With great power comes great challenge.
In recent years, as Chinese companies have grown stronger and played a more important role on the world stage, challenges have arisen. The most well-known is that the United States continues to impose sanctions on Chinese companies, especially against Huawei, ZTE, Hikvision, Dahua, Hytera and other companies in the security and communications fields.
Recently, the lawsuit filed by the United States and Motorola against Hytera has once again attracted public attention. On April 8, Hytera announced that it had received an order from the U.S. District Court for the District of Illinois, temporarily prohibiting the company from selling two-way radio technology products worldwide and imposing a fine of US$1 million per day, and prohibiting it from enforcing or relying on the judgment rendered in the Shenzhen Intermediate People's Court. The Order will take effect from 2 April 2024 until the Company fully complies with the Anti-suit Injunction.
In the face of the injunction, Hytera immediately appealed to the U.S. Court of the Seventh Circuit, requesting that the relevant judgment be revoked. In the early morning of April 17, 2024, the Court of Appeal issued an order suspending the implementation of the product ban and fines imposed by the court of first instance on the Company, which took effect immediately. This means that Hytera will immediately resume normal business activities and launch related products. At present, the case is still in the appeal stage, and Hytera will continue to seek to revoke the relevant order.
This incident originated from the copyright infringement lawsuit between Hytera and Motorola in 2017, and has now evolved into the malicious suppression of Hytera by the United States and Motorola.
In the face of extremely unfair and treacherous competitive situation, the core that Chinese enterprises should firmly grasp is not to dance to the rhythm of the other party, but to firmly anchor their core areas and advantages, sweep away obstacles, and keep moving forward.
The "thick snow" that is targeted in the "long slope"
Warren Buffett once said, "Life is like a snowball, the most important thing is to find wet snow and long hillsides." ”
Long slope refers to the field in which the enterprise is located has great development potential or a significant strategic position. Houxue refers to enterprises with high-quality development, which can accelerate growth like a snowball and achieve long-termism.
Many of the Chinese companies that are constrained by other countries in the global market are typical "long-slope and thick-snow" enterprises.
For example, security as an industry to ensure the safety of people's lives and property, has important strategic significance and broad space for development. The security industry in developed countries such as the United States, the United Kingdom and Germany has the characteristics of a high degree of core technology monopoly and concentration of leading enterprises.
In China's security market, the leading companies include Hikvision, Dahua, Huawei, ZTE, etc. The data shows that Hikvision and Dahua are the two companies with the largest market share, of which Hikvision occupies about 30% of the global video surveillance market, the first in global surveillance equipment shipments, and Dahua occupies about 20% of the global IP camera market.
It is precisely because of its leading position in the important security industry that Hikvision is regarded as a "threat object" in competition by the United States, and thus is included in the "trade blacklist".
Similarly, the reason why the United States and Motorola are staring at Hytera is also because of the extreme importance of its field and its own high-quality development.
Founded in 1993, Hytera is headquartered in Shenzhen, and its main business covers the R&D, production, sales and service of special wireless communication equipment such as walkie-talkie terminals and trunking systems.
Dedicated wireless communication is very important for the national economy and people's livelihood, and it is mainly used in public security, fire protection and other departments to protect national public safety and people's lives and property, as well as economic infrastructure such as energy and transportation. According to data from the China Business Industry Research Institute, in 2023, the application of mainland private network communication products in the three major fields of government and public security, public utilities and industry and commerce will account for 56.3%, 31% and 12.7% respectively.
If there is no dedicated wireless communication, it will be very difficult for the public security and fire departments to communicate and command in the daily service and large-scale event support. Petroleum refining enterprises are prone to safety accidents if they do not have reliable explosion-proof communication means.
Therefore, the autonomy and controllability of private wireless communication is particularly critical for national security. China must also have independent enterprises with high-quality development in this field, and Hytera is one of them.
In 2011, Hytera was listed on the Shenzhen Stock Exchange. For more than ten years, it has continuously provided safe and reliable wireless communication services through technology product research and development, channel construction and strategic mergers and acquisitions, and enhanced its competitiveness in the global market. Today, Hytera is the No. 1 private network wireless communication manufacturer in China, second only to Motorola in the global private wireless communication position.
The rise of Hytera on a global scale has also aroused Motorola's alarm. Because it challenges Motorola's market position and breaks the monopoly of private wireless communications. It is difficult for Motorola to make high profits by virtue of its monopoly position as usual.
When interests were touched, friction ensued, and the two parties started an eight-year litigation game.
In 2017, Motorola filed a trade secret infringement and copyright lawsuit against Hytera for DMR series products in the U.S. District Court for the District of Illinois. In the same year, Hytera filed an antitrust lawsuit against Motorola in the U.S. District Court for the District of New Jersey.
In 2020, the District Court of Illinois rejected Motorola's application for a global injunction against Hytera for the DMR products in question.
In 2022, the Federal Court of Australia ruled that half of Motorola's copyright and patent infringement charges against Hytera were dismissed.
In 2023, the Intermediate Court of the Düsseldorf District of Germany ruled in favor of Hytera that Hytera did not constitute patent infringement.
Until this year, Motorola has not given up its attempt to suppress Hytera through legal means.
In fact, in the face of Motorola's accusations and suppression, Hytera has not been afraid, and has always used formal methods to protect its own rights and interests in the past eight years, while also increasing R&D investment, improving product strength, and serving customers well. For example, the H series, which was vigorously developed by Hytera in 2017, adopts a new R&D platform, and has been widely recognized and sought after by customers since its launch in 2021, four years later.
Obviously, Hytera has profoundly grasped the "first principles" while being heavily suppressed.
"People and things" in "first principles"
In today's global business world, "first principles" is popular for strategic thinking and layout. It refers to the enterprise starting from the most basic principles to find out the essence of the problem and the solution.
In the face of malicious suppression and intricacies, what is the essence of what Chinese enterprises need to find out? In fact, it is to target core customers and improve core experience.
1. Aim at core customers
Drucker, a master of management, once said that the purpose of an enterprise is to create customers, and customers are the only benefit center.
Especially for 2B enterprises, the customer is the most important thing. For example, Huawei, which has also been suppressed by the United States, insists on "customer-centricity". In turn, customers continue to support Huawei and gradually emerge from adversity. In 2023, Huawei's B-end ballast business ICT infrastructure achieved sales revenue of 362 billion yuan, a year-on-year increase of 2.3%, and the overall operation returned to normal.
Similarly, Hytera also has high-quality government and industry customers, and has built a good reputation.
In 2023, in the domestic private network market, Hytera has surpassed Motorola and is the company with the highest market share. At the same time, Hytera is also actively exploring the international market, and half of the company's revenue comes from overseas, which also makes its global market share reach 12.6%, making it the most powerful challenger of Motorola.
Throughout the world, Hytera has more than 90 branches, with professionals from more than 40 countries, serving governments and industry users in more than 120 countries and regions.
It is worth mentioning that according to Hytera's third quarter report for 2020~2023, the gross profit margin of its products has been increasing steadily, with 47.3%, 47.5%, 47.96% and 50.26% respectively. To a certain extent, this shows that the added value of Hytera's products continues to increase.
On January 30 this year, Hytera released a performance forecast, stating that the company's traditional products involved in litigation have basically been discontinued, and the H series products are fully replacing the previous generation of products, and are not affected by litigation, and have been fully promoted globally and highly recognized by the market.
For example, more than half of the prefecture-level public security bureaus and emergency response departments in China use Hytera's dedicated wireless communication products and networks. Internationally, Hytera has built nationwide communication networks in more than 20 countries, including Malaysia, the Philippines and the Netherlands. The Olympic Games, World Cup, Asian Games, Universiade and other large-scale international events have also chosen Hytera as their dedicated communication partner.
It can be seen that despite the suppression, Hytera still wins the favor of global users because of its product quality and wins market reputation in the face of adversity.
2. Enhance the core experience
In this era where experience is king, in order to gain a high-quality reputation among customers, it is necessary to enhance the core experience through high-quality products, and also be able to deliver product value to customers more efficiently through the channel network.
CCTV Finance once reported that Hikvision's product line covers network cables, cameras, buildings, etc. There are thousands of cameras alone, and they are updated at a rate of 8 months, which can meet the differentiated and rapid iteration needs of customers.
In addition, Hikvision is also laying out a full range of sales network. Some peers often only cover the sales network to large nodes such as tendering units and system integrators, while Hikvision has spread its channels to computer stores and even contractors all over the township. The dense and stable sales network not only improves the customer experience, but also builds the operational stability of Hikvision.
Similarly, Hytera is also building high-quality products and sales networks, and bursting out with typical "user thinking".
Many enterprises shallowly believe that solving a certain pain point of users from their own position is user thinking. In fact, at a time when thousands of people are facing thousands of people and it is difficult to reconcile with everyone, the user thinking of enterprises must also iterate. Specifically, enterprises should have an all-round and in-depth insight into the needs of customers, and then use comprehensive strength to meet the needs.
For example, one of Hytera's core competitive advantages is its fully converged communication solution capability based on customers' key voice, key data, and key video needs.
Specifically, Hytera is able to provide a full range of dedicated communication equipment such as TETRA and PDT at the same time, and build a complete product layout from narrowband to broadband, from terminal products to system applications, and from key voice to intelligent applications.
In addition, based on years of experience in the dedicated communication industry, Hytera is able to provide an overall solution of "application + platform + network + terminal" close to the usage scenarios of users in various industries.
After creating high-quality products, how to better convey the value of products to customers? The answer is Hytera's multi-level marketing network established around the world. Up to now, Hytera has worked closely with thousands of distributors, integrators and partners around the world, and its sales and service network covers more than 100 countries and regions around the world.
This perfect marketing service network can support the rapid transformation of product solutions and market demand, and realize customer value delivery more quickly and accurately, which has also become one of Hytera's competitive advantages.
But it's not enough to just target your core customers and enhance your core experience. Facing the future, companies need to continue to go through cycles.
How to go through the cycle smoothly?
On the road of growth, the enterprise will not always be calm, but will always fight with the wind and waves.
The Huawei Basic Law mentions that there is an interaction between the four forces of opportunity, talent, technology, and products. Opportunities lead talents, talents lead technology, technology leads products, and products lead more and greater opportunities.
Increasing the traction of these four forces and promoting the virtuous circle between them can continue to drive the growth of enterprises.
Huawei, DJI, Hytera and other suppressed Chinese companies actually have core similarities in talent, technology, and products.
1. Talents
Drucker once said that "an enterprise has only one real resource, talent". Because talent is the fundamental driving force for enterprise development, it can provide a steady stream of innovation. Ren Zhengfei has made it clear that Huawei has no future without talent.
However, many enterprises are too short-sighted in talent construction, only seeking immediate results, and lack long-termism, resulting in chaos in the talent echelon.
In contrast, Huawei focuses more on cultivating talent over a longer period of time, rather than pursuing short-term leadership. In addition, Huawei also uses a multi-channel and multi-level training and development mechanism to help employees open up upward development channels.
Hytera also attaches great importance to a long-term talent training and incentive system. On the one hand, it has laid out a clear employee development channel to achieve a win-win goal of long-term development of employees' careers and enterprises. On the other hand, optimize the sales regional incentive program and promote the reform of the regional incentive program for R&D products.
In addition, Hytera has also expanded its vision to the world, continuously attracting global scientific and technological talents, and its overseas employees account for a quarter.
2. Technology
Technology is the moat of science and technology enterprises, and we must increase the layout efforts, otherwise it is easy to be replaced or even eliminated in the market.
As of December 31, 2022, Hytera has applied for 3,038 patents, including 516 PCTs, and 1,661 patents have been authorized, most of which are mainly invention patents, and have a number of industry-leading core technologies and independent intellectual property rights. In addition, in the 2022 Global Top 100 Enterprises with Invention Patents for Wireless Communication Network Technology, Hytera ranked 74th, and is the No. 1 manufacturer in the field of private network communication in the world.
In addition, since 2012, Hytera has successively purchased four well-known foreign dedicated wireless communication companies, and has a number of professional communication basic research laboratories. In Longgang, Shenzhen, Hytera also has the world's most professional and largest production base for special communication equipment.
On March 27 this year, Hytera was shortlisted for 10 awards in the ICCA Global Impact Annual Awards released by TCCA, a world-renowned industry organization, including multi-mode terminals, solutions, and best applications. This is the year in which Hytera has been shortlisted for the most awards, which is also a reflection of Hytera's continuous innovation.
With continuous innovation and professional technology, Hytera not only provides safe and reliable products for more than 50% of China's private network users, but also provides high-quality products for private network users around the world.
3. Products
The product is the foundation of the enterprise, and in order to continue to go through the cycle, it is necessary to let the product cover more users horizontally, and continue to respond quickly and iterate vertically.
Huawei, DJI, and Hytera all have international R&D platforms, such as Hytera's R&D centers in Shenzhen, Bad Münde in Germany, Zaragoza in Spain, and Vancouver in Canada, which enable its products to understand and meet the differentiated needs of users around the world and cover more users.
In addition, on the basis of R&D, Huawei, DJI, and Hytera all have the ability to iterate products quickly. For example, DJI's efficient organizational structure and team allow it to quickly capture changes in market demand and drive product iterations.
△ Image source: Huawei's official website
Under the interaction of talents, technology and product strength, although Chinese companies such as Huawei, DJI, and Hytera suffered setbacks for a while, the overall business layout is still stable. As long as the fundamentals remain stable, they can continue to pass through the cycle.
It can be said that going through the cycle will be a long-term battle. For Chinese companies moving forward on the world stage, the most important thing is to return to themselves, target their core customers, and improve their product and service experience, and the future is still worth looking forward to.