Ren Zhengfei's Interview with the Italian Media

July 18, 2019

Ren Zhengfei

Welcome to our company, everyone. I am very glad to be here with all of you today. I have always found Italy to be a beautiful country. I like Italy very much. Feel free to throw your hardest questions over to me, I will be honest in my responses. Thank you!

Q1 Antonio Fatiguso, Agenzia Nazionale Stampa Associata (ANSA): Before last December, you seldom talked to the media, including the Chinese media. You had taken only two or three interviews in the previous 10 or more years. But after your daughter Meng Wanzhou was detained by Canada, you communicated with the media more often. Could you please tell us the reason? In addition, from your perspective, how will your daughter's case end?

Ren: First of all, I am not a man who doesn't like to talk. I give lot of speeches internally at our company. How could I lead the company as a leader? I give a lot of speeches. I just didn't talk with the media that much in the past.

Following the Vancouver incident, the US filed a lawsuit against us in the United States District Court for the Eastern District of New York and then added us to its Entity List. After that, almost all international coverage about Huawei was negative. We felt like we were facing quite a bit of prejudice.

So I feel that I had the responsibility to stand up and talk more to the public during times of crisis, to remove some of the dark clouds hovering over the company and bring back some light and hope. Today, our skies are brighter and things don't seem as dark as they did. 30% of media reports on us are now positive even if the remaining 70% are still relatively negative.

Second, the US is very powerful and its voice resonates around the world. People tend to believe whatever it says. Because of this, we have faced a lot of pressure. I have the responsibility to stand up and speak out. By doing so, I can:

First, boost customer confidence in us, helping reassure them that we won't collapse and we will be able to continue serving them.

Second, strengthen supplier confidence, letting them know we can survive and will be able to pay them back if they sell components to us.

Third, strengthen employee confidence, so that they will continue working hard, knowing the company will survive. Even though the US is cracking down hard on us, we are still quite strong.

Last but not least, by speaking out, I help convey the truth about Huawei so that the world as a whole can better understand us. In the past, no one made accusations this severe against us, so we didn't have an opportunity to spread our message as widely. Today, the US's sharp accusations are giving us this opportunity to explain ourselves and show the public who Huawei really is.

In terms of public opinion, we can see that about 30% of people understand us while the remaining 70% still don't. So we must keep on talking.

Everything I have done over the past few months has not simply aimed to save my daughter, but also to save my company. That's why I feel the need to stand up.

Q2 Fabio Savelli, Corriere della Sera: Are you still the CEO and leader when your company is in a critical situation now? Regarding 5G rollout and network infrastructure in Europe, Huawei has not supplied much equipment for core networks there. Do you think this will change in the next several months or even years? If Huawei is still excluded from core networks, will this delay 5G rollout in Europe?

Ren: First, in such a critical situation, I am still the most fit to serve as CEO. I have the ability to lead our company out of darkness and move towards a bright future. Huawei will keep growing even without the support of the US. We have what it takes to stand on our own and thrive as a global leader.

Second, in Europe, which 5G vendors to choose is up to the individual countries and carriers in the region, based on their own interests. We can't make that decision for them.

Let me explain a little bit about 5G first. Then I will talk about how 5G will benefit Europe.

5G is not simply an extension of 4G. 2G, 3G, and 4G are, in essence, B2C businesses that connect people to networks. At present, network upload speeds are quite low, even though download speeds are high. On existing networks, uploading images is very slow. In autonomous driving, for example, the only way to ensure people's safety is if the network can transmit tons of images every second. Existing networks simply cannot support this type of industrial automated control.

5G bandwidth is 10 to 100 times larger than that of 4G, so uplink bandwidths can be ultra-high. 5G is also different from 4G in terms of data transmission architecture. 5G will support both B2C and B2B. The second B in B2B refers to high-speed trains, cars, aircrafts, and the automated production of Industry 4.0.

There are two types of architecture for 5G.

The first is the non-standalone (NSA) architecture, where 5G coexists with 4G. For example, a 4G smartphone can run on this kind of 5G network. The NSA architecture only provides higher bandwidth than 4G, but it cannot support industrial automated control. A 5G core network supporting both 4G and 5G systems can continue using 4G architecture.

The other architecture is the standalone (SA) architecture, where only 5G exists. This model doesn't have to support many 4G systems, so its terminals and system equipment are very simple. This means uplink speeds will be superfast, with a millisecond-level latency. Equipped with this kind of 5G network, a doctor in Italy can remotely guide a heart surgery in a rural hospital in China. What the Italian doctor sees, for example, how fast the scalpel is moving, must be in sync with what's really happening on site. The Italian doctor wouldn't be able to operate if the network failed to transmit images in real time.

All of you work in the media sector, so you must have seen the trails left behind fast-moving objects on your screen before. This is caused by high network latency, and it can be solved by the 5G SA model. 5G SA networks require our new type of core network equipment.

In a 5G network, information packages that are transmitted through base stations or transport networks will not be opened, so these two layers do not cause any information security issues. Information packages aren't opened until they reach the core layer of the network.

The UK's Prime Minister Theresa May has said that the UK can buy Huawei products for non-core parts of their networks. This makes sense. After recent debate though, some members of the UK parliament concluded that the UK may only be able to stay far ahead if the country chooses to deploy Huawei's core technology. Ultimately, the decision is in the hands of individual European countries and carriers.

In China, the 5G licenses that have been issued as well as the 5G networks that are being built by carriers use the NSA model, where 4G and 5G coexist. Huawei is right now the only company in the world that can provide 5G SA solutions. According to China's Bidding Law, bidding for these kinds of products can only begin when there are three qualified vendors who can compete, so China won't start deploying 5G SA networks until next year. We are still waiting for Qualcomm to catch up.

Q3 Filippo Santelli, La Repubblica: The US may stop its supply of key components to Huawei anytime, including chips, servers, and software. That is like sentencing a tech company to death. Is Huawei strong enough to be independent from these US suppliers? How can you achieve independence? And how long will it take?

Ren: We can stand on our own right now. We don't need to depend on the US to continue serving our customers. The more advanced a system is, the more capable we are of standing on our own. Of course, we haven't continued developing components for some of our old, outdated products. There might be some impact on them. But we can use new products and new technologies to replace these old products and continue serving our customers.

Q4 Bruno Ruffilli, La Stampa: We visited Huawei's Exhibition Hall for Virtual Restricted Shares today, and got to know that you have veto power. If the Communist Party of China or the Chinese government requests Huawei to implant backdoors in your network equipment or devices, can you exercise that power?

Ren: Of course I can, and I will certainly veto against this. As you might have seen, at the Munich Security Conference, 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, made it very clear that the Chinese government never requires companies to implant backdoors. Premier Li Keqiang then reiterated this position at a press conference following a recent session of the National People's Congress. Recently, when Premier Li visited our booth at this year's 16+1 Summit in Croatia, he even directly told our staff not to implant backdoors. This is testament to their support for us when it comes to never implanting backdoors in our equipment. We have confidence in this, and please be assured that we can sign "no-backdoor" agreements with any country.

Second, if we implanted backdoors, then no one around the world would buy our equipment. If that happened, our company would go bankrupt and who would pay our debts? Our employees could leave Huawei to start their own businesses, and I would have to stay to pay the debts by myself. Do you think that is what I want? No!

Q5 Andrea Biondi, Il Sole 24 Ore: My first question is about your daughter Meng Wanzhou. Are you still worried about her? How do you think this case will end? The second question is about information security. There are many allegations around the world that relate Huawei to information security, security issues, and backdoors. What's your response to these allegations?

Ren: First, my daughter's case should be handled by courts, because courts make rulings based on facts and evidence. I believe the courts will make fair, just, open, and transparent rulings on her case.

Second, Italy and Germany have proposed establishing unified cyber security standards across Europe. I think every vendor should receive the same kind of security checks. Huawei has been subject to the most stringent checks in the world, but not a single security problem has been found so far. I think other vendors should be subject to the same checks. That is the only way to ensure security in Europe.

Q6 Eugenio Buzzetti, Agenzia Giornalistica Italia: In a recent interview, I heard you mentioned that due to US export controls, Huawei's revenue may decrease by 30  billion US dollars. How do you think Huawei should adjust itself under this circumstance? Do you have a Plan B?

Ren: We won't have any problem surviving due to the US attacks against us. But we have to replace some versions of our products, and it will take some time for the new versions to fit in. I once said our expected revenue may decrease by 30 billion US dollars from 135 billion to around 100 billion, but this is the worst case scenario. Our revenue may decrease less than that because of the efforts of our staff. You have come and seen in person that our company is very healthy, and all departments at Huawei are functioning properly.

Q7 Samuel Stolton, EURACTIV: Thank you for receiving our interview. I don't know whether you have heard about Ursula von der Leyen, the newly elected president of the European Commission. What's your view on the future of relations between the EU and China?

Ren: I'm not very familiar with the newly elected president of the European Commission, but I have seen her on TV. She has a strong presence. And I believe Europe will make strong strides as well.

Europe must simplify its trading process. China is a huge market. Starting last year, China has begun to cut tariffs on many commodities like luxuries and clothing. Europe, including Italy, needs to seize this market more rapidly. Consider automobiles, for example. China is a large consumer of automobiles and the tariffs on them are dropping. To seize more of the Chinese automobile market, Europe should not simply bind themselves with the US.

As we all know, the world's best cars are European cars and the most affordable cars are Japanese cars. US cars don't have any advantages either in quality or cost. If you can hold the Chinese market for the next few years, US automobiles will find it more difficult to enter the Chinese market.

China has applied technologies from Germany, France, and Japan, as well as some of its own when building its high-speed railways. This means huge opportunities. China also has a huge demand for aircrafts. Europe should invest more in aircrafts to enter the Chinese market.

Chinese and European economies are complementary in many aspects. We can leverage this short window of opportunity to drive the rapid development of trade between the two sides. After the fight between the US and China is over, the US will find that the Chinese market is fully occupied by its allies. Europe should not follow in the footsteps of the US; instead, it should impose fewer economic sanctions and strive to expand room for its economic and trade development. Social stability depends on whether people's living standards are improved. Europe doesn't need an ideology; what it needs is to improve people's lives, especially those at the lowest rungs of society. This will help prevent social unrest and revolts. With a solid foundation for growth, Europe will surely continue to prosper.

Q8 Filippo Santelli, La Repubblica: European telecom carriers are being pressured by the US government to ban the use of Huawei equipment, but according to the information available so far, the Italian government is still willing to continue working with Huawei. In your view, is the European market, including the Italian market, important to Huawei's business? Do you think that you will ultimately succeed in the European market?

Ren: First, Europe is very important to us. That's why we have invested heavily in this market. We view Europe as our second home market. Second, many carriers have been working with Huawei for more than 20 years. Despite huge pressure from the US, many carriers still choose to buy our equipment. This shows that they place great trust in Huawei. We are confident that we can build excellent networks for Europe.

Q9 Antonio Fatiguso, ANSA: Many people say that Huawei is not transparent in its ownership structure or management. We didn't know that you hold only 1.14% of Huawei's shares until you voluntarily disclosed the figure. To improve this situation, will you consider going public in Hong Kong? My second question is: From a management perspective, have you planned for succession?

Ren: We remain fully transparent. Our financial reports are audited by KPMG, an independent third party. This means we are actually as transparent as listed companies. I really don't know what else is needed to prove our transparency. I think it is unnecessary to go public in Hong Kong just to appear more transparent.

Huawei has been moving forward in an iterative manner. Later I can share with you my speech to the Representatives' Commission, where I explained our corporate governance structure and succession. I believe that Huawei will continue to grow steadily. We welcome you to visit us regularly so you can see how we grow. We will not collapse; we will grow even stronger.

Q10 Eugenio Buzzetti, Agenzia Giornalistica Italia: You recently met with Prime Minister Conte at the Second Belt and Road Forum for International Cooperation in Beijing. How did that meeting go? How do you view the skeptics of Huawei's 5G products in the Italian government? Does Prime Minister Conte believe that Italy  should keep Italian data in its own hands?

Ren: I had a very friendly meeting with Prime Minister Conte, and he places great trust in Huawei. A small group of people in Italy may be skeptical of Huawei. We totally understand that. Actually, there are people in China who also have their doubts about Huawei. It's perfectly normal that people have different opinions. For Huawei, what matters most is that we do our own job well.

Q11 Fabio Savelli, Corriere della Sera: First, don't you think you should negotiate with the US government regarding its attacks against Huawei, such as the arrest of your daughter and the Entity List? Or can you make your source code more transparent? My second question is, will you withdraw your investment from Italy if the Italian government exercises its veto power given by the Golden Power Law or imposes more political restrictions on Huawei's business in Italy?

Ren: First of all, we do communicate with the US government. The US government already sued Huawei at its District Court for the Eastern District of New York, and we also sued the US government in a district court in Texas. These lawsuits are how we are communicating with each other using legal means. The US is a country ruled by law. I believe the best form of communication with the US is through legal channels.

Second, the adoption of the Golden Power Law will make doing business in Italy complex. Huawei doesn't have any of this kind of problems, so it's unlikely that we would be found problematic when the Golden Power Law is adopted. We have full confidence that the Italian government will not exercise its veto power against Huawei.

Q12 Andrea Biondi, Il Sole 24 Ore: According to Italy's Golden Power Law, only non-EU telecom equipment vendors will be subject to stricter reviews. Nokia and Ericsson can be exempted. Do you think Huawei is a victim of discrimination?

Ren: No, I don't think this is discrimination against Huawei. We don't have any problems, so we actually look forward to more reviews of our equipment; it will only show that we don't have any problems. Huawei is already subject to the strictest reviews in the world. We are not afraid of one more.

Q13 Bruno Ruffilli, La Stampa: First, Huawei has been operating in the telecom market for many years. Nobody talked about security when 4G appeared. Why has 5 G caused so many concerns about cyber security? Second, personally, I believe in addition to the technology itself, the discussion around 5G should be about trusting Huawei. President Trump has portrayed Huawei or you as the "Prince of the Devils". Why should we trust Huawei?

Ren: Why has 5G caused so many concerns? The US is a global leader in 3G and 4G. However, Huawei is leading in 5G; this is hard to accept for some people.

The Chinese government has made it very clear that it does not require Chinese companies to install backdoors. Huawei equipment does not contain any backdoors and can pass strict reviews by governments. We don't have any networks in the US, nor do we intend to sell our 5G products there anyway. How could we possibly threaten its national security? We don't understand why they are so concerned.

 As for the "Prince of the Devils" you talked about, you can clearly see me now. Do you think I'm like the devil? You can see for yourself.

Bruno Ruffilli, La Stampa: I don't think you look like a devil, but I still feel a little scared of you.

Ren: Not all countries in the world will exclude Huawei. The countries that embrace Huawei will achieve great success. History will show that Huawei will make great contributions to the countries that trust us. Therefore, I don't think we should be worried that Huawei has been called a devil. I've always believed that President Trump is a great leader. He is not a devil. Neither am I.

Q14 Samuel Stolton, EURACTIV: Wang Weijing, a former Huawei employee in Poland, was accused of conducting espionage and detained last December. He has not gone on trial yet. Do you think he will get a fair trial?

Ren: We don't know what he did. We require our employees to stick to business-related activities. If this employee engaged in other activities in this country, and if there's evidence to prove it, the country can exercise its sovereignty. We will only know what really happened after the trial, then we can go from there.

We don't know much about this, so we are not in a position to comment on it. You're better off interviewing someone from the Polish judicial system if you want to know what really happened.

Q15 Eugenio Buzzetti, ANSA: We visited your campus at Dongguan's Songshan Lake, and I found that the buildings are of European style. Among them, there are two buildings resembling Verona and Bologna in Italy. So what is your personal relationship with Italy? Have you ever visited Italy?

Ren: I have been to Italy many times, and my wife and daughters also visit there frequently. Much of the art and furniture at the company is from Italy.

The buildings at our Songshan Lake campus were designed by a Japanese architect. He chose a European style and won the bid. This was all totally orchestrated by the architect. The building that we are now in was designed by a French architect.

Q16 Bruno Ruffilli, La Stampa: You often compare Huawei to an Il-2 aircraft that has many holes to patch. How is it going with the hole patching? Which holes do you patch first? Will you transfer your investment in certain areas to other areas? My second question is about your new operating system – Hongmeng. In what domains will the Hongmeng OS be applied? We thought it would be used for mobile phones. But you said it was designed for the Internet of Things (IoT). Do you have an alternative for the Android operating system?

Ren: First of all, I came across a picture of this airplane online, and I felt that it was a lot like us – we are riddled with bullets, but our hearts are still beating. At that time, we didn't know how many holes we had in us, nor did we know which were the most important. All we knew was that we needed to patch the holes in 5G, optical transmission, core networks, and other related systems. Now, we have patched all the major ones.

 After making some calculations, we now know that there were about 4,300 to 4,400 holes in total, and we have patched 70 to 80% of them. By the end of this year, we may be able to patch 93%. We keep patching holes while replacing our old, outdated products. All this will have some impact on our business results this year.

Next year, we will continue to patch the rest of the holes, which might be more difficult. Our business results may also be affected next year, but we estimate that our growth will recover by 2021.

For your second question, what's unique about our Hongmeng OS is its low latency. It's a different operating system from Android and iOS. Hongmeng OS was designed for IoT, such as industrial control, autonomous driving, and other related scenarios. Now we are mainly using it in smartwatches, 8K smart screens, and connected cars.

As for the Android OS, we will wait for Google to get approval from the US government. We still respect and advocate Google's rights to its ecosystem and technologies.

Q17 Filippo Santelli, La Repubblica: I have two questions. First, you mentioned that the UK was aware that if they wanted a 5G network, they would need to use Huawei's equipment in the core network as well. Does it mean that if Europe wants a pure 5G network, they must use Huawei to deploy both the core and the edge networks? Personally, I'm doubtful about the idea of putting all our eggs in one basket, that is, Huawei. Second, you also mentioned that when it comes to 5G technology, Huawei and China have pulled ahead of the US. Do you think China will surpass the US in more technologies? And are US actions aimed at containing China's growth?

Ren: First, I can't speak for China. I don't know whether China will pull ahead. I don't have the energy to pay attention to society as a whole. I can only represent Huawei and I only know Huawei.

Second, the core network is essentially software. I believe Nokia, Ericsson, and Cisco can do well in this area too. If you have concerns, you can wait and they will  also provide such software eventually. The two baskets will not exist in parallel. You can put your eggs in these two baskets, but they will still be linked. If eggs in one basket are broken, the other basket will be affected.

Filippo Santelli, La Repubblica: Are US current attacks against Huawei aimed at preventing Chinese technologies from outshining the US?

 Ren: I have no idea. You should ask the US. Maybe the US has some misunderstandings about Huawei. That's why they are placing sanctions and restrictions on us. US government officials are welcome to come and see Huawei, and then the misunderstandings will probably be dispelled. I think the US will remain the largest technology power for decades to come.

Q18 Fabio Savelli, Corriere della Sera: Two questions: First, we know that Facebook recently announced plans to launch a digital currency called Libra. The technology behind it is blockchain. Do you think this signals that US tech giants and the US government are working to maintain their dominant position in the world? Second, do you think they will consider Chinese companies when launching digital currencies, and put RMB into their currency basket?

Ren: China can also launch its own digital currency. Why wait for others to launch such a currency? Anyway, a country would be more powerful than an Internet company.

Q19 Bruno Ruffilli, La Stampa: If we look around the world, inequality and polarized distribution of wealth are still prevalent in many countries. Freedom of speech cannot be guaranteed in some countries as well. In this context, what's the biggest technological challenge we might face as we move forward? Or what role will technology play?

Ren: I think technology will create more wealth for humanity. With technology, everyone will be able to share in and benefit from social developments. Society needs to eliminate poverty through development and avoid social instability. When society is stable, it will develop faster, which will in turn bring more stability. The tendency for the rich to get richer and the poor to get poorer needs to change. Investments in new technologies will increase the total wealth of society.