February 18, 2019
Huawei's founder Ren Zhengfei sat down for an interview with the BBC Asia's Tech Titans. The following is the full transcript (Ren's parts of the transcript were translated from Huawei's recording of the interview):
BBC correspondent: This is an opportunity for the world to understand your position. These are a lot of misconceptions about Huawei right now around the world. And the BBC and myself, we want to understand your point of view. This is really that chance and that opportunity. We are very grateful to get that opportunity. So I will be pitching questions to you that the whole world wants to know about Huawei. I want you to know that I will be fair and I am very grateful for this opportunity.
Ren: It's my pleasure to answer your questions. I feel as though the eyes of the whole world are on Huawei, and I am grateful to the US government for this. Huawei is a small company. We are not very well-known. But now many senior US government officials are lobbying around the world, saying that Huawei is an important company that has problems. They are drawing the attention of the whole world to Huawei. People begin to know Huawei and will understand with a deeper look that Huawei is a good company. We have rapidly growing sales, and the sales volume of our device business grows 50% on average every month. Therefore, we thank the US government for advertising Huawei.
Correspondent: It is my responsibility to ask you the questions that the world has. Some of them might sound difficult, but my desire is to understand your position and I want you to feel comfortable in this conversation.
Ren: As we are talking freely, I may give some humorous answers to your questions, so I only hope you and the audience will understand my humorous touch sometimes.
Q1: Thank you very much, Mr. Ren, for joining us. I wanted to start by asking you a little bit about your company. You have built this company in just 30 years. It's a remarkable achievement, but I want to understand: What are some of the challenges you faced when you first began?
Ren: I founded Huawei when China began to implement its reform and opening-up policy. Deng Xiaoping believed that the Chinese military was too large and needed to be significantly downsized. Hundreds of thousands of soldiers, if not more than a million, were released from the military and sought employment in civilian life.
At that time, China was shifting from a planned economy to a market economy. Not only people like myself, but even the most senior government officials, did not have the vaguest idea of what a market economy was. Deng Xiaoping advocated the theory of "crossing the river by feeling the stones on riverbed". The fact is, if something goes wrong when you are in the river, you might drown. When China shifted to a market economy, we had no idea of what a market was or what to do. It seemed it was hard to survive.
I am an ambitious man. After leaving the military, I came to Shenzhen. The city pioneers open market practices and is probably the most open market in China. When I was in the military, I just did exactly what I was ordered to do. However, when I began to work in a market economy and engage in transactions of products, I felt at a loss. I suffered from unfairness and deception. I stumbled, but had to rise up again, because I had to raise my family. I then thought of the possibility of starting a small business. The registered capital was roughly CNY21,000, which is about 2,000 pounds. Not all the money came from my pocket. The compensation I received upon leaving the military was only about one-fifth of this amount, so I pooled funds from different people and founded Huawei.
These times brought us to the path we are on right now.
By taking this path, our aim was to work for survival, rather than for ideals. Back then, we didn't have any ideals, because we were finding it so difficult to survive as a company. My portion of the registered capital was less than half of the monthly salary a waitress can earn today. How could we possibly have ideals then? Our priority was to survive.
Q2: You have painted a picture of great difficulty and hardship that you have gone through, but today Huawei is a top telecoms equipment seller in the world. How did you do this?
Ren: After founding Huawei, I did research on what exactly a market economy was all about. I read many books on laws, including those about European and US laws. At that time, there were very few books on Chinese laws, and I had to read those on European and US laws.
I figured out that the market economy was about two things: the customer and the product. And the law governs what's in between – the transaction. We obviously couldn't control our customers, so we had to get hold of the products. I had worked in research. Therefore, we began to do research on products, building products and selling them to customers.
Q3: What is your next goal for Huawei now that you have seen so much success?
Ren: When I founded Huawei, the communication industry was at the start of enormous changes in the 30 years that followed – changes as massive as if mankind had gone through thousands of years in that period of three decades. Back then, we didn't really have any telephones [in China]. The only phones we had were those hand-cranked phones that you see in old World War II films. We were pretty undeveloped back then.
Huawei started out by making simple equipment for rural markets. Instead of spending the money we'd earned, we invested it back into our business, making more advanced equipment. It was a time when China was in great needs for industrial development, and our equipment, though certainly not the best, still had market appeal. If we were to start Huawei now I don't know if we could succeed. As time went on, we came to realize that we might just be able to succeed, so we focused all of our effort on what we were doing at the time.
If someone can maintain focus on one thing, then they will definitely succeed. I was focused on communications technology. If I had focused on raising pigs, I might have become a pig expert. If I had focused on making tofu, I might have become the king of tofu.
Unfortunately, I chose communications. This industry is very challenging. The bar is too high. Ericsson's CEO once asked me, "The situation in China back then was so difficult. Where did you find the courage to enter such a demanding industry?" I told him that we did this without really understanding just how high the barrier to entry was. But we started anyway, and there was no way to back off, because if we pulled out then we wouldn't have anything. I had spent all the 21,000 RMB of initial investment, and would have ended up begging on the streets. So we had to keep forging ahead, one step at a time.
We had a very limited amount of strength, so we narrowed our focus to a tiny area, and that's where we chose to strike. Pushing forward little by little, we began to see success. It builds up over time. It's an effective approach, what I call our needle-point strategy. We just focus on a single point, and we've been focusing on that point for 30 years now. From several hundred employees, to several thousand, to tens of thousands, and now with 180,000 people. We put all of our energy behind one single point: information and communications technology.
Every year we invest 15 to 20 billion US dollars in R&D. Huawei is one of the top 5 companies in the world for R&D investment. This focused approach to investment has helped us succeed.
Why have we succeeded while other companies find it difficult? Publicly listed companies have to pay a lot of attention to their balance sheets. They can't invest too much, otherwise profits will drop and so will their share prices. At Huawei, we fight for our ideals. We know that if we fertilize the "soil" it will become more bountiful, and in the end the land still belongs to us, so we should not hand out the "fertilizers". So we invest, and we invest more heavily than others. That's how we've managed to pull ahead and succeed.
It's different for listed companies. We are not a public company, so we don't have to worry about fluctuations in our balance sheets. If we were a public company, being stuck in a storm of public opinion like today would certainly see our stock price plummet. But we don't really feel it. We just keep pressing forward.
We believe that our consistent focus over the past couple of decades is what paved the way for our success.
Q4: Thank you. That was interesting. But your success, according to what you've described, is now under threat, isn't it? The United States has launched an attack that's targeted your company. The Department of Justice has put forward charges saying that Huawei stole technology from an American company. Do you think that's fair?
Ren: To start with, what are our ideals for the next three decades, or even longer? To provide people with information services. In the next 20 to 30 years, we will see a great technological revolution. The emergence of AI will make the information society intelligent. In the era of cloud and AI, we will see explosive growth in data, bursting forth like a tsunami. This data needs the support of the most advanced connection and computing equipment possible.
I don't think 5G or any other form of data transmission has truly met the pinnacle of people's needs. And I believe there are still more profound needs that must be addressed. Right now human society is only in the early phases of the massive change that lies ahead. And Huawei is only at the starting line of this transformative journey. We still have a long way to go before we can deliver faster, more real-time, more accurate, and more affordable information services.
Over the past three decades, Huawei has helped to bridge the digital divide by providing information services to 3 billion people in more than 170 countries and regions. With affordable ICT services, underprivileged kids living in remote regions can see what the world is like outside, and they can grow better to become the "backbone" of society. Huawei's role is to provide services that make the world a better place.
I think the charges and accusations by the US against Huawei should be handled by the law. I trust the US is an open and transparent country governed by the rule of law, so they should handle these matters through legal procedures. Sometimes I feel happy [about what the US is doing to Huawei]. The US is the world's most powerful country. Their senior officials are talking about Huawei wherever they go, including in places where Huawei has not yet launched any ad campaigns and the locals don't know about us. Because of this, people all over the world now know Huawei. Huawei is now at the center of global discussion. This is a massive and cheap advertisement for us. When people ultimately realize Huawei is a good company, our sales might be even easier. We don't have difficulties today, and we may have a more favorable environment to sell our products in the future.
I'm not feeling much indignation about the accusations made by the US. These are ongoing legal cases. Just let the law take its due course.
Q5: I appreciate that. But I read through some of these charges the DOJ has put against you. The evidence is very compelling. The emails that are there show that Huawei's employees in China asked for specific prototypes from their colleagues in the United States, repeatedly. How are you going to deny this?
Ren: Now that the US Department of Justice has filed the indictment, let's leave it to the court to decide.
Q6: I understand, and I appreciate that it's a legal procedure, but the world really wants to understand it. The US is trying to paint you as a company that cannot be trusted. It says you've stolen technology from American companies, not the first time. It says companies like Cisco, Nortel, and Motorola, they all accused Huawei of stealing their ideas, stealing their technology. The United States is trying to say Huawei can't be trusted. What do you have to say about that?
Ren: Many of our technologies, not just our 5G, optical switching, and optical chips, are far ahead of those of Western companies. We have a huge number of leading technologies and those technologies are really complicated, some of which only our peers can really understand. The charges that the US has made against Huawei are fairly marginal. Huawei did not become what it is today by "stealing" US technology. How could we steal a technology from the US that they don't even have? People need to focus on more than just Huawei's problems and weaknesses; they need to also see Huawei's contributions to humanity. Huawei now owns over 80,000 patents. Huawei has contributed to the foundation of a digital society. In other worlds, part of the foundation of the digital society is built by Huawei.
In the US alone, we have obtained more than 11,000 patents. These are our legitimate rights granted by the US law. We have offered many services to people around the world, and we are becoming more open. We have submitted more than 54,000 proposals to standards organizations. We consider these a contribution to humanity and this contribution deserves to be recognized. Other problems should be solved according to the law.
Q7: So why do you think the US is trying to paint Huawei as a company that cannot be trusted?
Ren: There is virtually no Huawei equipment deployed in the US. Has this solved the US's cyber security issue? If yes, then other countries can also solve this issue by not having Huawei. Sacrificing one company is worth it if it is for the sake of the world. But the truth is that the US has not solved their information security issue. How could they share their experience with other countries? If they say, "We don't use Huawei equipment, but we still have an information security issue," could that argument convince Europe not to use Huawei equipment? Huawei has been serving three billion people in over 170 countries for over 30 years. There is no record of security breaches with Huawei. What is the factual basis for the US's charges? Our customers have experienced our networks over the past two to three decades, and consumers have the ability to make their own choices. We still have to rely on the law to solve this problem and the court will come to a conclusion.
Q8: The US is pressuring its allies. It says, "We don't use Huawei's equipment". It's telling the world not to use Huawei equipment, because it says Huawei's equipment could be used to spy for China. Is this true?
Ren: Over the past 30 years, many customers have chosen not to use Huawei equipment. This is not something that has started happening recently. It is understandable that some countries have decided not to use our equipment. As for the charges that our equipment may contain backdoors, as I stated in the interviews from the Wall Street Journal and other international media outlets, we have never installed backdoors in our equipment or engaged in any spying activities. We will not accept any request to do so. If there was such a request, I would rather disband the company.
On February 16, 2019, Yang Jiechi, a member of the Political Bureau of the Communist Party of China (CPC) Central Committee and Director of the Office of the Foreign Affairs Commission of the CPC Central Committee, said at the Munich Security Conference that the Chinese law doesn't require companies to install backdoors. He added that the Chinese government requires all companies to abide by international laws and the laws of the United Nations, and stressed that operational compliance is a must for all companies in countries where they operate. The Chinese government has also officially stated that they have never required companies to install backdoors. I have personally promised and the company as a whole has promised that there is no backdoor in our equipment. Our 30-year track record also proves that our equipment does not contain backdoors.
I don't really understand what the US has in mind. If European companies use Huawei equipment, then the US would be unable to access their data because they wouldn't be able to get in. Europe has also required their data not to be transferred out of the region, so the US won't be able to get in, because our equipment contains no backdoors and the US won't be able to get into European networks.
Q9: You say that you have never been asked by the Chinese government to create this backdoor, and that you would shut the company down if you were asked. It's a very big company. You have 180,000 people. If it comes down to the question of survival between your company and perhaps not creating a backdoor, but just giving access to the Chinese government, what would you do in that situation?
Ren: Top officials of the Chinese government have clearly stated that the government has never required companies to install backdoors. Huawei will not do it either. Our sales revenue is hundreds of billions of US dollars, and if we installed backdoors, it would cause our customers all over the world to dislike Huawei, and we would have no business at all. Without business, how would we repay our bank loans then? We cannot take that risk. When I said "disbanding the company", I want to show our determination. I want to show you that we will never do such a thing or hand over any information to the government.
Q10: I understand, and I think some of the confusion or the misconceptions out there about Huawei are because of your links to the Chinese military and the Chinese Communist Party. You enjoy special privileges that perhaps some government employees enjoy. You have a Communist Party Committee inside your company. That raises lots of questions about how close Huawei is to the Chinese government. Why do you have this party committee within your company? Why do you need it and what does it do?
Ren: Huawei is registered in China, so we must comply with all applicable laws and regulations in China. We need to pay taxes to the Chinese government, create jobs, and fulfill our social responsibilities, such as contributing to local communities. In fact, before we established a party organization, the Chinese branches of Motorola, IBM, and Coca Cola had already established theirs. This is a requirement of the Chinese law, and we operate in accordance with law. The role of this committee is to unite employees and encourage them to work harder and build their wealth, as this is in the interests of the countries, their people, and the employees themselves. Employees earn money from their work, so this is in their own interests. They also pay taxes, so this is in the interests of the countries. The party organization at Huawei only educates its employees; it is not involved in any business decisions.
According to Chinese law, all companies in China, including Chinese and foreign companies, must establish a party organization, and we must all obey the law. Just like British citizens who love Britain, the Chinese also love China. The British support their ruling party. If they don't, why would they vote for it? If you vote for the ruling party, then you support the ruling party. In China, the ruling party is the Communist Party, so we also support the party. Only when every person loves their country and supports their ruling party can a country advance. Voters outside China have the right to express their opinions. Chinese netizens are now doing this, too. Our country is making reforms, which is understandable.
Q11: But Mr. Ren, with all due respect, China is not the United Kingdom. This is a country where people routinely are arrested; they disappear. The Chinese Communist Party has ultimate control over everything here. It even has control over your courts of law. What assurance can you give people watching this program that, if the Communist Party were to ask you to provide them with a backdoor or to give them access to your information, you could say no?
Ren: I don't know whether there are such incidents in China, but nobody at Huawei has disappeared for no reason. We are a company, and never get involved in politics. We gain our customers' trust by working hard and doing every job to the best of our ability. We have never, and will never, take or receive bribes. I have told the Western media that we will never install backdoors. The official media of the Chinese government has also announced that they will never require Chinese companies to do so. Nobody has made such a request to me. This shows that China believes that companies should serve society and the whole world; they cannot break international rules if they want to go global.
Since no such incident has ever happened and we have no experience ourselves, I cannot answer this question.
Q12: With what seem like inconsistencies to the West – the fact that you have had links to the military, the fact that there is a Chinese Communist Party committee in your firm, the fact that China is a one-party state – can you see how difficult it is for many people around the world to believe that you are free of influence from the Chinese Communist Party?
Ren: The Communist Party of China is leading the reform and opening-up of the country. If this meeting took place 30 years ago, it would have been very dangerous for me. Today, I can receive your interview and be straightforward when answering your acute questions. This shows that China has a more open political environment. Of course, our country will become more open and there will be more social changes.
Thirty or forty years ago, I did not have the chance to study in the West, while many of my friends studied in the US and Canada. This is because I served in the military, had no ID card, and thus had no right to do so. Therefore, I missed that great timing to study abroad. After returning to China, my friends told me what a supermarket was. Back then, I didn't have any idea of what a supermarket was. You could image how superficial my understanding of a market economy was. Now China has changed greatly. At least our economic system is pretty close to those of Western countries.
I was a very low-ranking officer in the People's Liberation Army. After leaving the army, I had no connection or interaction with it. I was not a high-ranking officer as the US described. I served in an ordinary civil construction project. I began as a technician of a company in the military, and then I became an engineer. As I performed well, I then became a deputy director of a small research institute with just twenty plus people. That's actually a title equivalent to a deputy-regimental level, and the highest military ranking I have ever received. My dream back then was to reach the military rank of Lieutenant-Colonel before China cut down on its military forces. Unfortunately, I didn't realize that dream, leaving me as a veteran without a military rank, and without any connections to the military.
So please don't think that Huawei becomes what it is today because we have special connections. We have seen companies that were 100% state-owned but still failed. Huawei has become what it is today because of our hard work. Of course, during this process, we have learned from Western philosophies, cultures, and management practices. So when you visit Huawei, you may feel it is more like a Western company, rather than a Chinese one.
Q13: You mentioned that you have no connections to the military. Our research has shown that when your daughter Meng Wanzhou was traveling through Canada, she was reportedly traveling with a passport that is usually issued to state-owned enterprise employees or government employees. Further to that, our research has also shown that your chairwoman, previously to this, Madam Sun Yafang, had worked at one point in her career with the Ministry of State Security, the intelligence services here in China. Can you help me understand why you say you have no links or connections to the military?
Ren: First, regarding Meng Wanzhou's passports: China went through a long period of reform. Originally, China did not issue personal passports. Ordinary people held "ordinary passports for public affairs" and government workers held "official passports". As China became more open, personal passports were issued. We travel overseas frequently and our passports fill up with stamps. Once all the pages are stamped, we need to apply for a new one. I may have more passports than Wanzhou, because I need to renew my passport whenever all pages are used up. So altogether, I have had many pages with stamps. I don't know what the legal procedure is to reveal how many passports Wanzhou has held. I myself have many passports. This is because when all the pages are fully stamped, the passport is considered expired and you can keep it. After they cut off a corner from the cover of the expired passport, some country visas on it may still be valid. However, one person can only have one valid passport.
As for Sun Yafang, we have published her profile on the website. Our company has 180,000 employees. They come from a variety of backgrounds. We cannot say that only people with a spotless record as elementary school students can be employed. Our employees come from all different places. We need to assess their behavior, not where they are from. Otherwise, how would it be possible for us to access and hire this many employees? Therefore, you should check her profile on our website. I don't think it's okay to suspect or guess where this person used to be. Are those guys who have returned from the US spies for the US? Definitely not. We have recruited many Chinese graduates from the US.
Q14: I see. I just want to go to a point about Chinese law. I know you have addressed Chinese law, and that the government has given you assurances that you are not bound by some of the articles in Chinese law. But a lot of people have asked that, given the fact that these laws require all individuals and organizations to assist in intelligence gathering, how could you refuse, if asked by the Chinese government, to assist in intelligence gathering? Do you have a choice? Can you refuse?
Ren: You need to ask the Ministry of Justice about this question. I cannot answer questions about Chinese laws. What I can tell you is that we would never do such a thing. We have never done it before. We aren't doing it today. We won't do it tomorrow. Our company is shouldering a great responsibility of bringing the world into the information society. In our process of becoming a world leader, we need to lead by setting consistent rules and standards, so we could not do this kind of thing. Personally, I am resolutely against the behavior. My subordinates and successors wouldn't do such a thing. This is my answer to this question.
Many countries may choose not to believe us or work with us. However, in this large world, there are still many countries that welcome us. We have already won 30 5G contracts and shipped over 30,000 5G base stations. People are increasingly aware of our advanced products and are more willing to accept us. Let the facts speak for themselves. We cannot depend on speculation, as speculation is not the law and accusations are not court decisions.
Q15: So, are you saying that, if countries keep raising these sorts of security concerns about you, you will not want to go and do business with them, and you will not enter their markets?
Ren: No. We can understand their concerns. If they are concerned for the time being, we can hold off and wait until their worries have been addressed. We don't want to make trouble for other governments.
The UK also has had concerns about us, but this doesn't affect our investment in the country. We just bought 500 acres of land in Cambridge County to build an optical chip plant. We are leading the world on optical chips. This plant aims to export optical chips to many other countries. Our plant in the UK will receive oversight from the UK. Why can't we sell the chips that have gone through the UK oversight to other Western countries? This way, we don't need to produce these in China. The chips manufactured in China can be sold to China and some other countries that accept Chinese chips. Therefore, our investment in the UK is quite heavy. I am not saying that if you doubt us, we will not invest in your country. These are two different things. We may not operate in your market, but it won't influence our efforts to deploy strategic resources in a reasonable manner. Sooner or later, people will know that we are honest people.
Q16: The UK government, as I'm sure you know, has said that it can work around or mitigate the risks that they found in your technology. But that doesn't mean it can't still ban Huawei, in the UK, from 5G. What would you do if the UK decided to ban Huawei all together? Would you pull your investment out of the UK? Would you cut jobs over there?
Ren: The UK has been a very friendly place for us. In recent years, we have had a very good partnership with the UK government. We established our security evaluation centre in the UK and volunteered to show all information to the UK government. The UK knows that we have gaps in our software engineering over the past three decades. That is because our software architecture is not scientific enough and our source code is not standardized enough. These gaps must be addressed and our software engineering must improve to ensure that the networks will be more secure. The UK's OB report is not a total negation of us. It just points out the issues that have to be tackled. We are determined to make the changes, and many of our employees have already started to strengthen the software to bring it in line with the UK's standards.
Starting now, we will invest a total of over 100 billion US dollars in restructuring the whole network over the next five years. To restructure the network is to simplify network architectures, base stations, and transaction models. And it is also about ensuring the highest level of both internal and external network security and observing Europe's GDPR to protect privacy. While we are restructuring the network, we are also making business progress. We believe that five years from now, our sales revenue will exceed 250 billion US dollars. Doubts from the US are not making our market shrink. Instead, our market is growing. When customers see such a major power in fight with our small company, it proves that we are really good at what we do. We can even increase our prices. Some countries not buying from us may result in higher prices for other countries. We may even raise the prices for countries that have turned around to buy from us. It's like shopping in a mall. If you bargain and leave without buying, and turn round to buy it, knowing that you want the clothes, the vendor will not lower the price, but even raise it a bit. These increases in price can be used to ensure better network security, instead of giving it away. We don't want to emphasize these price increases, but we want to stress our efforts to build better networks. In the future, our networks will be intelligent and the whole world will be driven by the cloud. In an intelligent, cloud-driven world, our company will provide the most secure and trusted products. Until then, you will need to buy from me. There will be no other choices. This way we have the opportunity to invest and reform.
The UK has had some concerns about us. These concerns drive us forward. I don't think they are a bad thing. Instead, I see them as progress. Once we recognize our problems, we need to try our best to improve on them. We are not a company that can do everything just right, so we need to constantly improve. Currently, a group of outstanding employees has engaged in network modernization in the UK. It is highly likely that they will become key pillars for network restructuring following the improvement and will embrace greater responsibilities.
Q17: You sound very confident. And you sound like you don't believe that the US will convince its partners to stop doing business with you. Why are you so confident that the US won't be successful in getting other countries to ban Huawei's equipment?
Ren: Their allies may or may not believe in them. For countries who believe in them, we will hold off. For countries who feel Huawei is trustworthy, we may move a little faster. The world is so big; we can't walk across every corner of it. If all countries choose to buy our products today, our company would be overwhelmed. We cannot sell or produce enough products for the whole world. Therefore, we believe having countries accept us in one at a time will be best for sustainable development.Q18: What kind of impact would it have on your business if the US is successful in getting many of its partners in the West to shut your equipment out?
Ren: When the west goes dark, it's bright in the east. When it's dark in the north, we still have the south. The United States doesn't represent the whole world, but only one group of people.
Q19: But the US is a powerful country. It has a lot of influence, even in this part of the world. What would you do if they were successful in convincing your customers, even in Asia Pacific for instance? Isn't that enough to kill your 5G ambitions in the West and around the world?
Ren: There's no way the US can crush us. The world needs Huawei because we're more advanced. I think even if they convinced more countries not to use us for the time being, we could just scale things down a bit. We are not a listed company, and we aren't fighting for good balance sheets. Downscaling will help us get really good at what we do, so we will be ready to make better products that people will love.
At the same time, the US is constantly hurling accusations at us, finding fault with us. This pushes us to make our products and services better, which makes our customers like us more. That's where our opportunity lies. Only if customers liked us, would they be willing to buy from us despite the difficulties. I'm not too worried about any misgivings in the US or other countries. If they point out any areas where we need to improve, we'll improve.
Q20: How much do you think this is about jealousy of how well Huawei has done or how well China has done?
Ren: We're no more than a tiny sprout. I don't think a great nation like the US has much to be jealous of. The US has been in a position of absolute power for decades. And it will maintain its relative strengths for decades to come. Huawei's just a tiny sprout that popped out of nowhere. Would the US get jealous of a sprout? I don't think so. They have such strong technology and such a promising future. So I don't think they're acting out of jealousy. They probably just don't understand us. If they understood us, they wouldn't be so suspicious. I really wish US government officials could come to visit us like you have. Take a look at our Xi Liu Bei Po Cun, our research and the environment here, meet our scientists, see how devoted they are, the attention they pay to detail. The US is an innovative country. They are open-minded, far more open-minded than I am. I've never been jealous of others, and the US isn't jealous of us.
Q21: What about China? Do you think the US is jealous of China?
Ren: I don't entirely understand the relationship between these two governments and countries. Huawei is a business organization, and we are rarely involved in politics. Instead, we focus on our own development. Personally, I think China should continue to open itself up to the rest of the world. In China, I have never said anything against US or other Western companies. Even when Huawei was being treated somewhat unfairly by Western companies, I expressed my hope that the Chinese government would refrain from reducing the market share of Western companies in China, and I even required our employees not to attack their market share.
I believe China can benefit from the reform and opening-up policy. China has more or less tried to close itself off from the outside world for 5,000 years. Yet we had found ourselves poor, lagging behind other nations. It was only in the last 30 years since Deng Xiaoping opened China's doors to the world that China has become more prosperous. Therefore, China must continue to move forward on the path of reform and opening-up. I don't think China should close its doors because of Huawei, and I don't think the US will close its doors, either. The 250-year history of the US has been one of openness. During this period, it has attracted the world's finest talent and civilizations, and made the greatest accomplishments the world has ever seen. This is why I do not believe the US will ever close its doors to the outside world. China should not do this, either. China is a developing country, and we need to learn from Western companies, welcome their investment, and encourage them to do business here. Our population of 1.3 billion represents a huge market. I don't think Western companies will abandon this market and I certainly don't want to see that happen.
After Meng Wanzhou was arrested in Canada, Chinese people were still flocking to purchase clothes from Canada Goose. This shows that Chinese people are not overly emotional or populistic. I think this is part of the impact social advances in the last 30 years have had on people's mind. We should acknowledge that China is an open country, and is becoming increasingly more open, which is great for the world. If everyone sees things from this perspective, there is sure to be less confrontation. Economic globalization is a must, not a choice. During the industrial revolution, a sewing machine, bicycle, car, train, or ship could all be manufactured in one country. However, it is impossible for any country to build an information society all on its own. This must be established by many countries working together, following a set of agreed standards. Therefore, we believe that in the information society, openness and collaboration will enormously benefit every country, and China must continue to open itself up to the world. We don't want China to close itself off because of Huawei. I want China to continue becoming even more open. Perhaps one day we will see that many things in China are comparable to those in the UK. We have seen very clear social progress. For example, many people spat in the street 30 years ago, but far fewer people do this now. In the past, people would swarm to get onto a bus, even pushing others aside. Now, however, people are much more inclined to quietly line up in queues and get on buses in an orderly fashion. These are all signs of progress in China. We must be reminded of such positive progress, and remember it took Western countries several hundred years to get to where they are today. There are many movies about the frontiers when the US started developing its Western regions, showing that it had many problems of its own back then. However, after remaining open all those years, the US is highly developed today. We believe that China will open up and make progress even faster in the future, and that the entire world will reach the same advanced level of civilization.
Q22: You've talked about how Chinese companies have come up and how China has changed, really. That is what I've heard you say to me. But the allegations from the US are that many of these companies, many of these changes you described, have come about unfairly, that Chinese companies like you have an unfair advantage here in China, and that's why they are so successful around the world. They get government support. They have connections in the government here as well that help them overseas. What would you say to them?
Ren: First of all, I can't speak on behalf of all Chinese companies. I can only represent Huawei. I have never managed or taken the time to get to know other companies, and therefore cannot speak on their behalf. But any company would be hit hard overseas if they don't follow international laws and the laws of the countries in which they operate. If this occurred, they would have to learn from those experiences.
When Huawei started operating outside of China, we learned a lot about management from Western companies. Our financial reports are audited by KPMG in accordance with strict procedures. All issues will be identified and must be corrected. It took us 30 years to build ourselves into an orderly company. I believe other Chinese companies have learned a lot from their setbacks and other experiences outside of China. Huawei does not receive government subsidies, and the audit reports from KPMG are publicly available. We would be happy to provide you with a copy of an audit report so that you can see how KPMG, as a US company, audits Huawei and illustrates what Huawei is like.
I think Chinese society as a whole is gradually progressing. There are, of course, always bad people out there. We can see from newspapers every day that bad people get arrested. This means China is gradually adopting a very effective rule of law and optimizing the relevant systems.
Q23: Do you see now, as a result of the US pressure on some of the countries around you, that you will be forced to go into other markets? What are the other markets that might oppose you?
Ren: One of Huawei's core values is staying customer-centric. If customers choose Huawei, we provide them with excellent services. If they do not choose us, then we simply don't provide services to them. Regarding which countries accept or refuse us, that choice has not been made in many countries. Press stories do not represent government policy or the law. If a law was put in place to ban Huawei, then we must comply with such laws, and can stop doing business in those countries. Personal remarks from government officials are not law or government policy. The US has not promulgated any laws regarding Huawei. If they had such a law, we would follow it, but no such laws have been passed yet.
Q24: Given the fact that the US is trying to go around the world convincing its allies not to do business with you, what are some of the other markets that you are looking at? I know that you say those countries have not banned you yet, but are you looking at other markets?
Ren: We don't pay attention to particular countries. Instead, we pay attention to our customers. If our customers choose Huawei, we will do our best to meet their requirements. If customers do not choose us, we will try to serve them in the future.
Q25: So the UK is a country that is still considering using Huawei. It wants to work with you, and it's looking through trying to mitigate some of the technological risks. What would you say to UK consumers to reassure them of some of the security concerns that we've talked about, that you are not a company helping China to spy on the world?
Ren: Our issue in the UK is mainly related to software. There is software that was written when we were a smaller company, which needs to be more resilient. But there are no backdoors, security issues, or privacy-related issues. The software needs to be more robust; otherwise, the networks might be more vulnerable or break down in the event of an attack. However, this has not happened over the past 20-plus years. Networks are massive. No country or company can say for sure that their equipment is absolutely reliable. That's just impossible. The UK government is giving us an early warning that Huawei's networks might be vulnerable and may break down in the future in the case of an attack if we don't act to improve. We are working to address this issue, and it does not have an impact on the consumers.
Q26: I want to just continue with the UK point for a second. Given the fact that the decision has still not been made there, how important is the future of Huawei in the UK with regards to your investment plans and jobs? Are you able to guarantee that you will not be pulling out of the UK, you will not be taking jobs out of the UK?
Ren: Huawei employs around 1,500 locals and has directly and indirectly created 7,500 jobs in the UK. We have R&D centres in Edinburgh, Bristol, and Ipswich. Recently, we decided to establish a factory for optical chips in Cambridge. We also have a training centre in Birmingham. We will not withdraw these investments. We remain committed. Why? We believe the UK will buy our equipment sooner or later. We cannot cut our ties to it because they do not purchase from us for the time being. If we see a jacket in a shopping mall that we really like, but could not buy it because it has been reserved for someone else, does that mean we will never shop in that mall again? We would visit it again to see whether more came into stock, and would buy it as soon as it was available. For us, the UK will offer us many "clothes" sooner or later, and we will visit this "shopping mall" again. We won't withdraw our investment. On the contrary, we will continue to invest. We have our confidence in the UK, and we hope the UK will have more confidence in us so that we can continue to make more investment in the country.
If the US does not trust us, we will turn to invest more in the UK. Take a look at the size of the land we bought in Cambridge, and you'll see how ambitious we are in the UK. We will not stop visiting the mall just because it doesn't sell us the jacket for the time being. We won't do that.
The UK has remained open over the years, and I'm really impressed about it. I believe all the issues we face in the UK can be addressed.
Q27: Are you hoping that the UK example will help to convince other European allies as well?
Ren: We don't want to use the example in one country to convince others. If the UK government makes the right decision and places its trust in Huawei, we may make bigger investments in the country. In fact, we have big investments in many other countries, including Germany, Hungary, France, and Italy. But still the UK is in the leading position.
As you know, the UK is home to Arm, a company that specializes in developing CPUs. Years ago, Huawei was worried that the US would not sell CPUs to us, so we chose to strengthen our partnership with Arm at a time when it was not as big. Arm was sold for 32 billion US dollars in 2017. With the money, it has achieved greater development. Today, the UK, or Europe has earned its place in CPU, next to the US. In the communications space there are electrons, photonics, and quantum. With the photonics chip factory we are planning to build in the UK, the UK, or Europe will gain a leading position versus the US, as no US companies are currently working on the same technology. Therefore, Huawei has created many opportunities for the UK and for Europe to stand up equally [as the US]. There were once concerns in Europe that there were no European IT or software companies as successful as the US companies. Success can be expected with our future collaboration. Because of Huawei's involvement in these two projects, Europe has gained an equal footing at the forefront. Europe should understand what we are doing there. We view Europe as a home market. We want to be deeply integrated into local communities and develop like a local company in Europe. If we were to withdraw our investment, all our prior efforts over the years would go in vain.
Q28: Mr. Ren, I would like to raise the issue of your daughter. This is a personally a very challenging time for you. She is in Canada, she's been arrested by the US's request, and she faces extradition. How do you feel about this and what will you do if she is sent to jail?
Ren: I object to what the US has done. This kind of politically motivated act is not acceptable. The US likes to sanction others whenever there's an issue. They will use such methods, we object to this. But now that it has come to this stage, we'd better leave it to the court.
Q29: You say you are against this and you say this is politically motivated. China is now saying that the release of your daughter could be a factor between the United States and China in their trade war. How do you feel about your family being dragged into this conflict between the US and china?
Ren: I don't know whether the Chinese government has said that. I only know Trump had said something to this effect. I don't think Meng Wanzhou's case is part of the trade talks between China and the US. I've never seen a single word about this in any press or public announcements beyond Trump's statement that this could be considered during the trade talks. He said the US would consider it, but the Chinese government hasn't. Personally, I would not like to see Huawei stand in the way of China's reform and opening up process. I hope China remains open to the US, the UK, and the rest of the world, so that we can work together to drive the world forward.
Q30: Why do you think Huawei is being dragged into the trade war in this way?
Ren: I have no idea. I don't think Huawei has anything to do with the China-US trade war. The fight between the two countries is intense, but our sales revenue is growing rapidly. In my opinion, the trade war hasn't had any impact on us.
Q31: What is it like as a father to see your daughter in such a difficult situation?
Ren: Great men are made through hardships. Throughout history, many great people had suffered many hardships. Hardships are an important asset of our lives. We accept that this has happened and trust in the law to solve the problem.
Q32: Was she a successor that you were grooming, that you were hoping to see become the CEO one day? How much loss has the absence of her cost your company?
Ren: First, she could never become my successor, because she has no technical background. My successor must have the ability to gain technical insights and be able to make judgments about future technologies and customer needs. She comes from a financial background and is an exemplary manager. However, she does not have that particular quality that is required for strong leadership, to point the way forward like a beacon. She is not my successor for sure.
To answer your second question. There is no impact on Huawei's business due to Meng Wanzhou's loss of freedom. The company is actually growing faster and better. It may have been a mistake to arrest Meng Wanzhou. They may have thought Huawei would fall apart if they arrest Wanzhou, but this arrest didn't beat us. We are still moving forward. Our company operates based on established processes and procedures and does not rely on any one individual. Even though I am gone one day, the company will not stop moving forward.
Q33: It does though seem that the world is heading to a sort of split, where the technology or Chinese companies are welcome, like yourself, and where they might not be, like in the United States. How do you see that kind of impact in the future with regards to the success of Huawei, if this division exists in the world?
Ren: I don't think we are ready in our mind to lead the world. I think the US still leads the world in technology and science. We simply don't have the ability to dominate. We are still one of the many players that are trying to do its part to serve mankind. We don't really aim to grab more market share. We just plan to keep moving forward at our own pace and will not hinder the development of other companies. We don't have the intent, nor the capacity to dominate the world.
Q34: I understand what you have been trying to tell me, and I really appreciate it. I want to understand what kind of relationship the Chinese companies had with their government. It's quite different from the way companies in the US and Europe operate. Can you explain to us that kind of relationship?
Ren: I don't know about other companies. I only know my own company. I think any company must operate according to the law, and must pay taxes. If we don't pay enough in taxes, we would be in trouble. Huawei is a company that operates in compliance with all applicable laws. I don't know about other companies. I cannot speak for them.
Q35: Do you think the damage to Huawei's reputation has already been done?
Ren: No. I'd actually like to thank the US government for the great advertising they've done for us. We feel very proud that we could face off with such a powerful country.
Q36: Do you think that the Chinese system and the perception of how it operates makes it harder for Chinese companies to succeed globally?
Ren: I don't know much about other companies and their management systems. However, we comply with all applicable laws in countries where we operate, including UN resolutions. I'm not concerned about what other companies do, because they do not pay me money. Why should I care about them? I'm only concerned about Huawei. We will remain true to customer interests and never hold any other intentions.
Q37: I appreciate what you are saying and why you, as a business, take care about politics. But the rest of the world looks at China and it looks at the way this government operates. It sees that it's becoming more oppressive. It's wondering how a company like yours, operating in China, won't be free of that influence when it goes out to the rest of the world. What would you say to that?
Ren: We do business in other countries to make money. The Chinese government has nothing to do with our overseas development. In no way whatsoever. We comply with all applicable laws in countries where we operate, and all of the money we make in other countries is subject to the management of the State Administration of Foreign Exchange of China. That's all the pressure we face from the government. I'm not clear yet whether our tax rate will drop when we pay taxes to the Chinese government for our overseas profits. As far as I'm concerned, I don't think there are such requirements. But I cannot represent other companies.
I know nothing about other companies and do not have personal relationships with any of them. I devote my heart and soul to Huawei and read some books. Therefore I don't know about other companies and cannot answer questions about them.
In China, we study the laws that are applicable to our operations, and don't have much knowledge about others. I'm not a politician who can comment on the law. I'm a businessman, not an entrepreneur yet.
Q38: I know you say it's not your place to comment from a political perspective, but the Chinese government has been quite vocal in defending Huawei to the rest of the world. They have been very strident when they go around the world saying Huawei is innocent, and Meng Wanzhou's arrest is not the right thing to do. Does that make it more challenging for you as a Chinese company trying to operate overseas?
Ren: First, it is the Chinese government's duty to protect its people. If the US attempts to gain competitive edge by undermining China's most outstanding hi-tech talent, then it is understandable if the Chinese government, in turn, protects its hi-tech companies. This is good for China's economic development.
Now that our case is already in legal proceedings, I will not make any further comments on it. The laws of the US and Canada should first be open and transparent, and then be just and fair. The US should make all correspondence about Huawei public, so that we can understand the entire process, and the reason for their actions against Huawei, and then make judgments and defend ourselves at court. Now that we've begun the judicial process, I will not make any further comments on this.
Q39: If there is one thing you would say to the world right now, what would it be?
Ren: Moving forward, the future information society will be characterized by collaboration for shared success. We are in an Internet era, where knowledge and culture cannot be constrained to one place, or only available to the few people who will use them to create something. This was the case only when transportation was not fully developed, when the train, ferry, or car were not invented. Back then, it was understandable that those places that understood how to effectively grow crops would become rich while others wouldn't. But today, the means of transportation are developed. Communications tools and the Internet are all well developed. Advanced civilizations may emerge in any place. Only when these advanced civilizations are put together, will the future intelligent world and the cloud era come into shape. This era will be jointly created by the whole world, not a single country or a company. Together, we should jointly create a better society for mankind, and at Huawei we believe we are only making our due contributions.
Q40: Do you think the West misunderstands Chinese companies like Huawei or China itself?
Ren: In the West, it is only politicians who do not understand us. Western companies and scientists know Huawei very well. Just this morning, I met with the CEO of a huge Western company and we had a very good discussion. Such people are not hostile to any company, because we are in the same industry, and we understand where we are. Politicians, however, might not understand us well. They may wonder how it is possible for such an advanced company to come from what was previously such a poor country. They should come to visit Huawei as well, so I can receive them and answer any questions they may have. I welcome them.
I gave you honest answers today without any pre-conceived answers, and I will happily do the same with them. Over time, they will come to understand us.
Q41: As I was saying to you earlier, I read your secrets to leadership: be humble, have passion, and always be learning. Am I correct?
Ren: Yes, you are right.
Q42: And you believe in the element of fire, because you want everyone to have fire in their passion. But you also think that fire must be constrained. That's why you like fireplaces. It that true?
Ren: Both fireplaces and fires have nothing to do with me. They are ultimately just decorations in a building. Sometimes sitting by the fireplace for a chat has added to the atmosphere, but it has nothing to do with my love for fireplaces. I love a lot of things. The countryside is my favorite. My greatest regret is that I did not become a farmer. I read a lot of books and news about agriculture and how to grow crops. What I do and what I like reading are in conflict. Fire doesn't necessarily relate to me.
This is our annual report audited by a US accounting firm. This tells the truth about us.
Q43: What I've heard from you over the interview is, it seems to me, that you are a very committed businessman, and you just want to run your company. You want to get down to serving your customers, you want to have the best technology in the world, and you want to invest in research and development. It's become very difficult for you to just focus on your business, right? It's become very challenging for you to just focus on your business, because of all of these controversies and allegations surrounding you.
Ren: I also care about my daughter. I have three kids, and I care about all of them. They have their own personalities though, and we don't always get along with each other. When Meng Wanzhou was young, I was in the military and often far from home. Her mom took care of her. I had to be away from home for 11 months every year, and when I was home for only one month she was in school during the day and did her homework at night and then went to sleep. We haven't spent much time together, but she has always worked hard and she is great with people and things.
I still remember when she was studying in the Huazhong University of Science and Technology, her mom told me to give her some money and I gave her 10,000 RMB. When she graduated, she gave back 9,500 RMB to me. She is very frugal. The first time she went to Moscow for an exhibition, I gave her about 5,000 US dollars. When she came back, she returned more than 4,000 US dollars to me. She spent only a little money. She is also very independent. When we started working with IBM consultants on the Integrated Financial Services (IFS) program, she was the program manager and worked very hard. She threw herself into the program for ten or twenty years. She has a deep understanding of project management, so she has done a great job in finance.
Those who do an excellent job in finance are interested in balance, management, and efficiency. Huawei's leaders are not expected to focus on horizontal balance, but dive vertically for breakthroughs. So it's impossible for my daughter to be the CEO or chairman. This is going back to your previous question.
When Meng Wanzhou was detained, as her father, my heart broke. How could I watch my child suffer like this? But it happened. What could I do? We can only solve the case through legal proceedings. We don't believe that we have any wrongdoing, because we have been so strict with ourselves at Huawei. How could there be any wrongdoing?
The United States will disclose their evidence in the future, and the court will come to a conclusion. For now, Wanzhou is under house arrest, but she still has a strong will and is studying multiple courses online every day. Some of our colleagues still communicate with her online regarding the company's strategy issues.
As a father, I can't let myself be overwhelmed by emotion. I want to see my children fly high and free. All of my children have strong characters. They are all working hard to become better. As parents, we cannot ask our children to stay by our side forever. I think their personal development is more important.
I think this hardship is a valuable opportunity for her. Undergoing such a big issue will give her strength for the future. I think I should thank the US government for that. I believe that she will reach even greater heights because of this.
Q44: It's been said that it has taken you long time to talk to the media. You have been very quiet, you have stayed away from the press. People say that's because you are secretive, that Huawei is secretive. Why did it take you so long to come and open yourself and Huawei to the world? Why has it taken this crisis to open to the world?
Ren: Honestly, Huawei has always maintained a pretty high profile. All our leaders are out there, people like Richard Yu and Eric Xu, speaking publicly every day. So why haven't they become an Internet celebrity? Why has everyone zeroed in on me? I tend to be shy, not good in big groups of strangers. I'm good at poring over documents.
My wife once asked me what I loved. I said that I loved working with paper. She asked why. I said that documents and manuscripts are full of philosophy, logic, and real substance. When you write something and send it out, it might not have any impact for three to five years. However, 30 years later, when you look back and read them again, you realize that we've progressed with such consistency of purpose. This is what philosophy, logic, and management bring.
My wife's always asking me what I love. I said I love working on documents, and I wish I could spend more time on internal affairs, not external ones. So I didn't go for Chairman of the Board. The chairman has to be responsible for all of the company's business registration, signing this and that. Those are all a bunch of chores. It's like cleaning, and that's not what I want to do. I don't want to do anything but manage this company. My character has determined this.
Sometimes people ask me why I'm so great. I tell them: I'm not a squirrel; I don't have a big tail. (Note: This is a pun, "great" sounds the same as "big tail" in Chinese). If I say I'm not great, they say I'm pretending to be humble. Therefore, I can't talk to the media. If I say I'm great, they don't believe it. If not, I'm being fake.
At this historic moment, our public affairs team is forcing me to speak out more. They say when I speak, people pay more attention, that other corporate executives can't draw that much attention. If the CEO is out there having coffee in public, why not take a picture? I don't really speak in public, and am not much for socializing. If I go out for coffee, I don't feel free to be myself. Inevitably many people take pictures and put them on the Internet.
"Wow, Ren leads such a plain life!" I don't know why people think drinking coffee is plain living. They say the same when I eat. Maybe I'm not in the mood for meat, so I have some vegetables instead. And then you've got people saying how great I am.
What you see in the media isn't really me sometimes. And I don't really have time to explain myself, so I don't meet with the media all that often. That's not true, actually. I did do an interview with the BBC in Davos several years ago, and it was broadcasted live. So I do meet with the media, but not so frequently.
Our public affairs team is getting squeezed by you media folks, and now they're squeezing me. So I have to come out and put on a show. Sometimes I say the wrong thing. I have never received media training, and I always speak what's on my mind. So I can't help but say the wrong thing sometimes. If I do, I hope you can forgive me.
Q45: I have one final question to ask. You have talked in the past about being inspired, in your leadership, by the west. What was it about European history that inspired you?? Why were you drawn to it? And now that you are getting this resistance from the West, have you changed your mind?
Ren: First, I think the UK has had a deep impact on me. This is the country where the constitutional monarchy was established. Under this framework, kings and queens are placed under law, and the law is in the hands of parliament. The king is not the most powerful, and is subject to legal restrictions. He's subject to collective decisions in parliament. This has created a well-balanced country. The Glorious Revolution in the UK made it possible for the country to avoid conflict for 350 years. This has made the UK a very developed nation today, and it has had a great impact on me.
Second, the Puritans. After they sailed across the ocean to America, they inherited the rule of law from Britain. America is a large continent. During its rapid expansion, the west was in chaos, so it was impossible for them to establish very detailed laws. People in Britain, however, were super attendant to details in their legal system. This weakened the momentum of their innovation. Right now the overall management frameworks in the US are all quite standardized, but with a lot of flexibility at the end points. This has led to a dynamic society.
We have a similar system at Huawei, with a very rigid overall system, but very flexible end points. We give people the freedom to grow, so we've got not only order, but also democracy and freedom in our company. It looks like a miracle to people outside Huawei.
I actually learn from two cultures. One is the British culture. In this culture, clear and standardized management is the backbone of society. Second, it is the American culture. This is a culture that is open at the end points and that encourages openness and competition. We don't manage everything to death. All of this has had an impact on me. So much philosophy in the west is rich with meaning. I've learned a lot from it. Everything I write these days is at once standard, but also a little mischievous around the edges.
Some of our people have taken the time to read and understand what I write, and those are the ones who become key employees at Huawei. Those who don't quite understand continue doing their part at other levels in the company, and in this way we've created an organization with a certain order to it.
Correspondent: Thanks so much for your time. I could talk to you all day and it has been a really interesting conversation. We really appreciate the time that you have given us to try and understand where you are coming from. I think it is a very difficult situation that you are in.