HUAWEI vs. ERICSSON
CATCHING-UP
WITH ‘SIMILAR OR DIFFERENT’
TECHNOLOGIES?:
KEUN LEE
(WITH C. OH, S. JOO)
Huawei = China’s No 1 IT Company
established in 1987 by Ren Zhengfei
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Market Catch-up: Annual Sales of Ericsson and Huawei
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Previous Studies
•
Research on Huawei’s Success
– Chinese Company’s IPR Strategy: How Huawei Technologies Succeeded in
Dominating Overseas Market by (Nakai & Tanaka, 2010)
– Huawei Technologies competing in an international market
(Drs.vanden Hoogen, 2010)
– How can Chinese companies go global successfully (Arthur Yeung,2005-CEIBS)
– Internationalization of Chinese firms:
A case study of Huawei Technologies Ltd.(Wei huang,2006-Nottingham Univ)
– Management of R&D within a Dynamic Standardization Environment
(Keith Dickson, Fang Fang ,2008)
This study: detailed analysis of catch-up strategy
using patent data
cf) Joo & Lee (2009): Samsung vs. Sony
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Our focus: catching up by Similar or different technologies:
imitation or innovation
• ‘Similar’ technologies” = latecomer attempts to imitate the incumbents,
• ‘different’ technologies: latecomer to create new technologies and take
a different technological path or trajectory .
• Literature:
1) The literature, such as Lall (2000), Kim (1980), Westphal, Kim, and Dahlman
(1985), and Hobday (1995):
-Latecomers tried to catch up by assimilating more-or-less obsolete technology
from the advanced economies
2) Lee and Lim (2001) and Lee (2013), is that the latecomer does not simply follow
the advanced countries’ path of technological development; rather they sometimes
skip certain stages or even create their own path .
=> no studies have quantitatively analyzed whether a latecomer firm catch up
with forerunners using on the same or different technologies,
• no method for such analysis, except Joo and Lee (2009)
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Using EPO patent Data
• Patents of Huawei and Ericsson(European patents granted by
from 2000 to 2010) and related citations.
• Specifically, we analyzed the patents filed and registered at the
European Patent Office (EPO) from the PATSTAT database. to
investigate when and how Huawei caught up with Ericsson in
terms of quantity and quality of patents.
• Patents filed by Huawei and Ericsson to various national
authorities were collected from PATSTAT Database, which is
constructed by European Patent Office. The patents were
recognized according to their application year, considering time
of invention.
• We analyzed the number of registered patents to analyze its
technological catch-up in quantity terms, and conducted a patent
citation analysis to analyze the catch-up in quality terms.
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Making Sense of the Comparison
(Technological Proximity)
• The technological proximity between the two firms
• suggested by Jaffe (1986)
• The technological proximity between two firms, i & j, is defined as
:
• Technological proximity is measured as a value between 0 and 1.
• The higher the value is, the more identical the two firms are in te
chnological specialization, and vice versa.
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Making Sense of the Comparison (Technological Proximity)
• Technological proximity of Huawei and Ericsson at IPC subclass
level stands at 0.912.
• (cf.) The technological proximity between Samsung and Sony, two
major competitors in the global electronics industry were 0.98
(Joo & Lee, 2010).
• On this ground, it can be said that an analysis of Huawei and
Ericsson at the technological level is very meaningful.
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The catch-up phenomenon 1:
from technology to sales catch-up
● Huawei’s Market Catch-up with Ericsson
- Sales : From 2013
● Huawei’s Technological Catch-up with Ericsson
- patent Quantity : From 2008
- patent Quality : From early 2000
catch-up in technologies preceded the market
catchup in sales;
Technologies = basis for market catch up
cf) same pattern :
Samsung vs. Sony (Joo & Lee 2009)
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Catch-Up in Terms of the Quantity of Patent
Number of Patent Filings by Country and Year
Company CTRY
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Total
Huawei
EP
3
28
37
62
85
219
563
647
627
90
3
2364
Ericsson
EP
871
766
606
431
521
523
618
658
378
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2
5390
1000
900
Number of Patents
800
700
600
500
Huawei
400
Ericsson
300
200
100
0
2000
2001
2002
2003
2004
2005
Year
2006
2007
2008
2009
2010
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Research Question 1:
Catching up by Similar or different technologies?
Answer with 4 criteria
1) Patent quality
2) Independence: self –citations
3) Mutual dependence: mutual citations
4) Common citation ratio = indirect dependence
• By comparing a pair including the case of
overtaking (completed catch-up) only,
not case of some rise of the latecomers;
=> very few cases, thus not sample cases but
universe in each sector
eg) Samsung vs Sony; Hyundai Motors vs. Mitsubish,
Hyundai Shipbuilding vs. Mitusbish Shipbuilding
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1 Quality of Patents: Average number of citations received:
All patents in PATSTAT
EP patents only
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cf) Samsung vs. Sony: Quality of patents
Sony
Samsung
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2 Independence: Self Citation Ratio
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Cf) Samsung vs. Sony: self-citations
Self-Citation Ratio
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3. Mutual reliance: Share of citations directed to the
counterpart firm’s patents
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Cf) Samsung vs SONY
(3) Technological Dependence
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4. Technological Overlap between Huawei and Ericsson:
common citation ratio = indirect dependence each other
Importance of those common (78) patents in Ericsson ‘s patents
+ importance of those patents in Huawei ‘s patenting
=> (91/(4484+91)) + (87/(3360+87)) = 0.020 + 0.025 = 0.045
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1) Knowledge sourcing : There are commonly cited patents (C) by both
Ericsson and Huaweil
Importance of those patents in Ericsson ‘s patents
+ importance of those patents in Huawei ‘s patenting
Citations made to C by Ericsson (e)
Citations made to C by Huawei (h)
=( e/ total citation by Ericsson) + (h/total citation by Huawei)
= 0.045
2) Knowledge supplying side: There are the patents commonly cited by both
Ericsson & Huawei;
=> then do the similar calculation as the above; 0.026
3) Two-side sum = 0.071
Very low => a) Huawei and Ericsson do not share the same knowledge sources;
b) their knowledge, supplied to or applied by different technologies
cf) High in Samsung vs Sony = 0.36 + 0.32 = 0.68
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Research Question 2:
whether Huawei relies more on recent (or old) technologies
than the incumbents = latter’s citation lags,
One may reason that the latecomer would try to rely less on old technologies
protected by patents of the incumbents.
 citation pattern will be more toward recent patents. = average cycle time of
their patent portfolio would be shorter
Cf) Park and Lee (2006) or Lee (2013), : latecomers tend to specialize in shortcycle technology based sectors.
While that literature is concerned with across-sector specialization, we explore
a twisted question of whether a latecomer firm’s patent portfolio would show
the shorter average cycle time than that of incumbents in the same sector
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Cf) Samsung vs. Sony: citation lags
Backward Citation Lag
Forward Citation Lag
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Research Q3: Reliance on Science (to avoid patent dispute):
Citation to Non-Patent Literature
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Summary & Conclusion 1
Interesting sequence:
Technological catch-up preceded market catch-up
=> Tech. Capability is the fundamentals in Catch-up
Catch-up
In
Sales
Quantitative
Technological Catch-up
Qualitative
Technological Catch-up
2000
2008
2010
2012
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cf) Same Sequence in Samsung vs Sony
• Technological Capability is
the fundamentals of Catch-up
Catch-up
In
Sales
Catch-up
In
Market Value
Quantity:
catch-up
Quality of
patents
1990
2000
2002
2004
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Summary & Conclusion 2
1) In the case of successfully completed catch-up, the
latecomer eventually created its own unique path,
different from the incumbents
-- transition from imitation to innovation
(catch-up paradox: you will never ‘catch up’
if you just keep ‘catching-up’;
2) relied on more recent technologies than the incumbent
(maybe only true in short cycle tech. based sectors)
3) It also relied more on science than patented technologies:
(less constrained by IPRs by incumbents)
Cf) Similar story in Samsung, with slight difference
(eg; indirect dependence)
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