Introduction
Businesses’ internationalization strategies are essential to their success and market domination in the fiercely competitive global technology sector (Yaprak, Yosun and Cetindamar, 2018; Panibratov and Klishevich, 2020). With an emphasis on their exports, outsourcing, and foreign direct investment (FDI) operations, this article discusses and contrasts the internationalization strategies of two well-known technology companies, Apple Inc. and Huawei Technologies. According to UNCTAD (2021), Apple and Huawei have pursued distinct internationalization strategies based on critical factors such as technological and ownership advantages, geographic reach, and company size. Apple has utilized its cutting-edge patented innovation in consumer electronics and iconic brand property to pursue an internationalization strategy that includes high-value-added FDI and exports. Huawei has implemented integrated localized strategies in international markets, heavily relying on collaborations and absorptive capacity due to constraints associated with proprietary technology that is vulnerable to export regulations imposed by the United States.
Literature Review
Eclectic paradigm
The OLI framework, commonly referred to as the eclectic paradigm, has gained prominence as a theoretical model for examining the global growth strategy of multinational corporations (MNEs) in several areas, including the technology industry (Batschauer da Cruz, Eliete Floriani and Amal, 2020). The paradigm was developed by Dunning (1980, 1988). It states that for MNEs to offset the higher operational expenses associated with doing business abroad, they must have ownership (O) advantages in proprietary technology, branding, or other intangible assets. Additionally, location (L) benefits of the host nations’ technology resources, innovation ecosystems, and favourable institutions must be harnessed through FDI designs targeted to maximize local responsiveness and integration (Knoerich, 2019). Finally, internalization (I) incentives must exist to promote in-house value chain activities overseas over licensing innovations or assets to foreign partners (Wagner, 2019). This framework’s relevance has been supported by empirical investigations such as McWilliam et al. (2019) conducted in advanced, emerging, and developing host economies.
Product life theory
Vernon’s (1966) product life cycle (PLC) theory offers significant contributions to the understanding of how innovations’ internationalization strategies develop gradually in marketplaces that are becoming more interconnected (Ren et al., 2019). According to the theory, numerous technological goods and services undergo their first phases of development and launch in developed domestic economies, where the necessary scientific and engineering ecosystems prosper, before embarking on a series of international expansions. As the focused innovation grows and becomes more standardized, scale-intensive production and cost factors push movement to offshore export platforms and locations. At the same time, home countries focus on next-generation innovation. The PLC’s evolving value-chain alignment and geographic structure affect technology multinationals’ global FDI, exporting, outsourcing, and R&D decisions (Ren et al., 2019). Despite being criticized as deterministic, the PLC model shows how technology, goods, manufacturing processes, and appropriate locational nodes in MNE global networks must constantly evolve.
Foreign Direct Investment (FDI)
Much research has been done on the intricate incentives and factors behind foreign direct investment (FDI) in the fiercely competitive global technology market. According to Rafat and Farahani (2019), companies such as Apple, Google, and Huawei set up overseas subsidiaries to maintain ownership advantages in proprietary technologies and take advantage of host country assets. In particular, market-seeking incentives to modify goods and services greatly boost FDI aimed at large international consumer markets. Furthermore, discussions on asset-augmenting investments underscore the rising strategic intent to access internationally dispersed technological ecosystems and talent pools through overseas laboratories and R&D facilities, as demonstrated in Silicon Valley companies’ growth into regions like Israel, Singapore, and China (Wang and Jiayu, 2019).
Outsourcing
Global value chains have become more fragmented, and offshore outsourcing has increased in high-technology sectors due to the fast development of information and communication technologies (Charles and Ochieng, 2023). Global sourcing networks have significantly transformed the internationalization strategies of technology companies, as Munjal, Requejo and Kundu (2019) explain, by providing cost savings, flexibility, and around-the-clock production. Interestingly, original equipment manufacturers focus their proprietary activities at home bases and outsource significant amounts of the low-value-added output to foreign contract manufacturers in nations like China and Taiwan. Nonetheless, current studies show that increased high-value IT services and R&D are being outsourced to places like India due to rising countries’ access to global talent pools (Choi et al., 2017; Aamer, 2018). Technology companies actively use global innovation networks to accelerate product development, obtain localized user input, and shape worldwide standards through modularization.
Empirical Analysis.
Apple inc.
Apple Inc., founded in 1976 by Steve Jobs and Steve Wozniak, has become the world’s most valuable publicly listed business (over US$2 trillion market value) through pioneering consumer technology advancements in personal computers, media players, smartphones, tablets, and wearables (GlobalData, 2022). According to Teece (2018), Apple’s success has been fueled by innovative proprietary hardware and software, vertical integration that improves user-centric designs, and lifestyle branding magic. Apple uses unrivalled scale efficiencies in R&D and dedication from network effects to dominate the premium technology category, accounting for approximately 60% of worldwide smartphone earnings (Teece, 2018). However, in the face of fiercer rivalry, Apple is growing its services and supply chain flexibility while boosting global brand loyalty with new, culturally relevant goods.
Apple utilizes its distinctive design thinking, branding, and exclusive invention strengths to manage an extraordinarily prosperous global manufacturing network that includes foreign direct investment, outsourcing, and exports (Mallik and DM, 2023). Significant foreign direct investment has been invested in Apple to construct centralized R&D headquarters and regional distribution hubs closer groups as a result of emphasis on technology and human resources (Merenda, Li and Irwin, 2019). Meanwhile, Apple intentionally allocates labour-intensive high-volume production in China-based factories controlled by contract manufacturers like Foxconn while focusing its operations on key capabilities like product research (Mallik and DM, 2023). Exports, therefore, represent Apple’s principal internationalization vector since flagship iPhones, iPads, and Macs are sold internationally from outsourced Asian manufacturing platforms, with China notably accounting for over 90 per cent of Apple’s output now. By fine-slicing the value chain, Apple can focus on knowledge-intensive operations with the most substantial factor advantages and outsource scale-intensive production to flexible overseas networks.
As the world’s most significant information technology business by revenue, Apple has the worldwide power and vast resources to absorb the expenses of foreign growth that smaller companies cannot afford. Merenda, Li and Irwin (2019) contend that Apple’s manufacturing networks spread throughout every continent, are so large and global that they serve as a barrier to competition. However, geographic distance and cultural unfamiliarity offer early challenges. Apple has addressed this by establishing international market footholds through exports and licensing deals before pursuing full-fledged operations in crucial regions such As Europe and China (Igwe and Kanyembo, 2019). Furthermore, according to international product life cycle theory, Apple deliberately schedules market entrance sequences and product localizations based on nations’ infrastructural preparedness and demographic acceptance patterns.
Huawei Technologies Co., Ltd
Huawei Technologies, established in 1987 by Ren Zhengfei and headquartered in Shenzhen, China, has experienced substantial expansion in recent years to become the leading provider of telecommunications equipment worldwide and the second-largest smartphone brand in revenue. The company has achieved remarkable success with a workforce exceeding 195,000 employees worldwide (Huawei Technologies Co., Ltd, 2024). Sustained R&D intensity fostering rapid new product development, an employee stock ownership scheme ensuring consistently high performance, and an integrated global value chain catering to customized local market needs have all contributed to Huawei’s meteoric rise. However, recent US sanctions barring sophisticated semiconductor suppliers highlight Huawei’s strategic weaknesses as local and international competition intensifies (Tang, 2020). Huawei must regain technology self-reliance to navigate rising geopolitical concerns.
Huawei has embraced an integrated globalization road spanning both developed and emerging markets, departing from Western multinational corporations’ selective global manufacturing networks. Huawei has made a solid effort to build locally tailored end-to-end operations across borders in R&D, manufacturing, marketing, and services, heavily depending on greenfield FPIs and M&As. However, Huawei relies more on absorptive capacity, adaptive innovation, and consumer response resulting from interdependencies with its native Chinese ecosystem, missing the cutting-edge patented technology of rivals. While insourcing more outstanding value-added capabilities in-house, Huawei has significantly outsourced lower-end production to cost-effective partners, notably during its early international development (Yang et al., 2022). The global R&D labs and university partnerships run by Huawei are also motivated by the need to maintain technological catch-up.
Huawei, which is considerably smaller than its Western counterparts, has utilized its strategic freedom, which stems from its inception in an emerging country, to expand internationally at a rapid rate, unhindered by path dependencies (Tsang and Fuschi, 2020). In particular, Huawei has strategically leveraged cultural and language advantages to establish market dominance throughout Confucian Asia and larger China before undertaking a three-decade globalization initiative encompassing Europe, Africa, and Latin America. Huawei has effectively adjusted its entrance strategy and localization efforts to account for institutional gaps across increasingly geographically distant developed and underdeveloped national contexts as it has progressed (Fan, 2006). Nonetheless, due to its modest size, Huawei has had to form close collaborations with other countries to get vital expertise and legitimacy before size-scaled benefits in branding and R&D allowed for fully-owned FDI along the value chain (Tsang and Fuschi, 2020).
Comparative analysis
While Apple uses unique technology advances to organize chosen global production networks focused on high-value-added operations, Huawei has targeted comprehensive localization across host nations across the whole value chain, lacking Apple’s core skills. This discrepancy in global strategic paths is exacerbated by divergent home country institutional settings, as seen by Apple’s offshore outsourcing dominating exports from China against Huawei’s China-centric approach gaining state backing (Deng, Zou and Mao, 2018). Locational contexts and internalization incentives have ultimately tempered the relative effect of ownership advantages and firm size for these American and Chinese flagships in the face of rising global competition.
While both Apple and Huawei establish foreign subsidiaries to capitalize on locational advantages for distribution and research and development, a significant distinction can be observed in the level of high value-added production outsourced by Apple’s owned facilities as opposed to Huawei’s more extensive reliance on outsourcing (Minxue and Bi, 2023). Additionally, differences emerge regarding exports: Huawei initially strengthened its home position before venturing into foreign markets, whereas Apple’s initial China-centric manufacturing plan was mainly driven by exports (Deng, Zou and Mao, 2018). However, similarities in the strategic use of partnerships can be seen in how Apple and Huawei first rely on local partnerships to enter unfamiliar foreign markets before FDI. As a result, while the methods and configurations differ, FDI and outsourcing work together to help technology firms balance global integration with local response.
Despite the greater geographic and cultural distance across the targeted developed markets, Apple’s differentiation primarily derives from proprietary technological innovations and strong branding that constitute ownership advantages that allow for more selective foreign value chain configuration (Foldy, 2022). On the other hand, Huawei uses its comprehensive localized response to institutional anomalies and better flexibility as a smaller company free of path dependencies to make up for technological shortcomings. Huawei also leverages its cultural closeness in China and Asia (Jia, 2020). Both, however, are optimizing their production networks to strike a balance between cross-locational intellectual property risks and cost efficiency, and they are also making use of global knowledge resources through international R&D to supplement their assets. As a result, setups differ, but necessity is usually the driving force behind global expansion in pursuing knowledge and technological advancement.
The vast manufacturing networks of Apple and Huawei support global integration narratives, but they also show how country disparities affect multinationals’ overseas entrance tactics and value chain arrangements. Both use locational endowments, institutional gaps, and cultural familiarity to adapt methods, refuting that geopolitical and societal boundaries no longer matter.
Conclusion
This comparative research shows how the host site contexts and the firm-specific capabilities and origins of the home nation influence the distinct global paths that Apple and Huawei are pursuing. However, both demonstrate flexibility in using ownership advantages to enter international markets chosen by local partnerships and value chain alignment strategies. As competition intensifies in China and other countries, how these tech giants react to new political winds and quickly evolving consumer technologies will determine who dominates the world and how competitive each country is in the strategic technology arena. In the end, multinational companies must find a balance between global integration and local responsiveness to get around in our complicated, interconnected world.
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