China at WSIS: Cisco beware!

As nations reach compromise over who will govern the internet and the Tunisian government impresses nobody with its repression of dissidents and internet censorship (more about those things soon), the Chinese are hard at work doing business here at the World Summit on the Information Society.

Anybody who hadn’t heard of ZTE, China’s second-largest telecoms equipment maker, before WSIS will know who they are by the time this confab is over. As a conference sponsor, their logo in on flags lining the street around the conference center. (See some recent news about ZTE here.) They and “China’s Cisco,” Huawei, have bigger, more elaborate booths than pretty much all other high-tech companies except maybe Microsoft.

The booths of these companies are full of delegates from Africa and the Middle East. I spent a little time chatting in Chinese with the guys at both booths. They’re both doing aggressive business in developing countries, helping to build telecoms and internet infrastructure. They point out that not only is their pricing competitive, but having cut their teeth in a country where peasant farmers make up the majority, they say they’re simply better at meeting the needs of developing countries than their Western competitors. They also take markets in poor nations more seriously. 

A technology analyst once described Huawei to me as the “bottom feeders of the IT industry.”  Others compare the global strategies of Huawei and ZTE to Chairman Mao’s strategy for communist takeover in 1949: “surround the cities from the countryside.” Given that the majority of the world’s population is either poor or in the countryside, it sounds like a sensible long-term strategy for come-from-behind challenger brands with ambitions of competing head-to-head with Cisco and Sun.

Unlike Western companies who tend to train locals and transfer a lot of technology (as Cisco did in China, making Huawei possible in the first place) Chinese companies minimize technology transfer to the locals they work with. Some NGO guys I was talking to who do a lot of IT work in Africa were saying they see Huawei and ZTE all over the place, but they say they’ve observed that both companies take great pains to compartmentalize what they do, and use their own engineers as much as possible, so that local employees won’t be able to turn around and start up a home-grown competitor. Unlike the Chinese, African governments are not demanding technology transfer in exchange for contracts.

Comments

[faridpouya]

Fascinating! Napoleon said "world must trumble when China wakes up"!
I am wondering where is India in this business?

[Penguin]

Being concerned about censorship in China, I'm surprised you're impressed by the likes of Huawei, which was founded by Ren Zhengfei, a former PLA officer. (Here is a story on India's thoughts: http://www.atimes.com/atimes/South_Asia/GK16Df02.html)

Also, Huawei secured a $10B loan from the Chinese govt last Dec (Huawei is not a publicly traded company) so you're worried about the Chinese govt having too much influence on western companies....??? $10B can buy a lot of influence…..