You may not know Ren Zhengfei, but Huawei is very well-known due to its controversy rising among trade conflicts and technology rivalry between China and US.
Born on October 25, 1944 into a rural family where both parents were school teachers, Mr. Ren Zhengfei spent his primary and middle school years in a remote mountainous town in Guizhou Province. In 1963, he studied at the Chongqing Institute of Civil Engineering and Architecture. After graduation, he was employed in the civil engineering industry until 1974. Mr. Ren had taken positions as a Technician, an Engineer, and was lastly promoted as a Deputy Director, which was a professional role equivalent to a Deputy Regimental Chief. Because of his outstanding performance, Mr. Ren was invited to attend the National Science Conference in 1978 and the 12th National Congress of China in 1982. —-edited from Ren’s Huawei official bio
As he was dissatisfied with his job, he decided to establish Huawei with a capital of CNY21,000 in 1987. He became the CEO of Huawei in 1988 and has held the title ever since. Now, Ren’s Huawei has became the biggest 5G infrastructure provider in China and arguable the largest one on the planet.
Recently, the low profile Huawei founder starts to take multiple interviews from media around the world, including US-based CNBC network. Not much political flavoured, Ren answered question from the CNBC host Arjun Kharpal, introducing his anti-confrontational altitude towards world biggest economy.
A condensed version of transcript posted below:
Host: Mr. Ren, you started Huawei over 30 years ago with 5,000 US dollars. What were you thinking at the time and what were your expectations for the company?
Ren Zhengfei (Mr Ren): When I had just started Huawei, we still did not understand China’s reform and opening-up policy. The country wanted to reform and open its doors. However, most of us didn’t really understand how important this decision made by the CPC’s Central Committee was.
At the time, the market economy was beginning to take shape in China, at least in coastal cities. These cities were moving away from the previous planned economy.
I had a vague feeling at the time though, that the communications industry was about to explode and so I started looking for opportunities in this market with tremendous potential. We just wanted to produce some small things that could easily be sold. We did not know that these small things were designed to connect the whole city or even the whole world. So our products needed to be standardized. Otherwise, we wouldn’t be able to enter the network equipment industry. We chose a tough road. The industry had high requirements. Our company was very small then and almost had no capital or technology. It was hard times.
However, there was no way back. I raised a total of over 20,000 RMB (less than 4,200 AUD) to pay the variety of fees needed to start a company. By the time I got my business license, I didn’t have a single penny left. There was no chance for us to step back and start another business. So we gritted our teeth and pushed ahead.
Host: You survived some hardships like famine. What did you learn at the time that helped you start Huawei and guide your philosophy?
Mr. Ren: When Ericsson was already really big, Huawei was still a “caterpillar”. Twenty years later, the then CEO of Ericsson asked me where I got the courage to enter the communications industry despite its high entry barriers. I told him that I didn’t actually know that the barriers were so high, and once we had entered the industry, there was no turning back.
Back then, it would reach minus 20-something degrees Celsius in the winter. We were living in an adobe house that only provided us a little shelter from the wind. Every night, we took turns fueling the stove, because if it went out, we would have frozen. During the day, we were building a highly modernized factory. The contrasts were stark.
For me, it was an exciting experience. Back then, China was still going through the Cultural Revolution. The country paid little attention to technology and knowledge, but we were working on a project that required technology and knowledge. Living in such extremely harsh conditions and working on such a highly modernized project was really a good experience for me.
Host: I want to talk a bit about your management style. You often use military imagery and images of battles in your speeches and communications with the employees at the company. Is this a battle for you?
Mr. Ren: I often talk about staying focused. Tanks can cross a swamp, but needles can pierce hard things through. We have limited resources and technologies. Everything is limited. If we spread things too thin, there is no way we will be successful. So instead, we choose to narrow our focus, like a needle point, on a specific area where we can make breakthroughs. We just focus on a single point. At first, we had several hundred employees focus on this point, then we had several thousand, tens of thousands, and now we have hundreds of thousands. We always focus all of our energy on this same single point. Every year we invest more than 20 billion US dollars in it.
Western companies are no different. Microsoft focuses on Windows and its Office Suite. Amazon, Google, and many others all have their own focus areas. Intel only makes chipsets. Unlike many Chinese companies that set up many businesses but most cannot be called successful, US companies know how to narrow their focus and then charge forward. We are actually learning from US companies.
Why do I like to use military terms? Because they are simple and easy to understand.
Host: What guarantees can you give to customers that their data is safe?
Mr. Ren: We have worked closely with our customers for 30 years. This proves our equipment is secure. Over the next 20 to 30 years, we will never do anything that compromises security and we will remain secure.
Networks belong to our customers, not us. We just provide the equipment used to build these networks. Information that flows through the networks also belongs to our customers, not to us. We don’t need customers’ information. So it would be impossible for us to provide customer information to any third party.
Host: Would you support similar ideas about no-spy agreements in other countries, including the US? Is that the right way forward?
Mr. Ren: I can’t speak for other companies; I have no authority over them, but Huawei will be the first company to comply with this agreement. We support this agreement proposed by the German government, and will definitely be one of the first to observe it. However, we are not in any position to require other companies to do the same.
Host: But what was the personal effect of Meng Wanzhou’s arrest on you as a father?
Mr. Ren: I think my children have grown up without experiencing much hardship. Struggling a bit can be good for them. Cuts and bruises toughen her up, and even since ancient times, heroes were born of hardship. I think this challenge will be good for my daughter. These difficulties will make her stronger and prepare her for even greater things ahead. So I’ll let her face what she is facing.
Host: I want to switch focus a bit to a big bright spot in the company, and that’s the consumer business; it’s a multi-billion-dollar business now. And you’ve said that you want to be number one in smartphones. You’ve often looked up to Apple as a role model. Steve Jobs and Tim Cook have managed to turn Apple to an iconic brand. Do you think Huawei is at that point yet?
Mr. Ren: I think Mr. Jobs was a great man. When he passed away, I was on a vacation in the mountains with my family. My younger daughter is a fan of Mr. Jobs, so she proposed that we stop for a moment of silence to mourn him, and we did. Mr. Jobs was great not because he created Apple, but because he created an era, the mobile Internet era. Saying that he was great is an understatement. I think he was super great.
Apple is also a great company. It is great in that it has always pushed to make the market bigger, not smaller. With an “umbrella”, Apple sells at high prices and maintains high quality. It has grown the market, enabling many other companies to survive. When I look back on how Huawei developed in the telecom market, we actually made some missteps. We set prices based on our costs, which were relatively low. Our costs were low for two reasons. First, as our technology advanced rapidly, we managed to bring down the costs of our products. Second, thanks to the Western management approaches we brought in, our operational costs were also kept low. As a result, we set our prices at a relatively low level, which made it hard for Western companies to compete with us. We have reflected on this a lot.
We have raised our prices and now many people think Huawei is expensive. With higher prices, we have started earning more. But we will not distribute this extra money to our employees or shareholders. Instead, we will use it to fund universities and scientists for their research and explorations into the future. That future may be closely related to our business, but it also may not be.
Our strategy for investment is like this: If a technology is still two billion light years away, we may invest just a little money, like a sesame seed. If a technology is 20,000 kilometers away, we can invest a little more, like an apple. If a technology is just several thousand kilometers away, we will invest a lot more, like a watermelon. If a technology is just five kilometers away, we will invest heavily. We will rush towards and focus all of our efforts on this technology. We will expand it, and dive deeper into it. This way, we will be able to make world-leading products.
Moving forward, we will invest more in this direction. This can help us address the problem of how we distribute our increasing profit. We will not distribute any extra profit to our employees. Otherwise, they will become overweight and won’t be able to move fast. We will not distribute the extra profit to shareholders, either. If they have too much money, they would be obsessed with capital gains. So we won’t do that. We need to make our value distribution reasonable. We will put more money into research in new frontiers.
Host: Mr. Ren, as we come to the end of the conversation, I want to focus on your future. You’ve grown the company over 30 years to the size of it now. Have you thought of retiring any time soon?
Mr. Ren: In a long run, I can tell you clearly that I will retire as I won’t be alive forever but in a short term, it depends on my mental agility as I get older. I think Google might one day come up with a medicine that helps people live forever, but I may not be able to see it coming.—edited from CNBC
Ren will not be alive forever, nor will Huawei. At the edge of 5G era, Ren, the brain behind Huawei’s 5G focus, is nonetheless directing Huawei in shaping the industry standards for global users. We will not know if Nokia or Ericsson may bypass Huawei’s millstone on 5G, but innovations made-in-Huawei should be celebrated as the common treasure of mobile netizens globally.
Edited by Joreal Qian