Source | https://sloanreview.mit.edu : By Manuel Hensmans
The Chinese telecommunications company Huawei recently has made significant inroads into European markets using a strategy of innovation partnerships with customers and governments.
Emerging markets such as China and India have become the growth drivers of corporate R&D initiatives from all around the world.1 Although there is growing evidence that Chinese companies are shifting their innovation focus from cost savings to knowledge-based research, the view by many in the West remains that companies based in emerging markets are not ready to take over the role of leading innovators from their Western competitors.2 As a result, Chinese multinationals have been at a competitive disadvantage, particularly in strategic technology industries.
What can Chinese multinationals do to overcome Western barriers to entry in strategically important technology industries in which “Made in China” or “Designed in China” are viewed as negatives? What dynamic innovation capabilities — or, put another way, what culturally specific processes3 — should companies focus on to gain acceptance in the competitive global marketplace?4
To answer these questions, I studied Huawei Technologies Co. Ltd., the Chinese telecommunications company that has recently made significant inroads in Europe’s mature and strategically important telecommunications industry. (See “About the Research.”) Huawei, which is based in Shenzhen, is one of the first Chinese multinationals to be competitive in the West in a strategic technology industry, making it a potential role model for companies in China and other parts of Asia that hope to transition from being a follower to being a market leader.5