MIT Sloan Management Review Article on How to Compete Against the New Breed of National Champions

Going up against the latest wave of state-supported competitors requires a new playbook for Western companies.

On March 12, 2018, the U.S. government blocked Broadcom Inc.’s proposed merger with Qualcomm Inc. on the grounds of national security. The presumption was that the merger of the two chipmakers would have resulted in a third company, China’s Huawei Technologies Co. Ltd., gaining a dominant position in the market for 5G mobile network technologies. Huawei is a “national champion” — a company that is heavily subsidized (either implicitly or explicitly) or, in some cases, owned by a government — and the U.S. government is concerned that its growth could provide the Chinese government with undue access to and control over U.S. communication networks.

While the threat posed by national champions is nothing new, their essential character has substantially changed, and the competitive advantage of national champions in the global marketplace has become more pronounced. Today’s national champions are much more sophisticated, competing in more industries, and harder to spot than ever before. As a result, Western companies need a new strategic guide for competing against them.