Contemporary Issues Facing Huawei
Introduction
Huawei Technologies Co. Ltd occurs as a multinational manufacturer of different telecommunication and networking equipment. The organization holds its headquarters in Shenzhen, Guangdong, China. According to Wu et al. (2020, p.17), Ren Zhengfei founded the company in 1987 in which it initially concentrated in the production of phone switches but later developed and ventured into the manufacturing of various communication and networking devices. Wu et al. (2020, p.21) assert that the company’s growth facilitated its strategies for the international business hence becoming one of the world’s giant producers of telecommunications devices. Currently, Huawei partners with various international companies in the same market, such as Vodafone, T-Mobile, Orange, as well as British Telecom that enables it to possess higher shares in the global market. Currently, the company’s products get used in more than 140 countries worldwide with more than 140,000 employees who contribute to its success since 46% of the workers directly or indirectly participate in research and development programs in various countries apart from China (Wu et al., 2020, p.32). For effective operation and extensive market system involved, the company possesses three divisions, such as the enterprise group, carrier network business, and consumer business groups (Wu et al., 2020, p.33). Despite its success, the organization faces various challenges, such as the current outbreak of coronavirus pandemic, United States crackdown on its products and business, as well as the controversial Chinese Xinjiang region in which the company admitted.
Xinjiang Allegations
It has been reported that there has been 1.5 million ‘minor religious infection’. Claims indicate that the company used its far-reaching use of Huawei’s technology to underpin suppression of the minority Uighur population (Doffman, 2019). This includes AI-based surveillance, intrusive data collection, and smartphones, and general communications monitoring. Any missteps by an individual seemingly run the risk of internment. Once detained, only modified thinking and behaviors seem likely to secure a person’s release (Buckley and Mozur, 2019). The Australian Strategic Policy Institute report (November 2019) on the primary technology providers supporting the region: “Huawei’s work in Xinjiang is extensive and includes working directly with the Chinese Government’s public security bureaus in the region” (Doffman, 2019) However, Huawei responds that it ‘complies with local laws’ and works as per the same.
Carroll’s CSR pyramid is a well-renowned theory that highlights the different responsibilities that an organization should fulfill to remain ethical in its business activities. This is not only critical for creating a positive bond with the stakeholders but also for attaining sustained growth for an organization (Baden, 2016, p.8). Following is a pictorial presentation of the model.
Figure 3: Carroll’s pyramid (Morgan 2011)
There are four primary responsibilities that an organization should fulfill as per this model –
Financial obligations – Huawei is effectively undertaking this duty as the organization makes all the possible strategies such as business expansion, new product launch, using promotions tactics to attract customers, and more to ensure that its profits always show an upward trend (Buckley and Mozur, 2019). Moreover, based on the application of Carroll’s CSR pyramid reveals that Huawei is not undertaking many of its responsibilities mentioned in the model (Baden, 2016, p.8). Instead, it should focus on working more ethically and ensuring that it adheres to the law of all the countries where it operates. Earning profits is very important for the long – term survival of a brand. However, the organization should not compromise on its ethics and values to maximize its benefits.
Spread of Coronavirus
Like many other global multinational companies, Huawei experience various setbacks from the coronavirus pandemic from the fact that the virus originated from China. As a multinational organization, sourcing of raw material and selling its products on the international markets get significantly affected in a negative manner (Ayittey et al., 2020). Moreover, it should be noted that the supply chain of the products may also get affected because of the spread of Coronavirus. For instance, the average smartphone manufacturer involves 200 suppliers. This consists of procuring Screens from South Korea Samsung, the lens from Germany, and Chip designed in California, and Chip made in Taiwan, Battery Japan, Audio chip China and 194 more items and suppliers (Maertens, 2020). Therefore, the entire supply chain process may get affected because of the spread of Coronavirus. On the same note, the global transport system faces shutdowns hence the limited movement of people and goods, which affects Huawei based on the fact that the organization exists as multinational. Furthermore, most of the governments that Huawei operates in occur as highly conscious about any international trade with most of the ceasing consignments and flights from profoundly affects nations such as China, Italy, and Iran. For instance, India stopped its international business with China on the 2nd of March for a temporary basis citing Coronavirus fears as the cause (Maertens, 2020). It is evident that Huawei exports a considerable quantity of its product to India and gets almost 12 percent of its revenues from this market.
The concepts of the organization ecosystem play a significant role in the success of a company such as Huawei. The theory explains that a business operates in association with various parties and factors.
Huawei’s broader ecosystem occurs as significantly affected, but the Coronavirus pandemic. For instance, some of the suppliers may well have shut down during the Chinese outbreak in late January, which would impact the supply chain further down the line (Miri-Lavassani, 2017, p.285). Alternatively, it may be the case that Huawei’s access to credit is restricted due to banks tightening lending terms in China due to the economic outlook. Again, although these are not part of the “Core Business” of Huawei, they represent the broader business ecosystem so that it will affect the performance of the business.
Conclusion
Huawei persists as a well-renowned brand in the global market today. With the help of effective business strategies and diversification of its product portfolio, the organization has created a positive brand image in the worldwide market. Despite its success in the worldwide market, the company has faced several difficulties in business operations. Coronavirus pandemic, as well as Xinjiang allegations, significantly negatively affect the company. During this piece, several theories and models were applied to analyze the business challenges that Huawei is facing at present. As a result, it should focus on working more ethically and ensuring that it adheres to the law of all the countries where it operates.
Recommendation
Firstly, the organization should focus on developing an ethical code of conduct that guides all its business entities in the global market. It is evident that Huawei is an international brand, and hence there may be some issues with its foreign entities. By developing a code of conduct, the organization would be in a position to guide all the business entities efficiently and ensure ethical operations. Secondly, its products and services should abide and align with health requirements, which aims at keeping the virus at control as part of the company initiative and concern about its customers and workers. Such actions would comprise offering protective gear to the employees and the public and donations.
References
Miri-Lavassani, K., 2017. Coopetition and sustainable competitiveness in business ecosystem: a networks analysis of the global telecommunications industry. Transnational Corporations Review, 9(4), pp.281-308.
Baden, D. (2016). A reconstruction of Carroll’s pyramid of corporate social responsibility for the 21st century. International journal of corporate social responsibility, 1(1), 8.
Wu, X., Murmann, J.P., Huang, C. and Guo, B., 2020. The Transformation of Huawei: From Humble Beginnings to Global Leadership. Cambridge University Press.
Doffman, Z., 2019. Has Huawei’S Darkest Secret Just Been Exposed By This New Surveillance Report?. [online] Forbes. Available at: <https://www.forbes.com/sites/zakdoffman/2019/11/29/has-huaweis-darkest-secret-just-been-exposed-by-this-new-report/#656497294061> [Accessed 21 March 2020].
Buckley, C. and Mozur, P., 2019. How China Uses High-Tech Surveillance To Subdue Minorities. [online] Nytimes.com. Available at: <https://www.nytimes.com/2019/05/22/world/asia/china-surveillance-xinjiang.html> [Accessed 21 March 2020].
Maertens, P., 2020. Coronavirus – Impact On Companies With An International Workforce – Tax News. [online] Tax News. Available at: <https://news.pwc.be/coronavirus-impact-on-companies-with-an-international-workforce/> [Accessed 21 March 2020].
Ayittey, F.K., Ayittey, M.K., Chiwero, N.B., Kamasah, J.S. and Dzuvor, C., 2020. Economic impacts of Wuhan 2019‐nCoV on China and the world. Journal of Medical Virology.