Chapter 24 Overseas market is cold

Huawei has been expanding into Eastern Europe and Russia since 1996. At the beginning of 2001, Ren Zhengfei, Huawei's president, delivered a famous speech "Across the Pacific Ocean" in the company, calling on Huawei people to explore overseas markets.At this time, Huawei has established a firm foothold in Russia through the establishment of a joint venture company. However, in the more developed Western European markets, Huawei's success was delayed for several years.It didn't really gain recognition and scale sales until 2002.However, such success is the beginning of the overseas road, and the entire overseas expansion process is full of thorns.

Huawei's overseas market strategy focuses on avoiding the markets of developed countries in order to reduce the risk of entry. With the low-price strategy, it focuses on selecting big countries in developing countries as target markets, so as to avoid various restrictions on the entry threshold of developed countries. It also makes it difficult for large overseas telecommunications companies to "shopping" prices with Huawei in developing countries. After effectively entering the markets of developing countries, we will focus on actively entering the markets of developed countries with high-end products.For developed countries, we must dare to fight repeatedly and challenge high-end products with high-end products.Facing the high entry barriers of developed countries (such as British Telecom, France Telecom, Spain Telecom, Deutsche Telekom, etc.).

However, the above-mentioned process is also long and arduous.First of all, we need to let the above-mentioned developed countries know that Huawei’s technology is not behind. It takes 1 to 2 years to gain their understanding of Chinese companies, and another 2 to 3 years to pass their strict certification and enter the short list before they are eligible to participate in the competition. Fierce bidding. Therefore, in the process of internationalization, Huawei encountered the following problems.First of all, the vicious price war of domestic equipment manufacturers has seriously disrupted the market order. After the first-line price plus the customer's request for rebates or free delivery of products, the selling price is already lower than the cost price. The more you sell, the more you will lose. Losing customers again, it is becoming more and more difficult to maintain the huge profits at the beginning of the company's establishment.

In addition, when entering the international market, the entry point is an underdeveloped market, and due to the buyer's credit problem, the situation of defaulting on payment is also very serious.Huawei is still in arrears of more than 2 billion yuan in payment, some of which will become bad debts or dead debts. The accumulation of the above situations reached a very dangerous moment in 2004.At that time, Huawei's asset-liability ratio was about 55%. Although Huawei had a good reputation in various banks at that time, there were not many obstacles to loans. However, affected by price wars and arrears, Huawei faces high debt and cash flow that is asymmetrical to sales. Once the market fluctuates, the capital chain may break.In this way, Ren Zhengfei called out "winter" for the second time.

In his internal speech in the third quarter of 2004, Ren Zhengfei once again reminded "Huawei should pay attention to winter."In the 13,000-word speech, Ren Zhengfei reviewed and examined the severe difficulties Huawei is currently encountering.However, compared with the last time, the influence of this winter's notice has weakened, mainly because Ren Zhengfei discussed Huawei's internal problems in more detail. What Ren Zhengfei made this time is a long-term trend prediction.He said: "Winter is coming because of oversupply in the industry, and the entire information industry is experiencing winter. Because technology in the information industry is getting simpler and simpler, it is difficult for technology leadership to produce market advantages, and customer relations and customer needs have become the top priority. We need to tell the truth about the difficulties, and if we do not have the ability to foresee future difficulties, the difficulties we are in will be more serious."

His basis is that the adjustment of the traditional economy is accomplished through the adjustment of resources, and no one in the information industry can control resources.The two elements supporting the development of the information industry, one is digital, and the other is silicon dioxide, the raw material of silicon chips, are inexhaustible resources, resulting in a surplus of electronic products.Therefore, the essence of this life-and-death struggle is the competition of quality, service and cost. Ren Zhengfei believes that Huawei has an advantage in terms of cost, especially compared with Western companies. Compared with international companies, Huawei's R&D cost is only about 1/3, and its growth is relatively good, so it is possible to survive the difficult period. It is bigger than Western companies, but also stronger than small companies.

Huawei's measures are to actively expand overseas markets; the growth rate in the domestic market can decline, but not lower than others; to improve quality, improve service, and reduce costs; appropriately cooperate with competitors to reduce costs. research and development costs.In the cruel competitive environment at that time, it was better not to lose money to the industry chain alliance, because Huawei could afford to lose a little, and the alliance would die if it lost a little.Once spring comes, these allied forces, such as agents and distributors, can go out to grab orders vigorously, and Huawei will slow down.

In 2004, Huawei achieved global sales of 46.2 billion yuan, of which domestic sales were 27.3 billion yuan; international sales were 2.28 billion US dollars (about 18.9 billion yuan), accounting for 41% of total sales, creating a 17-year history. Highest sales record.Strong growth in international sales made an important contribution to Huawei's sales growth.