One flight later...
I'm in China as a guest of Huawei, one of the Middle Kingdom's most exuberant technology companies. With 62,000+ employees, Huawei is big, and growing rapidly – it had $11 billion dollars in revenue in 2006 and looks ready to hit $15 billion this year. For context, Cisco is 54,000 strong, recently announced $9.6 billion revenue for its first trading quarter this year, up around 17 percent on this time last year – and has just said it'll be investing $16 billion in China over the next three to five years. Meanwhile, Huawei has seen its revenue share from Chinese deals go from 35 percent in '04 to twenty percent in '06.
Other comparisons are easy to make, difficult to analyse. Cisco has famously grown by acquisition, having bought well over a hundred companies in its lifetime, while Huawei has a similar appetite for joint ventures; Sun, Motorola, Vodafone and many others are in the mix. Cisco is a publicly listed company, Huawei isn't – which has led to a lot of grumbling when, for example, it and a bunch of private equity types decided to buy 3Com – another partner -- recently.
Ah yes, the grumblings. Huawei is a lot more aggressive and outward looking than most Chinese technology companies: consultancy Interbrand places it seventh in a list of internationally recognised Chinese brands, unprecedented for a company that specialises in selling stuff to other companies, because its “strong culture pushes every employee to the extreme”. (Interbrand also designed Huawei's chrysanthemum-themed logo, so may be excused for being nice).
Such visibility, combined with the opacity of its financing and general Western apprehension about Chinese economic expansion, means that there's no shortage of stories out there. Industrial espionage (Huawei famously cloned a huge chunk of Cisco's product range, leading to a lockhorn of lawyers and an out-of-court agreement), extreme management style (the company recently decided to make 7000 of its long-term employees to 'voluntarily resign' and reapply for their jobs, apparently in reaction to a change in Chinese labour laws that would otherwise have granted them more rights) and overt friendliness with the military and state (Huawei was started by an ex-People's Liberation Army man) have all been raised as reasons why things just ain't right with the lad.
You can alternatively see all this as good old-fashioned reverse engineering – is it really industrial espionage to take the top off a competitor's product and work out what's inside?, efforts at employee motivation (Huawei said that the 7000 would get lots of benefits in return), and just the way things work in China. The PLA, after all, has a huge economic role in Chinese business – and if you look at Israel's technology sector by comparison, it's symbiotic with the Israeli Defense Forces root and branch.
China enjoys and exploits ambiguity. Makes my job fun.
Meanwhile, let's not lose sight of the fact that Huawei makes things. It is particularly keen on wireless, with fingers in more pies than Sweeny Todd, and works actively in new standards like LTE (the Long Term Evolution of 3G) as well as... well, everything else. Its list of interests reads like line noise: HSDPA/WCDMA/EDGE/ GPRS/GSM, CDMA2000 1xEV-DO/CDMA2000 1X, TD-SCDMA, WiMAX, IM, NGN, FTTx, xDSL, IN, BOSS, UMTS/CDMA, says the company website. Around half of its staff work in R&D, and it has labs everywhere you expect.
Which leads to thoughts about how much Huawei invents for itself, how much it generates in conjunction with its partners, and whether it's capable of creating a genuine lead in new technology that others will have to follow. And how much difference the answers to those questions will make to the company's future success.
As Groklaw's PJ says: let's find out together.