November 26, 2019
01 Kristie Lu Stout, Anchor and Correspondent, Hong Kong, CNN: Mr. Ren, thank you for inviting us to Huawei headquarters in Shenzhen. I'm really looking forward to this conversation. My first question to you is this: China recently launched the world's largest 5G network, and Huawei played a big role in the rollout. But the consumer reception was a little bit lukewarm. So what is needed to change that?
Ren: First, we have just started rolling out 5G networks. They are not fully implemented yet. For now, consumers can't get the full picture of what 5G can bring. We predict that sales for 5G smartphones in China will hit 200 million units next year. I expect that consumers will have a more in-depth understanding of 5G then. Especially by the time 5G phones are launched at around 1,000 yuan, individual consumers will have a better understanding.
Second, 5G will promote industrial automation and the adoption of AI. But this will be a very lengthy process. AI is just emerging, and its wide adoption should be built on low latency, large bandwidth, and large volumes of data traffic. AI will enable deep learning through modeling. All of these take time, so 5G won't be that popular very quickly.
02 Kristie Lu Stout: Huawei has been under intense pressure from the US. And yet, your business is growing. You're selling more smartphones in China, and you're signing up new customers, new international carriers. Is this proof that Huawei will not be defeated by the US measures against it?
Ren: Well, since day one, we have always been a strong supporter of globalization in our operations, so that we can serve the global community by collaborating across the global value chain. A long time ago, however, we realized that there would be all kinds of uncertainties and conflicts between the US and Huawei. We needed to be prepared, so that we wouldn't collapse and could be self-reliant when the US chose not to sell to us. Today, I can say that it won't be a problem for us to survive short term, but I'm concerned whether we will still be a global leader in three to five years. We will delve deep into this topic, and it has become part of our agenda.
03 Kristie Lu Stout: For example, can you maintain leadership in smartphones? Smartphone sales for Huawei are growing, but only in China. The Google app ban is really hurting your international sales. So would you be happy if Huawei became an only-in-China smartphone vendor?
Ren: I don't think things will end up like that. If Huawei is clearly banned by the US from using Google's GMS ecosystem, we will have to put our own ecosystem into use. We believe that we will be able to build up our own global ecosystem within the next two to three years.
Kristie Lu Stout: So you are confident that you would be able to have a global smartphone presence without Google, and without other companies that at the moment are still waiting for licenses to work with Huawei?
Ren: We firmly embrace global supply chains. We welcome US companies to increase their supplies to Huawei, and will use their supplies wherever possible. This will ensure shared success between Huawei and US companies. If US companies are not allowed to supply their products to us, we have our alternatives. If those alternatives become mature and stable, I don't think it's very likely that we will go back to US companies.
So it is now a critical moment for all of us. We hope the US government will take the best interests of US companies into consideration. Huawei's position has always been clear: We firmly embrace globalization. We don't want to close ourselves off by pursuing independent innovation and self-sufficiency. Nevertheless, we need to make preparations in case US companies don't supply components to us. We need to survive.
04 Kristie Lu Stout: Microsoft was able to get a license to work with Huawei. What about Google? Will Google get a license?
Ren: Microsoft has been granted a license, which will boost the rapid, continued development of the Microsoft ecosystem around the world. We produce a very large volume of PCs and servers, so we will increase the use of components from Intel and Microsoft.
We also have our own chips and servers, including Kunpeng chips and TaiShan servers. Our own chips and servers are not intended for sale on the market. We use them to ensure that our system will remain stable when supplies to Huawei are cut off. If our supply security can be guaranteed, we actually don't have to develop our backup systems. We have developed them because our supply security is not guaranteed.
It's extremely difficult to develop CPUs. Building backup CPUs requires heavy investment, in terms of both human resources and capital. Huawei does not have much money, so you can imagine how much we would have to invest to build these backup systems. There are some things that we must do, even if we don't want to.
We welcome the open attitude taken by Microsoft and Intel. They have already gained the largest market share in the world. If they give up some of their markets to other technology companies, I will not know how to thank them enough.
Kristie Lu Stout: Does Huawei have a Plan B if Google is not going to get a license to work with you?
Ren: Yes, we have a very big Plan B.
Kristie Lu Stout: Have you heard definitively that Google did not get a license to work with you? Has Google been denied?
Ren: We haven't heard anything about that yet.
Kristie Lu Stout: Right now, Huawei is the No. 2 smartphone vendor in the world. Can Huawei become No. 1 without Google?
Ren: I do not think we will have trouble achieving this, but it will take time.
Kristie Lu Stout: Take time? How can you crack into the overseas market without Google?
Ren: By taking time, I meant the overseas market, because we will start returning to the overseas market next year or the year after that. We are more than determined and capable of doing so.
05 Kristie Lu Stout: Let's talk about 5G. The US has been pressuring its allies, most recently, Canada, the UK, and Germany, not to work with Huawei on 5G. Do you think those countries are open to working with you?
Ren: Yes, they are open to working with us. Countries around the world are comparing whose 5G is better. Carriers and their government officials are well aware of who has better 5G. Only a handful of politicians hold a different view which is politically driven, while others hold a more realistic view.
Kristie Lu Stout: There are countries right now that are refusing to use Huawei's 5G technology, like Japan, the United States, and Australia, and there are other countries that are firm believers in Huawei's technology. Right now we're seeing almost a splintering of 5G. Are you afraid that this splintering effect could influence… how do I phrase it? Are you afraid that because of the tech war between the US and China over 5G, we're seeing a splintering of 5G and the true promise of the technology will never be delivered?
Ren: The world is so big that it's impossible for us to have only one vendor. It's normal for multiple vendors to serve society as a whole. There is only one set of 5G standards in the world. If someone wants to develop another set, what will happen if the two sets are incompatible? Therefore, even if some countries choose others' equipment over ours, all the equipment will ultimately be compatible.
Humanity can only move forward by working together, not by being driven by Huawei alone. 5G belongs to the world, to everyone. It is something that we should share so that the world can thrive.
06 Kristie Lu Stout: As technology becomes more and more sophisticated, how important is trust?
Ren: Technology is increasingly complex. So technological expertise is more important than trust, because without expertise, products cannot be made, and trust will be meaningless. When a product is made, there will always be someone who will trust it despite what others say. Countries that have decided to use the product will find that it helps with their economic development, and this will remind everyone else that if they don't use this technology, they will be left behind.
Let's take a look at an example. When the train was just invented in the UK, many people did not see it in a positive way. When the technology was first brought to China, many Chinese people thought that trains were scary. When Empress Dowager Cixi traveled by train, she refused to sit in a passenger carriage and insisted on sitting on a chair in the engine carriage, because she thought the royal family should never sit behind anyone else. But now we know about the huge benefits railways have brought to society, and even those countries that initially balked at the idea ultimately built railways across their lands.
Anything that is advanced will definitely benefit some people. When people realize its advantages and reap the benefits, they won't refuse it any more. The weaving machines invented in the UK were considered as terrible threats and denounced by the Luddites. They even smashed the machines with hammers. Today the best clothing materials are made in the UK. This shows how an advanced technology can help drive the development of a country, and provide a model for its neighboring countries. A good model can have boundless influence. People will see and make their own decisions.
Kristie Lu Stout: The US Federal Communications Commission ruled against Huawei, from accessing the federal government's subsidy money, basically saying that they don't trust Huawei. As a result, rural carriers in America won't be able to tap into government funding to get Huawei to build out networks in rural areas. You plan to contest this. Why is it important to you and how do you plan to contest it?
Ren: Huawei is a company, not a political entity. We aim to provide high-quality information services to humanity. With this ideal in mind, we work even in the toughest environments, such as high mountains, rainforests, and many remote areas in Africa.
We are also quite willing to serve American customers. Years ago, we wanted to provide services to large carriers in the US. When this was impossible, we provided services to small carriers instead, to realize our value that way. In making this decision, the US government has failed in its duty to serve the American people. I think they will have to communicate with their people to address this. We are only a vendor and we don't get involved in solving conflicts. The US government has violated the spirit of the country's Constitution by ruling against Huawei instead of acting in the interests of the American people.
Kristie Lu Stout: The US government is allowing politics and the trade war to get ahead of bridging the digital divide. Is that your view?
Ren: I personally believe that politics and the economy can be and should be separated. The largest beneficiary of globalization is the US, because the US is the most powerful country in terms of science and technology. It needs to sell its best products to the rest of the world. If US products are not sold to the whole world, the gap will be filled by alternatives made in other countries, and the US will lose the markets it once had. The US should be confident enough to believe that no country in the world can surpass it yet, at least not any time soon. That said, the time frame could be anything from a few dozen to a hundred years.
The US has very robust innovation mechanisms and innovation drivers as well as a leading legal system, which have attracted many talented people to the US. Currently, no other country can compete with the US. Many of the world's most talented people seek to settle in the US, which makes it difficult for us to attract top-tier talent. What we get are probably tier-2 or tier-3 talent, but we are a close-knit team. Maybe together, a few of us, or dozens of us can be equivalent to one top-tier mind. That's why we have a lot more employees than many US companies, but don't necessarily achieve far more than them.
In this sense, the US will continue to lead the world technologically, and globalization is good for the US. But the US government is gradually backing away from globalization and giving up its market share in certain countries, creating opportunities for some smaller companies in those countries to emerge and thrive. And one day these countries may also overtake the US.
07 Kristie Lu Stout: At the core of the US-China tech war is a lack of trust. The US government does not trust Huawei. It thinks Huawei's technology provides a backdoor to the Chinese government and it still thinks that. What can be done to remove the suspicion and to rebuild the trust?
Ren: First, the assertion made by the US government is false. Huawei has never been involved in any such incidents over the past few decades. I don't think we can convince the US, but we can convince its allies. They have used Huawei's equipment for more than 10 or 20 years, so they have a thorough understanding of Huawei. Carriers in these countries will also persuade their governments to greenlight Huawei and open their domestic markets to us.
Second, Huawei's equipment is very advanced in terms of energy consumption, bandwidth, and especially size and weight. Few companies can deliver the kind of lightweight solution we offer. Take 5G equipment installation for example. Our base station is so compact that it can be carried with one hand and no towers or cranes are needed. This makes the site construction cost extremely low, which is quite a big accomplishment.
Many houses in Europe are old. It's impossible to build big towers on top of them, so the base stations can only be installed on rooftops. If the equipment is too heavy, the houses won't be able to bear the weight. Our equipment has excellent features and is lightweight, making it a perfect fit for Europe. European countries will definitely choose us. I think the choice made by our customers will drown out the voices of the US government, though they are very loud. Ultimately, customers will make up their own minds.
08 Kristie Lu Stout: The trust in Huawei and the issue of trust in the Chinese government. If the Chinese government asked Huawei to hand over data, you would have to hand over the data, right?
Ren: First, the Chinese government has never made such requests.
Second, Mr. 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 a statement at the Munich Security Conference that China has no law requiring companies to install backdoors. And at the press conference following the Second Session of the 13th National People's Congress in March, Chinese Premier Li Keqiang also said that Chinese companies are not allowed to install backdoors or steal information. These are the official interpretations of Chinese law from the Chinese government.
Third, Huawei has no access to data. We only provide bare equipment to carriers. Data is only generated when carriers run the equipment. Carriers operate in sovereign states, and they have to comply with the laws of these sovereign states.
Huawei has no access to the data and we don't need the data. So from this point of view, what the US has been saying just doesn't hold up. It's like trucks. Trucks can be used to do bad things. What to transport in a truck is up to the driver, not the truck maker. You can't blame the truck maker for any bad things that are done using the truck. The same applies to us. We are like a truck maker.
09 Kristie Lu Stout: On December 1, 2018, your daughter Meng Wanzhou was arrested in Canada at the request of the United States. So, she's been under house arrest for a year now. What has been the personal toll, the personal impact of her ongoing detention on you as a father?
Ren: As a father, of course I care about my children and I am concerned, but I believe that these hardships will toughen my daughter up and benefit her for the rest of her life. In the China-US trade war, she is like an ant caught in between two titans. I think she should be proud of herself for being caught in such a situation – that she is important enough to be used as a bargaining chip when two countries fight.
She hasn't committed any crime, and the charges brought against her by the US are simply not true. We believe that the court will come to a just conclusion sooner or later. So she is now in a good state of mind.
Now her mother and husband take turns keeping her company in Canada and they help her stay relaxed. She also spends time learning, reading, and drawing to keep her spirits up. She has the patience to wait for a fair, just, and transparent solution to the issue by the Canadian law.
Kristie Lu Stout: And you are confident that she won't be extradited to the United States?
Ren: Yes, we are confident that there won't be any problem about that. We are now fighting a lawsuit in the US District Court for the Eastern District of New York and we are confident that we will win. This way we can prove that we have the capacity to stand up to the US government in court, and the US government won't attempt to bully us in the future.
Kristie Lu Stout: When was the last time you spoke with Meng Wanzhou, your daughter?
Ren: Three or four days ago.
Kristie Lu Stout: How often do you speak to one another?
Ren: It depends. Sometimes I will send her something funny I see on the Internet, and I will also call her and chat for a while.
Kristie Lu Stout: Have you become closer as father and daughter since she's been under house arrest in Canada?
Ren: Yes, we are closer than before. In the past, she rarely called me or sent me texts, even over the course of an entire year. But as parents, of course, we were very happy that our children worked so hard. Now, our relationship is closer.
Kristie Lu Stout: Do you think she is toughening up under house arrest in Canada? Is she being tested in a way that will improve her leadership qualities for when she comes back to Shenzhen to work at Huawei?
Ren: First, I believe these difficulties will have a huge impact on her willpower and make her more mature. However, she will not be assigned any special, additional responsibilities once she returns to the company. As she was the company's CFO, she will continue working in this area. Our company's top leadership must have a background in technology. Otherwise, they will be unable to provide strategic insights, and under such leadership, the direction in which we are heading will become vague and our company will gradually lose its competitiveness. Therefore, Meng will only continue working in the area she specializes in.
Kristie Lu Stout: While under house arrest, has she been working for Huawei in some capacity? What kind of projects has she been working on?
Ren: At the moment, she can only work online remotely, so she is not involved in the management of any day-to-day work. Liang Hua has been appointed as our acting CFO, and has assumed the CFO's responsibilities. Liang was Meng Wanzhou's predecessor. She took over this position from him, and Liang later became our chairman. As she is going through this crisis, Liang is now working as acting CFO and has assumed the responsibilities that come with the position. Meng Wanzhou occasionally provides comments on relevant work remotely. That's the current situation.
10 Kristie Lu Stout: Have you made any attempt to visit Meng Wanzhou in Canada?
Ren: That depends on Trump. If he invited me, perhaps I would go.
Kristie Lu Stout: President Trump has said that he would intervene on your daughter's behalf if it would help resolve the China-US trade war. Is that something you would still welcome?
Ren: If Trump could intervene in Meng Wanzhou's case, then it means that her case is not about crime, but about a deal. The conditions for that deal would be that the Chinese government make huge concessions in trade negotiations. That means Meng would only be exchanged provided these conditions are met.
I think, China overall is still poor. There are still tens of millions of people in China living below the poverty line. According to the UN, the poverty line is set as 1.9 US dollars per person per day; however in China, it's set as 1.2 US dollars. So if we use the UN's standard, China would have more people below the poverty line. China's goal for next year is to lift these tens of millions of people out of poverty.
But if China has to make bigger trade concessions with the US, money that should have gone to the underprivileged would be used in exchange for Meng's freedom. We won't even consider this. Maybe you haven't been to Western China, where there are still many people living in poverty. I can share some photos of the children there. If Meng's freedom was gained at the expense of the underprivileged, I don't think our consciences could rest.
We are confident that Meng will win the case under Canada's legal system, because she is innocent. We also believe in the US's legal system and that we will win the case in the US District Court for the Eastern District of New York.
11 Kristie Lu Stout: Two days after your daughter was detained in Canada, two Canadian citizens were detained in China, Michael Kovrig and Michael Spavor. Unlike Meng Wanzhou, they cannot see their loved ones, and they cannot call their loved ones. They are not allowed to move freely. Have you thought about how they're being treated and whether they're being treated suitably?
Ren: Even now, I don't know details about the two Canadians detained in China because that has nothing to do with us.
What we care about is whether Meng is treated with generosity, and we think she should be freed. If the US thinks Huawei as a company has a case to respond to, we can handle it in the US District Court for the Eastern District of New York. Meng's case is her own matter, and she doesn't represent Huawei. We don't need her to assume any responsibility that should be on Huawei. We are confident that we can fight the charges at the US District Court for the Eastern District of New York. So I think these are two separate matters.
I don't know what has been going on between China and Canada, because we aren't a representative of our country.
Kristie Lu Stout: As a father, you've been able to speak with your daughter and, in fact, your relationship has gotten closer, as you said, even though she is under house arrest. Do you think the fathers of Michael Spavor and Michael Kovrig deserve that as well?
Ren: We don't know the situation of these two people, or the situation of law enforcement surrounding their cases, so I cannot really offer any comment.
12 Kristie Lu Stout: Let's talk about your leadership style. You are the founder of Huawei. You're also a former PLA officer. You use a lot of military language in your speeches to your employees. Do you sometimes feel like you're a general, and this is a battle for the future of Huawei?
Ren: First of all, I'm not a general and I've never been conferred a military rank. I was merely a low-ranking officer when I served in the Chinese military several decades ago. My rank may have been a bit higher than that of George W. Bush, who was a first lieutenant equivalent to a company-level officer, while I served a professional role equivalent to a Deputy Regimental Chief. But I was still only a low-ranking officer at that time.
Second, a company must be well-organized and disciplined, and cannot be like a heap of loose sand. We learned this from the US Military Academy at West Point. I once met West Point's former superintendent. I told him that I had greatly admired West Point when I was young, including their management approaches, education approaches, and hardworking spirit. During our company's early stages of development, we learned from West Point's spirit and introduced many of their practices, especially the mechanism of phasing out underperformers. However, the coverage of this mechanism was too wide when we first adopted it, as it included non-managerial employees, which was too cruel. We've realized now that we only need to phase out underperforming managers, rather than "soldiers". Through this mechanism, managers are pressed to improve their management, which drives the company forward.
Looking to the future, we will continue experiencing a very difficult time. We cannot even assume that the external environment will stay the same. If the US makes more changes to the external environment, what should we do? We must have solutions, and this will require organizational efforts. Sometimes, when it's difficult to describe some concepts, I may use military language. But these are just figurative terms, and they don't indicate that we are a military-style organization.
13 Kristie Lu Stout: Your leadership style works well for Huawei. What is your leadership advice for the leaders in Hong Kong to end the unrest and protests?
Ren: China has adopted the "One Country, Two Systems" principle for Hong Kong, which means their system differs from that of China's mainland. Hong Kong is capitalist, while China's mainland is socialist. Hong Kong needs to solve their problems themselves, and any advice from outsiders like us means nothing to them.
What's happening in Hong Kong now has little to do with Huawei. Our biggest concern is to patch up our holes, rather than worry about what's happening in Hong Kong. I'm not a politician, so I'm not too concerned with the situation there, and I seldom go there to shop.
Kristie Lu Stout: Last weekend we saw a landslide victory for pro-democracy parties in Hong Kong. How do you view that? How is China viewing that? Is that going to introduce more friction between Hong Kong and China's mainland?
Ren: An action is lawful only if it is performed under the "One Country, Two Systems" legal framework. What matters most to Hong Kong is how to achieve prosperity and let everyone benefit from it. This is the most important mission for Hong Kong leaders. Democracy is just a political term and shouldn't be Hong Kong's top priority. How Hong Kong can prosper is really the most important issue that its current and future leaders should consider. Isn't prosperity something we all hope for?
Kristie Lu Stout: Do you have sympathy for Hong Kong protesters for what they're fighting for?
Ren: I wouldn't say that I have sympathy because I don't know what is happening. I strongly oppose violence because it is wrong. Everyone has the freedom to express themselves, but violence is unacceptable. Violence is not acceptable in the US, either.
Kristie Lu Stout: Do you have sympathy for peaceful protesters and what they aim for?
Ren: It's not a matter of whether or not I have sympathy for them, because I have not really looked into what they are asking for, and I don't understand what they have been doing or what their demands are. What I'm saying is that only peaceful actions that are aligned with the "One Country, Two Systems" principle are acceptable. It's not a matter of whether I understand them or not. But I think extremes like vandalism are unacceptable.
Kristie Lu Stout: Now, US lawmakers are fighting for Hong Kong. They're getting directly involved in the situation there. That must be complicating the trade war, the tech war, and also the future of Huawei in the United States. What's your thinking about that?
Ren: I'm aware of what Mr. Marco Rubio recently said about Hong Kong. China's Ministry of Foreign Affairs has objected to US interference in the internal affairs of Hong Kong. But Mr. Rubio had said their treatment of Hong Kong was an internal matter of the US. I think this is a big joke.
14 Kristie Lu Stout: Huawei needs to rebuild its partnerships and business in the US. Have Hong Kong and the protests there made that task even more difficult for you?
Ren: Hong Kong has nothing to do with Huawei's rebuilding of business or partnerships. As a hub of commerce and trade, rather than technology, Hong Kong cannot offer any products or components we need. Therefore, Hong Kong does not impact our international collaboration in any way.
Kristie Lu Stout: If President Trump signs the Hong Kong Human Rights and Democracy Act into law, surely that will affect the trade war and, in turn, affect Huawei's future, right?
Ren: We don't think so. Since we don't operate in the US market, how would that affect us?
Kristie Lu Stout: So Huawei has given up on the US market entirely?
Ren: Well, we can't say that we've completely given up on the US market. We are still fighting for the rights outlined in the US Constitution. However, the US is currently rejecting our services in the country. For example, US carriers like AT&T and Verizon don't buy our products. So we have no way to serve the American people, even though we have the intention to do so. The US is a country that advocates freedom, so I think it should be open and inclusive towards different players from around the world. But the US is currently turning its back on these principles. How can the US continue to lead the world in the future?
15 Kristie Lu Stout: Mr. Ren, you have served at Huawei over the last 30 years, during which time Huawei has become the world's largest equipment provider and the second largest smartphone vendor. Have the US-China trade war and tech war prevented you from retiring? Because you must be exhausted.
Ren: I don't think the US trade war or tech war has much to do with Huawei. As to whether I would retire at some point, I hope to solve Huawei's survival and development problems first. When we begin to pull through, I will gradually reduce my workload at the company. Actually, I don't do much work at Huawei now, because the company is mainly managed by our executive directors and rotating chairmen. They just consult me on certain matters from time to time. If they don't consult me, I won't know what's happening at the company. My role at the company has already been reduced, and gradually it'll be further reduced until I have no role at all. So I'm not concerned about how I will exit the company. In the short term, I don't have a plan for retirement yet; but if I come up with one, I'll let you know.