Building virtual bridges in South African markets(2)

Localization is also an important factor in the subsidiary's growth in South Africa as well as a key strategy of the parent company's overseas expansion.

"No matter whether it is Europe or Africa, we hire locals because they understand the environment and customers' demand and help in effective communication. Most of the local hires are in project positions but some have managed to make it to top management positions like chief operating officer, human resources head, or legal and financial department heads."

Sophia Liu, an integrated marketing communications manager with the subsidiary, said Huawei is one of the best when it comes to looking after local employees.

"As a local, I think Huawei is a very fair company. The conditions are very good. Cultural clashes are not a concern. What is valued is the employees' loyalty and devotion."

Liu worked for South Korea's LG Corp and advertising agencies before joining Huawei five years ago.

To cope with the growing talent shortage in South Africa, Huawei set up a training center in 2008. The center has trained more than 3,000 people, including engineers of carriers and its own employees.

The subsidiary is also taking care of developing the younger generation by creating educational opportunities. The company has provided fellowships to China, donated laboratories for local colleges and funded small and medium-sized enterprises through incubator projects.

"The digital divide here is huge. But if the younger generation can access advanced education through the Internet, they will be exposed to the whole world, which will bring infinite scope for their growth and future," Qi said.

Despite the bright business prospects, the subsidiary continues to face several challenges in South Africa.

"We are already an international company, but the locals still consider us as an Eastern company, which is a big challenge. African people still have a lingering distrust of Eastern companies, mainly caused by the poor quality of products in the past. They transfer the image to technology, though most of our products are more advanced than our rivals," Liu said.

Qi said it is hard to further expand market share in the carrier network area, and competition in the consumer business is fierce.

As for the enterprise business, which the subsidiary started two years ago, established Western companies have an advantage in brands, corporate institutions and sales.

"Huawei has been focusing more on the enterprise business market, which will help increase revenue and transform the company," she said.

Liu said the government, financial, mining and transport sectors will be the mainstay for the enterprise business in South Africa.

Huawei signed a contract worth 485 million rand ($52 million) in April last year to supply a digital radio communications system for passenger trains and associated infrastructure of the Passenger Rail Agency of South Africa. It will be the first time that sub-Saharan Africa deploys the Global System for Mobile communication on railway networks, which span a total of 1,200 kilometers across South Africa.

The Chinese company is also introducing virtual teller machines that will help banks expand their operations in remote areas where bank branches don't exist.

"The virtual teller machines can do 80 percent of bank employees' work and even help with card applications. Machine services can save a lot of costs as rental charges are high and the rand is depreciating," Liu said. "The solutions can be used in South Africa as well as across the continent."