,000 new
Russian technical experts.
Huawei was mobilising forces to make the second of its key moves — developing viable alternatives to both GMS and the Android OS (Operating System).
2. Ecosystem Moves (Alliances) A) Industry experts would have considered anyone trying to create a rival to the Android OS and GMS as being on a fool's errand, but Huawei simply had no choice. However, they didn't try to do this from scratch. Instead they moved to incorporate Aurora (a Russian OS developed by Rostelecom, a state-owned carrier) onto their devices. Then, as part of a large scale field test, they supplied the government with 360,000 Huawei tablets pre-installed with the new OS for use in the country's census — announcing Huawei as a genuine alternative to established global players on the Russian market. Importantly Aurora, (like Android) was developed on the open source Linux platform meaning Huawei — with a supporting cast of thousands of highly-qualified and specially-trained Russian engineers — could rapidly develop and deploy its own operating system.
B) Just two years into the 'Huawei Ban' the company launched their own alternative to Android — Harmony OS. But to be useful to end users mobile devices need apps. Cut off from GMS (Gmail, Chrome, Maps) and the Play Store meant Huawei had to develop alternatives. They moved quickly to incorporate Yandex's extensive suite of apps, (including a voice assistant, Celia) and worked with other leading Russian companies (such as those providing popular local alternatives to Facebook (VK) and other widely successful tech companies, like Wildberries and Ozon) to make their Android apps compatible with Huawei's new Harmony OS. But it was Yandex that was he key partner.
C) Together China's leading Telecoms company and Europe's largest tech company developed the Huawei Map Kit, which helped unlock the holy grail for smartphone companies — convincing a vibrant ecosystem of independent developers to build apps for your OS. The Map Kit allowed developers to create apps using Huawei's mapping and location capabilities and this — along with millions in incentives — activated the thousands of developers in research institutes and universities that Huawei had been building relationships with. The result was Huawei's 'App Gallery' (a rival to Google's Play Store with specific regional and language apps) and' Huawei's Mobile Services' (an alternative to Google Mobile Services), which had reached 730 million users by 2021.
3. Positional Moves (Land Grab) A) Huawei had already been investing in Russia's science and technology base but now moved deeper with a series of more corporate partnerships and acquisitions: A joint venture with Rostec — a state-owned enterprise focused on advanced technology — enabled Huawei to expand its manufacturing and production of smartphones and tablets at a new assembly plant in the Moscow region; they teamed up with Sber (the country's largest bank now re-positioning itself as a tech company) to launch a cloud platform in an attempt to gain ground in country's large, and rapidly growing cloud computing market; and Huawei bundled services with Kasperksy (a globally recognised cyber security firm) to provide security solutions for the cloud both in China and Russia.
B) Huawei, in a deal worth $50 billion, also acquired video surveillance and facial recognition technology patents and the team from a Russian startup — Vocord. While a major partnership with MTS — Russia's leading telecommunications provider — saw Huawei launch the first 5G test zone in Moscow. Although this was not the first 5G test zone in Russia (and Huawei is not the only provider of such network equipment in Russia) this move made Huawei a player in the competitive Russian 5G equipment market. If they can learn how to out-compete their rivals here and be the 'last-man standing' they are in a prime position to take a model of entering and dominating the 5G infrastructure of large developing economies worldwide.
4. Defensive Move (Sale) Despite the ban Huawei managed to (briefly) surpass its Korean competitor, (Samsung) to become the world's top smartphone maker. But restrictions on chipsets was the killer. Unlike most other players in the market Huawei designed its own chipsets but had to outsource their manufacturing to TSMC. At first the Taiwanese company assured Huawei it would continue to produce their chipsets, but this promise was soon broken as most chipsets are manufactured using US equipment. Huawei was now left without future access to this critical component. Therefore they sold a smartphone sub-brand, (Honor) to another Chinese company, (Shenzhen Zhixin New Information
Technology Co) to break their formal link. Honor, now free from sanctions, launched its first 'post-Huawei' phone in early 2021, which was focused on the Chinese market. But the following year launched its Magic 4 series, which included GMS — making it a global competitor.
However, the Huawei Ban continues to spread and (at the time of writing) included more than 1,000 Chinese companies in an non-transparent attempt to hinder China's global digital competitiveness. This has left many companies around the world wondering: "Are we going to be sanctioned next?" So, what has the above map and discussion enabled us to learn from Huawei's moves?