Ren Zhengfei's German Media Roundtable

November 6, 2019

Shenzhen, China

Ren: Good to have you here at Huawei. It's a pleasure to see you all. I am more than happy to take your questions.

01 Georg Fahrion, Der Spiegel: So, first of all, thank you very much for having us. It's a pleasure to be here. And thank you very much for taking an entire hour for us. We appreciate it a lot. Maybe I'll start with something about these surroundings that intrigued me when I came in here. In the hallway with the staircase leading up to this room, you have a large oil painting of the coronation of Napoleon, the French Emperor. And in the back there's a large photo of the reenactment of the battle of Waterloo that basically is the demise of Napoleon. That brings me to ask: Is Huawei a rising or falling empire? And are you at war?

Ren: Those two paintings don't have anything to do with the situation Huawei faces today. They are just works of art for decoration. I saw the painting for the 200th anniversary of the Battle of Waterloo in a Belgium museum. I found it striking and bought it for decoration here. The coronation painting is a work by a family member of one of our employees, who took four years to finish it. He gave it to me as a gift and wanted me to hang it in my house. But my house isn't big enough for a painting like this. So he instead gifted it to the company and we hung it here. These paintings do not have anything to do with our current business situation.

Georg Fahrion, Der Spiegel: Just one follow-up. So, how would you describe the situation that Huawei is in currently? Would you describe it as a war? Because the term trade war is being tossed around a lot. And if not, how would you describe the situation the company is in at the moment?

Ren: I would say Huawei's growth is like an exponential curve, an upward spiral. Overall, its current development is very healthy.

02 Ulf Röller, ZDF: I want to show you the picture, and I don't want to focus too much on simplification, but I want to show you a picture which I found on the campus. This is your picture from your company, if you can take a look. This is an old warplane during World War II which took many hits. Why did you choose this kind of picture to symbolize the situation of your company right now?

Ren: I just happened to see this photo online after Huawei was added to the Entity List. As you can see, the plane in the photo is riddled with bullet holes, but is still flying. I feel as though Huawei is currently in a similar situation. We have also been riddled with numerous "bullet holes", but we are still hanging in there and our airplane is still flying. We are working very hard to patch up the "holes" in our business so that our plane can continue flying and make it home safely.

We have brought together many scientists and experts responsible for working on Huawei's long-term development over the next five to ten years to patch up the "holes" in our business. We are patching up those "holes" in order to survive rather than lead the world.

We have fixed most of the "holes" in our business, so our plane is still flying. However, there are still some important "holes" that will take us the next two or three years to fully patch up. We have put together thousands of scientists, experts, and engineers who are working hard to fix those holes. I believe we can accomplish that task and turn our broken plane into a brand-new plane over the next two to three years.

Ulf Röller, ZDF: Just one more question, sir, who is shooting at you? Are these Americans who are shooting at your company?

Ren: Yes, the US government is shooting at us.

Ulf Röller, ZDF: The Americans are shooting? In which way?

Ren: They are shooting at us by adopting various means, such as adding Huawei to the Entity List and banning us from buying and using US components and software.

03 Jörn Petring, DPA: The German government is debating right now if Huawei should take part in the construction of the country's 5G network. Some politicians still have doubts and say Huawei may not be trustworthy because they could pass on information, or could be forced to pass on information to the Chinese government. How do you respond to those fears?

Ren: The catalog of security requirements recently released by the German government raises the bar on the security of 5G vendors, and equally applies to all vendors. We strongly support this approach. Facts must be used to prove vendors' security and reliability. The German government will perform evaluations, in which Huawei will happily be an active participant.

Jörn Petring, DPA: The Foreign Minister Heiko Maas has cast doubts that this catalog is inadequate, so the discussions seem to be not ended. And at the moment, there are many fears about Huawei. How could you stop those fears?

Ren: We should leave that discussion to politicians. As a technology provider, our responsibility is to make good products. We are not in a position and don't have the capacity to engage in political discussions. We believe that the German government will make policies that serve the interests of the German people.

Jörn Petring, DPA: Can you ensure you won't pass on information to the Chinese government?

Ren: We can, absolutely. We will sign a "no backdoor" agreement with the German government, representing our promise to Germany.

04 Frank Sieren, DvH Medien GmbH: You offered Europe that you would like to work together with Europe. Why did you offer this? Because you're so strong already. Or to put the question in a wider perspective, how important are the Western countries still for your business?

Ren: We certainly want to sell our products around the world. The more products we sell, the more profit we can make. We have to offset our R&D costs and other costs, and we need sizable markets. Europe, Africa, the Middle East, and others are all our target markets, and we should actively serve people in these markets. The African market is challenging because we cannot make much money there, but we are still striving to serve Africa.

We believe that the German government will make policies that serve the interests of the German people. We also believe that Germany can make the best decisions based on facts, evidence, and full discussions.

If a small number of European countries decide not to choose us, we won't have any issues with them and will simply stop selling in these markets.

Frank Sieren, DvH Medien GmbH: Why do you want to work together with Germany and Europe in the area of research and development? You're strong already.

Ren: We are in an age of globalization and openness. Closing ourselves off won't lead to success. We are working with European scientists to research future-proof products. We also help Europe develop its software, applications, and industry capabilities. We should collaborate to contribute to an intelligent world. Have you visited our production lines? We use software made by Siemens, Bosch, and Dassault in our production lines, and most of our production equipment was made by Germany and Japan.

Frank Sieren, DvH Medien GmbH: Is the software good?

Ren: It's pretty good. We increased our production efficiency by integrating our AI technology with the software we got from Siemens, Bosch, and Dassault. We are open, not only to researching new products in Europe, but also to providing services to Europe. For example, Huawei has the most advanced AI-backed autonomous driving and intelligent car technologies, and we are willing to work more closely with European companies in this area. When it comes to intelligent computing in vehicles, we can collaborate with them on every aspect of this field, or just on a few targeted aspects, like specifically on chips. We want to grow together with European companies, so we will contribute more to Europe.

Frank Sieren, DvH Medien GmbH: Why are you so strong in autonomous driving?

Ren: Since the very beginning, we have designed our chips based on level-4 autonomous driving standards. Europe, Japan, and China all followed the same standards, while the US adopted different standards. Huawei is a leader in terms of intelligent computing, so we are strong in autonomous driving.

05 Steffen Wurzel, ARD German Radio: A lot of the questions regarding Huawei in the past weeks in Germany have been not only dealing with technical details, but also with the question of trust and with the rule of law. Do you understand that in Germany there are more and more politicians who doubt that the level of rule of law in China is not equal to the level of rule of law in Germany and that's why there is a lack of trust towards companies from China?

Ren: If people make political judgments simply based on the country or region a business comes from, how can they tell who their friends are? How can they tell which countries are the most credible ones? The US? They don't offer products equivalent to ours. Germany should be one of those most trusted countries. But if Germany is the only country that is being trusted, how will German companies be able to go global? All companies want to go global, but they have to subject themselves to the choices made by global customers and assessments by world governments. They need to hear critical voices. Ultimately, countries and carriers will make independent choices in line with their own interests.

Steffen Wurzel, ARD German Radio: Just a follow-up, do you think that China and Europe are comparable when it comes to the level of rule of law? Because this is actually the main debate right now in Germany and this might be the reason for the decision in whichever way for your company.

Ren: China is making progress every day in terms of the rule of law and is advancing the rule of law and the market economy. Some may argue that China is not doing enough to promote the rule of law and therefore we should not allow Huawei products to be sold in our country. But if you are selling your cars to a country that you think is not doing good enough in terms of the rule of law, doesn't that suggest that you support the status quo in that country?

We should come together and try to reach a consensus on an approach that benefits us all. The most important thing for a company is to abide by the laws and regulations in countries where it operates.

Steffen Wurzel, ARD German Radio: Is there a danger that Huawei will pull its investment out of Germany if the decision is not in your interests?

Ren: We will not pull out our investment, because investment has nothing to do with sales. If you say our products don't meet your requirements and thus you won't buy from us, we can choose not to sell. We won't take it personally.

Even though the Canadian government has, at the request of the US government, detained a member of my family, I don't bear a grudge against Canada, nor have we cut our investment there. This year, we have invested heavily in Canada. We have hired more than 200 additional scientists and experts to work at our facilities in Canada. We want to help Canada develop into an innovation hub, like Silicon Valley. People in Canada and the US have a shared heritage and similar lifestyles, and they're geographically close to each other. So it is easier for Canada to attract some of their friends to join in with their innovation. In addition, many scientists cannot get a US visa. In this case, many international conferences can be held in Canada instead. When sufficient conferences are held in Canada, innovation there will boil over.

We separate our personal emotions from corporate development. Even if Huawei is not selected to build 5G networks in Germany, it won't affect our development in the country. At the moment, we are in the process of building a large industrial campus of around one million square meters on our Songshan Lake campus. We will buy a lot of industrial equipment from both Japan and Germany to expand our production capacity for the next year. If we don't consider our own business interests, but only consider political interests, that would be too naïve.

The way I see it, Germany really needs Huawei, technically. This is because artificial intelligence is extremely important to Germany's Industry 4.0 initiative. The precision manufacturing industry in Germany relies on data transmission systems that have a high bandwidth and low latency. That is an area where Huawei is unrivalled, and I believe customers know that and they will choose us.

Frank Sieren, DvH Medien GmbH: But you shouldn't buy from Japan. You'll get a better price elsewhere.

Ren: Not necessarily. Japan is our strategic partner. Why not buy from them? The Japanese approach to management is different from what you have in Germany. In Germany people are very confident. They test products only at the end of the manufacturing process. But in Japan, people are meticulous. They conduct a test at almost every step of the manufacturing process. That's why we have built one factory in Weilheim, Germany and one in Funabashi, Japan. These two factories can help us combine the strengths of both Japan and Germany and make high-quality products. Then it will be impossible that customers don't buy from us.

The challenge for Huawei, though, is that we may not have enough capacity to meet customer demand. That's why we are asking our customers in China to buy less from us at this time, so that we will have enough capacity to supply international customers. As you know, it takes time to expand the production capacity of new products.

Frank Sieren, DvH Medien GmbH: How do you convince them to buy less? That's very difficult.

Ren: It is difficult to persuade them, but there's no other choice. We don't have enough capacity to meet customer demand. In a few days, China's Double 11 Shopping Festival is going to start, so I advised our Consumer Business Group to further reduce the price of our devices to lower our profits. Our profits for this year are already very high. The Consumer Business Group's CEO agreed but their supply chain department didn't. They said they had only prepared to sell 10 million units during this festival. If the price was further reduced, then demand would soar. If we can't deliver the devices to consumers, then we are just offering them empty promises.

Frank Sieren, DvH Medien GmbH: Big problems.

06 Fabian Kretschmer, TAZ: Recently there were some positive signals from the Trump administration to try to de-escalate the trade war and reach the first steps towards a pre-trade agreement with China. What kind of hopes does Mr. Ren have if that deal should be achieved? Could that help fix the holes of Huawei?

Ren: We almost have no sales in the US, so the trade talks between China and the US have nothing to do with us. I don't pay attention to the news about it, so I am not able to answer this question.

In addition, we can solve our supply issue without relying on the US. We will survive even if the US keeps us on the Entity List. I don't know if you took any photos when you visited our exhibition halls. When the Associated Press came here, we allowed them to take pictures of every one of our circuit boards. There is not a single US component or chip on them now. Adding us to the Entity List has not harmed us, but it has harmed US companies. They can keep us on the list or remove us as they like. But they should make that decision based on the interests of US companies. They don't need to take us into account.

07 Steffen Wurzel, ARD German Radio: How is your daughter doing in Vancouver? And how often do you talk to her?

Ren: I don't talk to her over the phone very often. Her mother is with her, and I think she is doing well. She is in good spirits, and she's very strong. I believe she will be able to ride this out.

08 Steffen Wurzel, ARD German Radio: You must have a special relationship with Europe because the environment we are currently sitting in is totally European. Even the porcelain is from Germany. There is also Chinese porcelain. Why do you like this?

Ren: I also have wine glasses, as well as hard knives and forks from Germany. I once said that if there were no labor laws in Germany, all knives and forks in the world might have been made in Germany. With artificial intelligence, Germany will be able to shake off the constraints of labor laws, and embrace explosive growth in the future.

09 Georg Fahrion, Der Spiegel: You have a very good sense of humor, but I would like to move to a more serious area of what you said previously, because supply is a problem. I understand that the US is not an important market for you in terms of selling, but it's an important market in terms of sourcing. I would like to know how Huawei plans to overcome the shortage in sourcing and especially the problems with Google and Android.

Ren: I can tell you for sure that Huawei will continue its rapid growth even without US supplies. But Huawei will always be willing to work with US companies. We will always embrace globalization. We will never close ourselves off from the rest of the world and seek independent innovation or self-reliance.

10 Georg Fahrion, Der Spiegel: How do you want to deal with the fact that you may not be able to access Google products or the Google Play Store within 14 days? I understand that you're developing your own operating system, but it's a huge environment and infrastructure, so it will take time to set that up. How do you plan to bridge that gap?

Ren: We'll see on November 20. You're welcome to come back and interview me again then.

11 Ulf Röller, ZDF: I want to ask you a personal question. I have read a little bit about you and you're clearly the embodiment of the rise of China. You grew up in an average family. You were hungry and you didn't have enough money. And now you're sitting here and you really have made it. In many ways, it's just like how China has risen to become a superpower. So let's look at Europe. You're talking about your wonderful products that nobody else can produce and saying how essential these products are. Then you have these dishes from Europe, knives from Germany, and these kinds of museums which only have cultural things, but you don't have any high-tech products from Europe. If you look at Europe and Germany maybe, do you have some feelings that Europe, compared to China, is a continent which is in decline, and China is a continent which is rising to become a superpower?

Ren: Actually, many high-tech products come from Europe, but many of them are not out in plain view. For example, we use SAP software in our human resource management. We also use software from Siemens, Bosch, and Dassault in our product design, manufacturing, and supply systems. So we certainly have used lots of advanced high-tech products from Europe. Besides, in our devices, we have applied much mathematical, physical, chemical, and aesthetical knowledge from France, Germany, Italy, and other European countries. So we do use a lot of high-tech products from Europe.

Europe may need to change some of its business rules. Europe should be bolder in selling its products to China. Will Europe and China go to war? Of course not. Then why is Europe still sticking to the old rules of economic blockade? Since the US doesn't sell these products to us, it's a great opportunity for Europe to rise. Why don't you seize this opportunity and fill the gap left by the US?

Since we have enormous demand for chips, why can't Europe make a big investment in advanced chip manufacturing? Why don't you make more money when you have the opportunity? Europe has some big chip manufacturers. If you increase investment in chip manufacturing, Huawei will certainly buy more. But of course, Europe needs to ensure that no more than 25% of investment in this area comes from the US; otherwise, you'll be subject to US rules. If you don't want investments from China, you can turn to the Middle East.

Clearly, ICT adoption is accelerating, but we may not have the capacity to meet the rising demands. I hope to see European companies like Infineon, NXP Semiconductors, and STMicroelectronics invest more to increase their production capacity. Chip production equipment is also made in Europe, and you can try to persuade these European companies to invest more in building new factories. If they don't have enough money, we can make advanced payments to support their development.

Opportunity is rare, and once it appears, European companies should seize it to speed up their development. If they miss out on this opportunity, they may fall behind.

12 Frank Sieren, DvH Medien GmbH: What are the differences between Western enterprises and Chinese enterprises? Are there any?

Ren: Western companies are more outstanding. Germany and Switzerland are bywords for quality, but Chinese companies don't have that kind of brand influence yet.

Frank Sieren, DvH Medien GmbH: Except Huawei.

Ren: Even Huawei is not there yet.

13 Georg Fahrion, Der Spiegel: The numbers that you published in mid-October for the first nine months of the year were excellent. Your business revenue was up almost 25%. How did you pull that off despite the global economic conditions as they are?

Ren: Our growth rate already dropped to 17% in October. We have achieved growth this year because all our employees have a sense of urgency, and we have been working harder than ever before to row our boat to increase revenue and profits.

14 Ulf Röller, ZDF: What I've learned after coming to Huawei is that it seems like Huawei is always considered part of national pride. The Chinese are buying more Huawei smartphones to support the company during these very hard times of the trade war. My question is, if the political decision is to reject Huawei, will there be repercussions on German cars and other industries, just like the Chinese government has done before? What are people's feelings about that?

Ren: First, I've already criticized some of our staff, asking them not to take advantage of Chinese consumers' enthusiasm for Huawei. We should continue to be customer-centric and give top priority to improving customer experience. Second, will there be repercussions on the automotive industry, whether it be for German or Japanese cars? I think facts speak for themselves. There are numerous German and Japanese cars still on the road in China.

We have a DVD here for each of you. This is a recording of the gala celebrating China's National Day. Tens of thousands of people participated in the performance. It was really a grand spectacle. The gala was filmed and broadcasted using 5G. You are media professionals, so surely you understand it's almost impossible to film fast-moving scenes without buffering or delays using previous shooting and transmission technologies. With 5G, there were no such problems during that gala. You'll find what 5G can do for the media industry. If you look closely, you'll notice that every journalist filming the event had a little backpack on. Inside the backpack was a portable 5G site, and the feed was not transferred to an outside broadcast van, but instead directly to the CCTV studio.