China's Footprint on Nigeria's Telecommunications Market
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JHMS Vol. 4, No. 1, June 2018 Odeh & Olalekan China’s Footprint on Nigeria’s Telecommunications Market: A Case of Huawei Technologies since 2000 Lemuel Ekedegwa Odeha & Akinade, Muideen Olalekan Abstract The marked presence of Huawei in the Nigerian telecommunications market cannot be ignored in recent times. The Chinese private telecoms company has made an inroad into the Nigerian telecommunications market since 2000. In fact, it has been able through its telecommunications technology and expertise to expand its market tentacle in Nigeria vis-à-vis its products and services such as, cloud computing, smartphones and fiber optics network. This study takes a historical survey of Huawei’s impact on the growth and development of Nigeria’s telecommunications market. The study adopted a multidisciplinary approach of historical research and the findings of the work revealed that Huawei has to a very large extent contributed to the enhancement of Digital Divide in Nigeria through ICT education and training programmes. It also revealed that poor power generation, multiple taxation among many others are major challenges faced in Nigeria. The work concludes that the government should invest more in the provision of telecoms infrastructure in the country so as to aid more investment from Huawei. Huawei should not also limit its CSR operation on a specific area in Nigeria but rather spread it across the country. Huawei should also be encouraged to further engage more in technological transfer to Nigerians through its training programmes. Introduction The fact that Nigeria has become a beautiful bride for Chinese investors is an open secret. It’s bountiful but largely untapped natural resources; large domestic market of over 170 million, a growing middle-class with spending power and an increasingly stable polity, among others, have become irresistible to china and its investors.1 Although formal diplomatic relation dated back to 1971, however, the economic aCorresponding Author: Department of History & International Studies, University of Ilorin, Ilorin Ilorin, Kwara State, [email protected] 71 JHMS Vol. 4, No. 1, June 2018 Odeh & Olalekan relation has witnessed phenomenal increase since the return of democracy in Nigeria in 1999.2 As a matter of fact, China-Nigeria relations span through such areas as oil and gas, trade, manufacturing and telecommunications. In recent time, the growing involvement of giant Chinese telecommunications companies in Nigeria’s telecoms market has attracted scholarly attention. One of such is Huawei Technologies, a Chinese private, hi-tech company headquartered in Zhengen, China. It is from this background that this paper focusses on the impact of Huawei Technologies in Nigeria’s telecommunications market. There is no gainsaying the fact that, recent advances in telecommunications technology have been an important vehicle in permitting information exchange to develop as a valuable commodity. Countries and sectors equipped with the requisite telecommunications systems have been rapidly moving into post-industrial, information-based economy growth. For the developing world, a modern telecommunications infrastructure is not only essential for domestic economic growth, but a prerequisite for participation in increasingly competitive world markets and for attracting new investments.3 It is in realization of the above significance that the efforts of Nigerian Telecommunications Limited (NITEL) to develop solid telecommunication in Nigeria functioned well into the 1980’s, but internal brick walls of challenges and the sporadic demand of the digital age posed threats to the survival of indigenous telecommunication industry.4 It is important to know that the advent of global system for mobile communication GSM in the year 2001 during the Obasanjo led administration opened the flood gate for foreign investments in the Nigerian telecommunication sector. Moreover, such sectors like construction, mining among others also witnessed a wholesale importation of Chinese multinational companies.5 In order to fill this “Digital Divide”, the Nigerian government over the years have sought the involvement of highly technologically developed countries like China through its telecommunication companies to fill the telecommunication bottlenecks of the country. One of such Chinese company that responded to this demand was Huawei.6 It is necessary to note that Huawei entered the Nigerian telecommunications market in the year 2000, the Nigerian telecommunications market is one of the fastest growing in sub Saharan Africa as a result of its large market 72 JHMS Vol. 4, No. 1, June 2018 Odeh & Olalekan size and the ever increasing demand for mobile phones and ICT Information and Communications Technology. This must have been one of the major drive of Huawei’s investment in Nigeria. It is remarkable to know that Huawei has contributed immensely to the growth and development of Nigeria’s telecommunications since its emergence in Nigeria through its huge investment in ICT training, telecommunications equipment, broadband computing among many others.7 There is no doubt that, telecommunications is both dynamic and capital intensive and in view of its catalytic effect on the development of other sectors of the economy such as agriculture, health, tourism and education and its necessity for the commercial, industrial, socio-economic and political development of the country, the need for an orderly and efficient development of telecommunications infrastructure in Nigeria has now been found more urgent in order to keep pace with the development of the other sectors of the economy.8 Finally, the thrust of this paper focuses on the History of Huawei, its internationalization or entry mode into Nigeria’s domestic economy as well as its impact and implication for telecommunications development in Nigeria. Brief History of Huawei Technologies Huawei Technologies Company Limited is a Chinese multinational networking and telecommunication equipment and services company headquartered in Shenzhen, Guangdong, China.9 It is the largest telecommunication equipment manufacturer in the world, having overtaken Ericson in 2012.10 Huawei was founded in 1987 by Ren ZhengFei, a former engineer in People’s Liberation Army. At the time of its establishment, Huawei was focused on manufacturing phone switches, but has since expanded its business to include building telecommunication networks, providing operational and consulting services and equipment to enterprises inside and outside of China, manufacturing communications devices for the consumer market.11 Huawei has over 170,000 employees as of September 2015, around 76,000 of whom are engaged in research and development.12 It has 24 R&D institutes in countries including China, United States, Canada, United Kingdom, Pakistan, France, Belgium, Germany, and Turkey, and in 2013 invested US $5Billion in R&D, increased to $6.4 bn 2014.In 2014, Huawei recorded profit of 34.2 billion CNY (5.5 billion USD).13 Its products and services have deployed in more than 140 73 JHMS Vol. 4, No. 1, June 2018 Odeh & Olalekan countries and it currently serves 45 of the world, 50 largest telecommunication operators. It has invested at least 10% of annual sale volume in new product research and development.14 Huawei’s contracted sales in 2005 reached USD 8.2 billion, of which 58% came from international markets. Overseas sales have been doubling each year for the past five consecutive years. Huawei has provided products and services for over 300 telecommunication carriers around the world. It has achieved outstanding growth over 17 years since its foundation. Huawei has won the leading position in the global market in the areas of 3G, next generation network (NGN), switching, XDSL, optical network and data communication.15 Huawei is organized around three core business segments namely telecommunication carrier networks, building telecommunication network and services; Enterprise Business, providing equipment software and services to enterprise customers e.g. government; solutions and Devices, manufacturing electronic communication devices16. Telecomm Networks Carriers Huawei offers a variety of network technologies and solutions to help telecommunications operators expand the capacity of their mobile broadband networks. Huawei’s core network solutions offer mobile and fixed soft switches, plus next- generation home location register and internet protocol multimedia subsystems (IMS). Huawei assists content service providers looking to migrate from copper to fiber with solutions that supports XDSL, Passive Optical Network (PON) and next- generation PON (NG PON) on a single platform. The company also offers mobile infrastructure, broadband access provider routers and switches (SPRS). Huawei’s software products include service delivery platforms (SDPS) BSSs, Rich Communication suite and digital home and mobile office solutions. Enterprise Business Huawei announced its enterprise business in January, 2011 to provide network infrastructure, fixed and wireless communication data center and cloud computing solution for global telecommunications customers. Some of Huawei’s enterprise business products includes of recent; - Fusion sphere 74 JHMS Vol. 4, No. 1, June 2018 Odeh & Olalekan - Fusion insight - Fusion stage - Software defined Network etc. Manufacturing Electronic Communication Devices Huawei’s devices division provides white label products to content service providers including USB modems, wireless modem and wireless routers for mobile