China can: Huawei captures the Russian market

The desire to please the customers and sanctions help the Chinese telecom giant to oust the Western competitors from the Russian market. How successful will be the expansion of Huawei?
Origin source
Minibus stops in front of business center in western Moscow. From it poured, and the Chinese, running in the drizzling rain, a dozen meters away, hidden in the office. "We have 85% of the state in Russia is still Russian," - said Wan Biao, head of the Russian representative office of Chinese vendor Huawei IT-equipment. Strolling through the headquarters in Moscow, did not say.

On one side of the glass box Huawei - Microsoft Office, on the other - Cisco.

In Microsoft can pass for the transit of Chinese companies, Cisco - no, they are bitter rivals. The open space office of the Chinese company, the walls hung with pennants red. At a cursory glance, the Asians at the tables much more than Russian and Europeans. The newly appointed head of the mission, Wan Biao - a member of the global board of directors Huawei.

Russia in 1997 became the first country where Huawei (the name translates as "China can") opened its first overseas office. In May, during the visit of President Vladimir Putin to Beijing Huawei signed an agreement on cooperation with "Rostelecom" and the Russian Railways, one of the largest Russian telecom customers. FPractical cooperation with them has long been established. "Huawei's Agreement for - the ability to once again demonstrate their success in the regional market, and Russia has shown its willingness to change the geography of suppliers," - said a top manager of a major system integrator. The geopolitical situation has to this.

After the imposition of sanctions against the background of the Russian-Ukrainian conflict, talk about the need to make their own equipment, and try to replace Western Union only intensified. For Huawei, has long been a tangible share of the Russian market, this situation can be very useful. Can the Chinese company to take a chance?

Everything is for you

"Russian mafia" - so jokingly called at the headquarters of Huawei those who worked in the Russian office at the time of its creation.

They have good knowledge of the Russian language, sometimes singing Russian songs. And they are the first Huawei employees to gain experience on the international market. After 17 years, Huawei firmly established in Russia, the turnover in 2013 amounted to about $ 2 billion, with customers - large companies.

Pers hardware model, which came to the Chinese, were very similar to the western analogues vendors, just as inferior, says one of the interlocutors Forbes, who worked in the early 2000s with the operators. But the Chinese have promised a good price, and if anything were willing to send troops to bring its expertise and equipment to mind.

The first major contract in Russia Huawei sought with admirable tenacity. After selecting the target, such as "Rostelecom", the Chinese people have rented office next to the company headquarters and planted to a few dozen sales managers. "These people are systematically went to the same dining room, on the same corridors for hours sitting in reception," - says one of Huawei partners. The tactic bore fruit, orders appeared. "I had not yet worked in Russia, but knowing how the company enters new markets, I can safely assume is" - smiles Wan Biao.

With the mobile operator "MegaFon", which is the largest shareholder structure of billionaire Alisher Usmanov, Huawei's started to work in 2003. The Chinese have come from the Far East and Siberia. The operator then has been deCentralized, the decision to purchase the equipment taken by each of the macro-regions in particular.

And the money for modernization, as said the strategy director of "MegaFon" Alexander Bashmakov, at that time was not enough. Huawei to offer good financing conditions, gave loans. As a result, the company signed a contract for $ 40 million.

Six months later, the parties entered into a second contract - Huawei set of "MegaFon" system to select the music instead of beeps while waiting. "Proactive and ability to anticipate the needs of customers always distinguished Huawei», - says the shoe.

Processing client, as a rule, started in advance.

Once a known problem with the client already knew her decision and a potential artist. For the customer there and then came negotiating team and negotiated for almost make a pilot project for free. As a result, the client began to feel that the decision to purchase is already evident. "The mechanism of pre-sales have a very well worked out", - says the shoe.

And all this is accompanied by a willingness to lend. "Andhen there is a feeling that the Chinese companies bottomless coffers ", - says one of the counterparties. In 2009, the "Megaphone" has received from the China Development Bank $ 300 million loan for the purchase of Huawei equipment. In 2011, the same bank was opened by Russian operator two credit lines worth $ 1 billion. "We are working with both Chinese banks and from banks in other countries. Look who better conditions ", - explains the tactics of the head of the Russian representation of Wan Bao.

At Huawei in Russia 11 offices - from Vladivostok to St. Petersburg. It manages to be closer to customers and respond to their needs quickly. At the same time, regional offices can make decisions without referring to Moscow, says Wan Biao.

The Chinese are willing to negotiate until they manage to agree. In contrast to the Europeans can decide the day: the managers who lead large customers, there is a direct link with the headquarters. If a concession to you can not offer a bonus or discount to another order.
Huawei is able to build relationships at the highest level - with business owners.

"I know that Usmanov had meetingsthe principal owner and founder of Huawei. Relationship close enough "- said Forbes, a source close to the leadership of" Megaphone ".

Now the "Megaphone" calls itself one of the largest in the world, Huawei customers: the company had to start with the LTE-communication for the Olympic Games in Sochi and signed a seven-year contract for $ 600 million in June.

Cooperation with Huawei Density Guide "Megaphone" somewhat worried. Chinese - too good partner, buyers are no longer to call other suppliers. "We are now trying to expand the range of vendors," - says the shoe. For any company is too strong dependence can be disastrous from a single vendor.

A new front

Cisco - has long been not only a target for the company. Several years ago, Huawei released in the corporate segment - provides servers, storage systems and other equipment, encroaching on the traditional fiefdom of companies such as IBM and Hewlett Packard.

The Russian offensive on the corporate market the company is since 2010. Tactics, helped Huawei to win customers in the telecom segment, zdes worked only partially. If operators with a Chinese company to work directly, it is not accepted in the corporate segment. It was necessary to build relationships with partners - systems integrators and distributors.

Delegation Huawei managers went to the offices of major Russian integrator. Told that are open for joint business that the company is changing. There were also new products.

"Product line was poor, but adequate. No frills. They themselves recognize that this up, "- says the first deputy general director of" Envision "Alexander Pyavkin.

Telecom operators Huawei also initially offered only base stations, and then "settle in" niches around. It was necessary to capture the market at any price - dumping, wide delivery, good credit conditions. "Now on the quality and range, they will not concede," - recognizes Pyavkin.

Huawei has opened 16 worldwide centers of research and development (R & D), the largest of them in China. Forbes interlocutors who visited there, describe it as "a smalla separate city. " Above research the company employs 70,000 people, about 45% of the company staff. In 2013, the Chinese company has spent $ 5.4 billion on R & D. «If our innovation will not allow us to offer a competitive price, we will not survive. In R & D constantly analyze how to reduce cost and improve quality, "- explains the enormous costs of Wan Biao.

Huawei equipment now stands in "Rosneft", the Pension Fund, "Yandex", "Gazprom". But skepticism about Chinese-made large companies is still present. "We tried to do a project for a major customer for Huawei, - says head of department of telecom" Krok "Natalia Dyakonova. - Approaches and technical conditions, and financial. But the customer still chose Cisco ».

In the spring of 2014 the Russian Huawei representative leadership to call for an appointment two dozen partners. The occasion was the appointment of a new head of Huawei corporate offices in Russia Cao Chong. In March, he was transferred to Moscow from the UK office. That he would have to win the corporate market in Russia.

While Huawei in the role of catch-up. The main driving force for sales in the hardware market - secondary orders. "If the company will supply HP server, it is likely to be close to HP, too. At Huawei is a primary demand, the history of the company short-lived, "- explains Igor Belik, commercial director Treolan, subsidiary integrator" Cheeks ". Aside from his work with Huawei company Russia's largest IT-distributors Merlion and Landata.

Do you have a Chinese company chance to reverse the situation? Huawei Managers continue vigorously to sell their services. "They walk and walk, walk and walk," - says Dyakonov of "Krok". She recalls that Huawei peak of growth in Russia came to the crisis of 2008-2009, when companies cut IT-budgets. According to her, now in Russia are cutting budgets again.

"Western vendors are cutting marketing costs, and these guys are not" - says Belik from Treolan. For example, in the autumn of 2013, when up to the World Cup was a little more than six months, the Russian team was left without a sponsor, technological. Invitation to participate in the financing of SRBtion of the agency "Telesport" received and Huawei. The company has experience in supporting football clubs in Europe, sizing and Russian. During negotiations got in November 2013, agreed in May 2014. Why negotiations were taking so long? The Chinese traded.

"When they sell something, they are very flexible. And when are the customer - well count money, "- says one of the participants.
Support for the national team has managed to Huawei in several million dollars. Sponsorship team needed was to promote Huawei in Russia their mobile devices - smartphones and tablets. This is a relatively new direction for the company, but Huawei has ranked third in the world. "We started out with solutions for operators, and gradually expand its range," - says Wan Biao. According to him, this is one of the advantages of Huawei - the company is trying to be present in every promising field, as competitors tend to concentrate on two or three.

On the hand the Chinese and sanctions. During the visit, the delegation of the Russian Ministry of Communications in China in late August sides Dogsrilis about a broadcast TV channel "Culture" in China, visited the R & D-center of Huawei, signed several agreements. And most importantly - raised the issue of Russia's dependence on American equipment. "US sanctions for its own push us to turn towards China," - explains Forbes source in the Ministry of Communications.

In the Huawei acknowledge that sanctions are beneficial for the company. "But we have to think about business development, quality of equipment and services," - said Wan Biao. Huawei and sanctions to preparing for the next battle for the customer - for six months, the staff has grown to 100 people in Russia.