October 20, 2020
Jiang Xisheng: This is your first time visiting us, so please ask any questions you have. I will answer them to the best of my knowledge. Huawei was founded in 1987 and I joined the company in 1989, so I'm a bit of an old hand here.
01 Björn Djurberg, China Correspondent, Sveriges Radio: Thank you for taking the time to speak with me today. I've wanted to come here for a while now, but couldn't before because of the pandemic. I know that you have given some interviews, introducing how Huawei is an employee-owned company. But some countries outside China still believe Huawei's ties with the Chinese government and Communist Party are too close. What do you think of this? Why do you think people feel this way?
Jiang Xisheng: I have no idea why they think this. Huawei has many shareholding employees. There aren't many other companies out there that can say they have more than 110,000 shareholding employees. Over the years, we have gone around the world to learn from others about how they run employee-owned companies and their governance models. Some family businesses in Europe share more of their stocks with employees. But there is only one company that distributes all its shares to employees, the John Lewis Partnership in the UK. It has tens of thousands of employees, who own the entire company. There aren't really any other similar examples. So, I think people are just not that familiar with this kind of company, and they wonder who would let their employees own the entire company.
First, the founders of this kind of company have to envision this model from the beginning, and be willing to share the benefits with others.
Second, this is one of the key factors that attributed to Huawei's success. Employee-owned companies are different from other companies in many respects. Shareholders of companies outside China, shareholders of state-owned companies in China, and shareholders of publicly listed companies, they might be more focused on profits and short-term business targets. They are often not comfortable with the uncertainty that comes with long-term investment.
Huawei is an employee-owned company. Our employees know the company best and are most confident in the company. They know the company's departments and business well, so they have the confidence to invest in the company over the long term. That's why Huawei has been able to invest this much money into R&D for so many years.
02 Björn Djurberg: As far as I know, these concerns are related to the Communist Party. What do you think of these concerns?
Jiang Xisheng: The reasons for their concerns outside may first be because there aren't many other examples of such large employee-owned companies. So it is natural to have doubts.
Second, Huawei is a company that developed within China, and there are many questions about China's development.
But people must recognize that Huawei is not the only company that grew during this time. Across the board, every aspect of China has developed rapidly. You must have seen this since you've been in China for so long.
I'm from a small county in Jiangxi Province. Over the National Holiday, I went back there and was able to see just how much that remote area has changed and developed. The villages too, not just the main town.
China is changing a lot, not just Huawei or the industry we work in.
03 Björn Djurberg: Mr. Jiang, are you a party member?
Jiang Xisheng: I'm not.
Björn Djurberg: How many party members are there on your board?
Jiang Xisheng: There aren't many. As part of our governance process, electing representatives of shareholding employees or board directors doesn't take party membership into account. This isn't something we consider, so there is no need to point out whether or not they're a party member.
Björn Djurberg: But it's still a fact.
Jiang Xisheng: Sure. People sometimes get asked if they're a party member. Some say they are and some say they aren't. At Huawei, party identity has nothing to do with the election process or corporate operations. Huawei has a party committee because Chinese law requires it, and other large companies in China – foreign companies, joint ventures, private businesses, and state-owned enterprises – all of these have to have their own party committees. At private companies like Huawei, however, the party committee isn't involved in our operations or business decisions. What you see in Huawei's organizational structure is how we really work.
04 Björn Djurberg: How many party committees or groups or branches does Huawei have? It must all be different.
Jiang Xisheng: We do have a party committee because it's required by law. As the Chief Secretary of the Board of Directors, my job is to support the operations of the Board and the Shareholders' Meeting, including their operating mechanisms and routine work. In our business decision system, the party committee doesn't have a role at all. Allegations that the party committee is involved in Huawei's day-to-day operations are wrong. By law, the party committee's main job is to educate employees on occupational ethics and integrity.
05 Björn Djurberg: How does that kind of education relate to your company?
Jiang Xisheng: It helps by increasing legal literacy and calling on everyone – including party members – to comply with the law. This is important.
06 Björn Djurberg: President Xi Jinping said, "East, west, south, north, and center, the Party leads everything." Mr. Ren Zhengfei is a party member. Based on what President Xi said, where do companies fit into all of this?
Jiang Xisheng: There are many types of companies in China. State-owned, listed, wholly foreign-owned, or, like Huawei, private. At private companies, funds come from the private sector, and there isn't any foreign or state capital in the company. All companies have to comply with China's Company Law. This is a crucial requirement.
The Party may keep a tight rein on state-owned enterprises. We don't know much about how these enterprises work. When we started in 1987 until the early 2000s, many state-owned enterprises competed with Huawei for market share. Later, many of these enterprises disappeared from the scene. Some of them are very small now, like Datang Telecom.
Björn Djurberg: Is Huawei a private company?
Jiang Xisheng: Huawei is a leading private company. Its ability to independently decide its management strategies and operations gives it advantages in things like ingenuity and innovation.
Excessive control usually backfires. People may wonder how Huawei became what it is today. It's because it operates independently and effectively.
07 Björn Djurberg: As far as I understand, private enterprises in China are also directed and led by the Party. Is that correct?
Jiang Xisheng: I'm not in a position to answer that question from a political standpoint, but from a business perspective, I can assure you that Huawei's operations are free from interference of any kind. No one can interfere with our investment decisions, business directions, product strategies, or market strategies. We make decisions independently. Neither Huawei's party committee nor any external party committees can interfere or give orders. This is because experts are the ones most capable of giving useful instructions when it comes to product development or strategic planning. These insights could never be given by any unrelated organization or individual outside.
08 Björn Djurberg: Mr. Ren Zhengfei and some other members of the Board of Directors are party members. Though the Party's goals are usually consistent with Huawei's, what if they aren't? How would they make decisions? Whose goals would they align with?
Jiang Xisheng: First and foremost, fulfilling the responsibilities of the Board is the only role of our board members. People have different roles. For example, I can be a father as well as a corporate decision maker. When I make decisions for the company, I don't act as a father. Likewise, if a board member happens to be a party member, they make decisions as a board member. Their party membership does not influence board decisions. It doesn't work that way. Board decisions are only made by board members.
Björn Djurberg: Don't you think this is exactly where some foreigners' doubts stem from?
Jiang Xisheng: These doubts are groundless. It's a very complicated issue, but we are trying to help people understand it. That's why we invited you to see our ESOP Room. You can tour around and confirm everything I've said. You may have read some articles about us and thought that was how we operate. I can tell you that's not true.
Back to your question about the Party. Huawei adopts an operating mechanism where the Representatives' Commission, the Board of Directors, the Supervisory Board, and the Executive Committee of the Board of Directors decide on, manage, and oversee the company's daily operations and strategic matters. In addition, there are checks and balances in place for these bodies.
We are now exploring new ways of corporate governance beyond the Chinese approach. The US approach of introducing independent directors is also failing. Why? The fall of many US companies is a testament that the US approach is also problematic. For example, Enron and WorldCom went bankrupt around 2002 and many others vanished during the 2009 financial crisis. Many Chinese companies also have governance problems. What kind of governance approach should Huawei adopt for its long-term strategy? This is something we are exploring right now, and we are looking at some of the European models.
Recently we've been looking at Germany's supervisory board systems. In China, supervisory boards are relatively nominal and weak in terms of their power over the Board of Directors. Supervisory boards in Germany do pretty good. We are looking at how we can learn from them. The German model is at odds with the Chinese one, but we are still looking into it.
09 Björn Djurberg: Have you read last month's Opinions on Strengthening the United Front Work of Private Economy in the New Era that the Chinese government issued?
Jiang Xisheng: I haven't read it. I don't think this document has much to do with us, or at least, not with our daily business operations. The term "united front" reminds me of older movies about the War of Resistance when Japan invaded, or the Civil War, when everyone had to come together to fight a common enemy.
I haven't read this document, but from what I hear about, I do wonder why China would need to build another unified front. Private enterprises right now act independently. A united front of private enterprise means that even though the organizations remain independent, there is still a need for everyone to work together. During the War of Resistance, it was the Nationalist Party, the Communist Party, and other political cliques that came together.
I think the government releasing this document today is a call for collaboration with the private sector. It is actually an acknowledgement of just how independent private enterprises are within China's legal system.
10 Björn Djurberg: There were a few points that stood out in the Opinions I think. Like the requirement for people in the private sector to raise their political awareness, to follow the Party's platform more closely, to listen to party guidance, and to become more politically savvy. The document also demands private economic entities toe the party line and more to this effect...
Jiang Xisheng: I don't know that much about it. My understanding is that Chinese people are all required to receive patriotic education. No matter where you work, in this country, you have to study these teachings. This is number one.
Number two, we must obey the law.
Number three, we have to act ethically.
All businessmen must abide by the law and have morals. I think in a sense, this includes loving your country. Other than that, I'm not really sure.
Björn Djurberg: So when you hear these requirements, you think of patriotism?
Jiang Xisheng: Yes. My understanding is they are about loving your country, complying with the law, and acting ethically.
Björn Djurberg: So, the Party's Opinions say that private enterprises should listen to their guidance, but you are saying this is asking people to just love their country?
Jiang Xisheng: Yes.
Björn Djurberg: I think there is a slight difference.
Jiang Xisheng: I don't know, because I don't understand it that much. This is just what it looks like to me.
11 Björn Djurberg: Do you think the Chinese market has been politicized?
Jiang Xisheng: I don't think so. I think some other countries have politicized 5G, and this is clearly seen in some media and reports that have been released. This isn't happening in China, but you can see it in some other countries.
12 Björn Djurberg: With regards to party organizations, what is the actual role of the party organization at Huawei?
Jiang Xisheng: It has no role when it comes to daily decision making and management at Huawei. I'm not a party member, but some of my colleagues are. Every once in a while they will tell me they are going to watch a movie and I'll ask which one. The party organization gives out tickets for movies that it feels are patriotic or educational. Sometimes, it will sponsor a self-reflection session, where you can drink a cup of coffee, and reflect on how we and others are doing. This is the only influence I see. There are no other roles.
13 Björn Djurberg: According to Chinese law, every company that operates within China must have its own party organization. Mr. Ren is a party member. Therefore, how is Huawei different from other companies like Ericsson?
Jiang Xisheng: You mean in terms of the party organization?
Björn Djurberg: In terms of management.
Jiang Xisheng: That's a great question. You are from Sweden, and Ericsson is a Swedish company. In our industry, companies compete, but also learn a lot from one another. Huawei learned a lot from Ericsson back in 2015, and even earlier. Ericsson excels in many areas of management, including quality management, operations management, and fine-grained management, so Huawei has learned a lot from Ericsson in this regard. Now, many companies are also learning from Huawei. Companies learn from each other and engage in healthy competition, which is conducive to the development of our industry.
14 Björn Djurberg: Do people outside China believe that the Party has no involvement in Huawei's management?
Jiang Xisheng: Believe it or not, it's a fact that the Party has no involvement in Huawei's management. I think some people understand and believe this, but others still have doubts. In this regard, it may help if they better understand China's current situation. Huawei must also better explain its operations. The videos you just watched are all based on facts. As the Chief Secretary of the Board of Directors, I take notes after every BOD meeting and develop records that will stand up to later scrutiny.
One of my most basic responsibilities is recording all the facts, including details of whatever decisions are made and who was or was not involved during discussions or when making certain decisions. To help clarify the doubts some people have, we have made a number of videos that show how Huawei operates. These videos are not edited to look good, but they are all true. I have a responsibility to explain exactly how Huawei operates.
I think people will gradually come to understand better. Fact is fact. In China we say that "Facts speak louder than words." I believe people will gradually come to understand and accept the facts about Huawei.
Many China academics have also started researching this area. They have found that government involvement in private business is much less common in the coastal areas of eastern or southern China, like Guangdong, Zhejiang, and Jiangsu. This is exactly why private companies in these areas have been able to flourish.
A professor in Zhejiang province conducted a study in Wenzhou to identify the factors that contributed to the development of local private companies. He concluded that their success was mainly due to less government interference. But does this mean that there is less government interference in the operations of private companies across China? The answer may not be as simple as a resounding yes.
In some parts of northern China, things can be slightly different. Some companies in that region rely on government assistance for growth, rather than improving their own capabilities. That's actually exactly why they eventually hit critical mass. However, no law requires companies to rely on government assistance, and only a very small number of private companies in a few parts of China do this.
Generally speaking, private companies in developed areas have grown because there is little government interference. This is true in the case of Huawei and the vast majority of private companies in China.
15 Björn Djurberg: I see. Some people outside China say that though the Chinese government doesn't want to interfere in Huawei's business, if requested by the government or the Party, Huawei would have no choice but to obey. Do you agree with this statement?
Jiang Xisheng: Absolutely not. Firstly, China is becoming more market-oriented and is ruled by law. Everyone in China must comply with the law, no matter what they do.
Secondly, no one in China is allowed to arbitrarily interfere with any independent organization or individual. This is what we call private property protection. Those who don't own shares in an organization are not entitled to participate in the organization's governance. Therefore, as long as we are a law-abiding company, we have nothing to fear.
Thirdly, being a globalized company, Huawei abides by the laws of China as well as all of the other countries and regions where it operates. We must comply with local laws of countries and regions where we operate and provide products and services. If Chinese laws conflict with laws from other countries and regions, then we prioritize the laws that are local to where we are doing business. This has been key to Huawei's robust business performance in the face of a complex international environment. Huawei is committed to complying with the laws and regulations wherever it operates.
16 Björn Djurberg: China's 2017 National Intelligence Law has generated a lot of debate.
Jiang Xisheng: I've heard these arguments, but most of them essentially boil down to misunderstandings. The intelligence law passed in China is similar to laws passed in many other countries, including the US and Australia. This type of legislation is in no way unique to China.
Secondly, the National Intelligence Law doesn't authorize the government to require Huawei to act illegitimately.
Thirdly, Huawei will never violate the local laws of countries and regions where we do business. We won't do anything that hurts local interests or violates the law.
17 Björn Djurberg: You just mentioned Europe's situation. Currently, some European countries don't want Huawei in their 5G networks. What do you think of Huawei's situation in Europe? It seems that Europe is becoming hostile to Huawei.
Jiang Xisheng: I don't think it is. Europe is an open and tolerant region, and is not biased against Huawei. I have every reason to believe this due to my years of engagement in Europe. Throughout history, Europe has been open and willing to share.
Huawei respects everyone's opinions when exchanging management ideas. It's quite normal that different people have different opinions, but we shouldn't politicize things from an economic, technological, or developmental perspective. In the long run, politicization will only harm the entire society. I think the Cold War is a very obvious example of this from the past few decades.
The rapid development we've seen around the world in recent decades was only possible because the politicization so prevalent during the Cold War era came to an end. Politicization only makes things complicated. Conflicts, such as ethnic conflicts and border disputes, exist everywhere, even within the European continent, whether they are driven by historical grievances, psychological factors, religious differences, or any number of other factors. It is hard to tell who's right or wrong in these conflicts, and takes a long time and an open mind to deal with.
We must reject politicization of technological issues. Things will get clearer as long as they are not politicized. For example, cyber security is fundamentally a technological issue, rather than a political one. Does the fact that Huawei comes from China necessarily mean it is insecure? Huawei has maintained a proven track record in cyber security over the past 30-plus years, and no country or organization has found any cyber security issues related to Huawei.
18 Björn Djurberg: Do you think it's unfair?
Jiang Xisheng: Whether it's fair or not, it's incorrect to say that Huawei's network is unsafe just because its parent company is in China. We need to look at the facts. Huawei's equipment has been in many countries' networks for 30 years, and it has served more than one-third of the world's population.
Björn Djurberg: You're right. For 30 years, no one has discovered any security issues, but there are still concerns.
Jiang Xisheng: Yes, this is the first issue, but we also have to look at the second issue from a technical rather than a political perspective. Doubts still exist and some people believe rumors. For example, in Europe, there are rumors that 5G base stations are spreading COVID-19, so people started burning down base stations... (Björn Djurberg: In the UK) This is what rumors are like. So we need to look at how the rumors are being spread and what is powering them. If it is a rumor driven by politics, like the rumor that Huawei's networks are unsafe, there will be an impact.
Björn Djurberg: What if it's not a rumor?
Jiang Xisheng: If it was true, Huawei wouldn't exist or have grown like it has.
19 Björn Djurberg: Some European countries like the UK, France, and Germany might not allow Huawei to participate in their 5G. Is it something you agree with?
Jiang Xisheng: It's not like that. There are some concerns and restrictions on Huawei in these countries, but, we are still participating in their 4G or 5G operations.
20 Björn Djurberg: In this situation, what's Huawei's strategy? Will you still stay in Europe?
Jiang Xisheng: Huawei will do all that it can to serve our customers. We will spare no effort to serve the customers who still trust us. It doesn't matter if some customers have doubts. We will continue to communicate with them. Some customers may say, "Not right now". That's okay. We will still serve those customers who have chosen us. This way, we can build better networks and become more competitive. This can still benefit Huawei's growth.
In addition, we are also able to do something good for the world this way. Helping carriers develop better 5G networks and services will have local impacts. 5G, AI, and digitization are vital for future development. This has been most clear during the fight against COVID-19. Networks allow people to work from home and fight against the virus. They not only keep people safe but also keep society in working order, and allow businesses to grow. Due to the limited bandwidth and speed of 4G networks, many countries restricted bandwidth during the pandemic. It's better now since networks have continued to develop. 5G, intelligent, and digital technologies and products will play a greater role in the future, both in fighting COVID-19 and in economic development.
21 Björn Djurberg: Videos say that Ren Zhengfei can veto some issues. What are those issues?
Jiang Xisheng: Our veto power was inspired by the UK's monarchy. Often, we need a braking mechanism. If some bad decisions are made, they can be pushed aside and rejected. That's why we adopted the veto power from constitutional monarchies in Europe. Constitutional monarchy has its advantages. It seems that many kings don't have any real power, but they are still influential. We turned this kind of power into the veto, rather than giving people power to make decisions directly. Mr. Ren's veto power is mainly applicable to company decisions pertaining to capital. For example, whether capital should be increased and by how much. This veto power also extends to selecting new members of the board directors. Beyond these areas, it has little relevance.
Björn Djurberg: He has this power.
Jiang Xisheng: The veto power, the power to object.
Björn Djurberg: What you just said makes him sound like a "king". He's the "king" of Huawei, right?
Jiang Xisheng: It's not like that. The idea of veto power is just taken from the perspective of a monarchy and the ruling system of the British Queen. It doesn't mean that Mr. Ren is the king. We don't mean that, and Huawei does not have a system like this. We have a saying that the main power lies in the Board of Directors or in the Board of Directors Executive Committee, and that this power should be supervised. This is also learned from the UK's political system. The UK had a system reform advocating the "Rule of Law" and "Crown-in-Parliament". These concepts have been developed since the days of the Magna Carta, and we have learned to draw from them.
22 Björn Djurberg: As for labor unions, my understanding is that labor unions in China are managed by the Party. Is Huawei's labor union the same?
Jiang Xisheng: Huawei's labor union is not directly related to its party committee.
Björn Djurberg: In other Chinese companies they are always related.
Jiang Xisheng: I don't know what it's like in other companies, but they are not directly related in Huawei. They are just two separate organizations. That's my first point.
Second, the role of the labor union in Huawei is quite simple and has no influence on business. Its main role is to solve problems for employees, like if employees have potential labor disputes, the union will help them. For example, if an employee is fired inexplicably, or the employee has complaints about the company and feels discriminated against when he leaves, then it is the union's responsibility to intervene.
In addition, if an employee with limited economic means falls ill, the union may organize a collection or some subsidies to help them.
Third, the main responsibility of the labor union is to organize staff activities. The union has a fund to organize various activities for employees, like the Volleyball Association, Basketball Association, and Badminton Association. I play badminton, but I didn't join the association, because I'm not good enough. But we can always participate in our department's badminton activities, which the union also sponsors. This is the main purpose of our labor union.
23 Björn Djurberg: The US election. Do you think the result will have anything to do with Huawei? Will it have an impact on Huawei?
Jiang Xisheng: We aren't really following it. It's impossible to predict the outcome, and we don't really care about it. The most important thing is to focus on our business – products, technologies, and surviving and developing under pressure. This is what we really need to focus on. As for everything else, we neither can nor should get involved. So we haven't given it much thought.
Björn Djurberg: Thank you.