Ren Zhengfei's Interview with New York Times Op-Ed Columnist Thomas L. Friedman

New-York-Times

Thomas L. Friedman: I just want to first thank you. I've had a fantastic day here at Huawei with your team. I could write a book on what I learned this morning.

Ren: This afternoon, please ask whatever questions you want. I will be very frank in my answers, including with any of your trickier questions.

01 Thomas L. Friedman: I'm looking forward to it. I know you will be. Let's get right to business. As I have explained to your colleagues, there are two stories in the world right now. There's the US-China trade story and then there's the US-Huawei story. My view is that the US-Huawei story is more important than the US-China story.

Ren: I am flattered.

Thomas L. Friedman: US-China will figure that out, more soybeans, more Chinese goods. But US-Huawei, I think, is so important because of what Huawei represents. And I'll explain.

Ren: Actually, we can also find solutions to the US-Huawei problem. For example, Huawei can buy more chips from Qualcomm and Intel, and buy more software suites from Google and Microsoft. We can also support the research of more professors from US universities without asking for the results of their research in return. Doing this will help ease the conflict.

Thomas L. Friedman: So let me ask, let's go right to that issue. To me, over the last 30 years, trade between America and China was mostly of what I call "surface things" and "shallow things"; the clothes we wore on our back and the shoes on our feet. What Huawei represents in wanting to sell 5G to America is not "surface trade" any more, it's "deep trade". You're the front end of China now, making many technologies that actually go deep in our streets, our homes, our bedrooms, and our privacy, and that is a new thing.

When it comes to the exchange of "deep things", we were able to sell China these kinds of "deep things" because you didn't have any other options. We had it and if you wanted it, you had to buy from Microsoft or Apple. But now that China wants to sell us "deep things". Because it's advanced technologically, the problem is we don't actually have the level of trust yet needed to be trading in "deep things". That's why, I believe, either we solve the Huawei problem, or globalization is going to fracture.

Ren: Well first, we have no plans to sell our equipment to the US, so I don't really think there is such a deep-rooted contradiction between Huawei and the US.

Second, we have been more than open to sharing our 5G technologies and techniques with US companies, so that they can build up their own 5G industry. That would create a balanced situation between China, the US, and Europe. This is something we have been ready to do, but the US side has to accept us at some level for that to happen.

Thomas L. Friedman: So let's talk about that. That's a very interesting proposal. So, in that case, maybe a company like Cisco could license your 5G, the entire set of 5G production techniques and software. Is that the idea that an American company could license all of that and use Huawei's technology to build a 5G network on a kind of license basis, so then Americans wouldn't have to worry Huawei spying on America?

Ren: Yes. It doesn't have to be Cisco. It could be Amazon. They have a lot of money. Apple could do as well.

Thomas L. Friedman: Interesting. Mr. Ren, that's a very important proposal. Has this proposal ever been made in public before?

Ren: This interview is considered public, right? I guess you are the first to hear it.

Thomas L. Friedman: So this has not been discussed with any American companies yet?

Ren: No.

Thomas L. Friedman: So another question that we have is, would you consider listing Huawei shares on the New York Stock Exchange or the NASDAQ for transparency assurance?

Ren: What I just said has nothing to do with Huawei doing business in the US. It's about helping US companies use our technologies to do business in the US. Based on the 5G technology we provide, US companies can continue to work on 6G. They can also modify our 5G technologies to meet their security requirements. It is impossible to develop successful 6G without having 5G. Millimeter wave spectrum is too short for 6G, so it would be very difficult for US companies to build a 6G network without our technology. That won't happen for another 10 years though.

Thomas L. Friedman: Interesting, so if I were Amazon or Microsoft and I wanted to do this, I would pay Huawei like a licensing fee. Would that be the idea?

Ren: Yes. It would be even better if you hired me as well. I am good with a salary a bit less than Tim Cook's. I am always blown away by the high salaries executives have in the US.

Thomas L. Friedman: While we are on that subject, can I buy just one share in Huawei while I'm here?

Ren: Not possible. You aren't a Huawei employee. Only Huawei employees can buy Huawei shares. We'd welcome you if you want to come on board though.

02 Thomas L. Friedman: One of the things we'd heard was that Huawei was in talks with the Department of Justice about trying to settle some of the outstanding issues of the past. Do you think there's a deal to be had there? Are you in talks? Would you be ready to be in talks with the Department of Justice on these issues to try to clear up all the old baggage?

Ren: I don't think we have had these kinds of talks, and we wouldn't proactively reach out to the US government. We instead will continue to follow the legal procedures. During that process, if the US reaches out to us in good faith and promises to change their irrational approach to Huawei, then we are open to a dialogue.

Thomas L. Friedman: Let's talk about that for a second. When you say, "change their irrational approach", what specifically would be required?

Ren: The US shouldn't try to destroy Huawei over something trivial. If the US feels we have done something wrong, then we can discuss it in good faith and find a reasonable solution. I think we can accept that approach.

Thomas L. Friedman: Open to a dialogue with the Department of Justice on those terms?

Ren: Yes.

Thomas L. Friedman: Some people say Huawei and Mr. Ren would be happy to settle, but Beijing won't let them?

Ren: No. This is an issue about Huawei itself; it has nothing to do with Beijing. Beijing is not interested in these problems. Without 5G, there would be 6G; without 6G, there would be 7G. We see a long road ahead of us. With money, we can buy almost anything. We planned to sell our business to US companies, but they didn't want us.

03 Thomas L. Friedman: So this is a sensitive question. They're all sensitive but this one in particular. Are you comfortable with the way that Beijing has treated two Canadians who are detained in connection with your daughter's situation in Canada?

Ren: I cannot say whether these two cases are connected. My daughter is innocent and I'm not satisfied with her detention by the Canadian government. I don't really know about the relationship between the two countries.

Thomas L. Friedman: You're not being consulted on it?

Ren: Never.

04 Thomas L. Friedman: One of the interesting things I learned today with Vincent and the team is, if Huawei were able to build 5G in America on a competitive basis with other countries, that it could save up to 240 billion US dollars in the buildout of 5G across America, if Huawei were there competing with its alternative. Talk for a minute, Mr. Ren, what America loses by not having Huawei compete to build our 5G infrastructure?

Ren: I just said that I would agree to transfer our 5G technology to US companies. If that becomes a reality, the 240 billion US dollars you mentioned would go to those US companies, not us. They can change the software code. In that case, the US will be assured of information security.

05 Thomas L. Friedman: Mr. Ren, if President Trump were sitting here, and you got to talk to him directly about Huawei's situation and its aspirations for the American market, what would you say to President Trump?

Ren: First, it's unlikely that he might be sitting here. Second, I think collaboration for shared success is the way forward in the future. I read your book, The World Is Flat. Globalization will lead to optimal allocation and utilization of global resources. For example, if there is only one company that produces a component and supplies it worldwide, then there is no need to make repeated investments into the research of that component. This will translate into lower R&D costs. In addition, the global market is big enough to help bring down the cost of the component. If the product is both high-quality and affordable, it will contribute a lot to humanity. Actually, it is the US that put forward the notion of globalization in the first place. It was a very smart move back then, and they should stick with it.

When it comes to the security of the supply chain in the natural environment, no company would rely on only one vendor for a component, or put all their eggs in one basket. They may find alternative vendors. When there is an earthquake, fire, or when a machine breaks down, one vendor alone cannot ensure the security of the global supply chain. So a component needs at least two vendors to limit risks because it can help secure supply in the event of a natural disaster. However, this causes redundant R&D investments, halves the market share, and drives up costs.

If security is approached from a political perspective and there is a lack of mutual trust, the world would be split into two or even three different parts. Even the US does not dare to place all their bets on a single company. The reason why the US passed the Antitrust Act is that they wanted to have at least two players in every sector in the US market and in markets outside the US. As a result, a company that used to serve the global market now only serves a quarter of it at most. And R&D expenses have quadrupled. This is a huge waste for our society.

Globalization is in the best interests of humanity. The US is best positioned in the tech sector. Everyone wants to buy chipsets from US companies. If US companies sell more chipsets, quality will go up and costs will go down. Then other companies will find it hard to compete with them. Microsoft Windows and Office are good examples of this. It's unlikely that we will see another vendor in that field.

Thomas L. Friedman: If President Trump says, "Sorry, Microsoft, you cannot sell Windows to Huawei. Google, you cannot put Android on Huawei's phone. Intel, you cannot sell chips for Huawei handsets." What will Huawei do? Will it go out of business or develop its own version of Windows, its own version of Android, and its own chips?

Ren: No matter which company decides not to sell a product, there will always be other alternatives. We should believe that humanity will not just die out. When there was not enough food, people ate wild fruits or even tree bark and survived, right?

Thomas L. Friedman: Huawei will not die either. I mean, you will survive this.

Ren: As long as there is market demand, there will always be alternatives.

06 Thomas L. Friedman: It seems Huawei has a lot of enemies. It has challengers in our intelligence community. They say it's a front for PLA spying. It has competitive enemies like Qualcomm and Cisco. All these companies are saying Huawei stole this and that. Is that just competitive jealousy? Is it just conspiracy theories? What are the things that Huawei has done in its rapid growth that it regrets now?

Ren: You said the world is flat. Maybe not necessarily 100% flat, in my opinion. There are also bumps, and ups and downs. There may even be glaciers in between. From that perspective, Huawei is mentally prepared to embrace all the different ways people see us.

If you look at the history of China and also the development trajectory of the Chinese society, Huawei was born by accident. During the 10-year Cultural Revolution, China's economy stagnated and even went backwards to the extent that the economy was on the brink of collapse.

That was a time when tens of millions of young people had no jobs and were sent to rural parts of China. After the Cultural Revolution ended, those tens of millions of young people looked to return to cities, causing much unrest in society. The central government agreed to have them come back to the cities where they originally came.

At that time, workers in factories did not have enough work to do, let alone extra jobs for those young people coming back. The country was concerned about the employment of these people because if they had nothing to do, it would only lead to social unrest and instability.

Then the government mobilized some businesses to set up labor services subsidiaries to work on stuff like cleaning. But still, there were not enough jobs for all of those young people.

Some people who could not find their way out started to sell big bowls of tea or steamed buns in street stalls. That's how China's private sector started, from those stalls selling big bowls of tea, steamed buns, and things like that.

The government then found this was a feasible way to create sufficient jobs. So they gave permission to these small private businesses selling noodles, steamed buns, and big bowls of tea. This was not the delicate tea like we are having now. Back then, they only sold big bowls of cheap tea under shabby tents in the street, a cent or two each.

After some time, some businesses did quite well and grew bigger. But the central government issued a document saying businesses were not allowed to employ more than five or eight people; otherwise, they would be capitalistic. China's private sector was forced into existence, not planned.

Huawei was founded at that time. We had more than eight employees, and we operated under huge pressure. It was very difficult for us to add even one more person to the workforce, because we could not get licenses from the government of the Shenzhen Special Economic Zone.

However, as we often say in China, you cannot keep spring in just one garden. Since private businesses were more efficient, and their employees worked much more diligently, they grew very fast. In the end, the government acknowledged the private sector as a new economic form in China.

But that only happened after a long time of struggling with the old mindset. I would say it was only until recent years that the private sector got a legitimate social status in China. At that time, we were considered communists outside of China; back in China, we were considered capitalists, because people in China saw us holding corporate shares and thought having money was a form of capitalism. Therefore, the challenges that we have encountered do not necessarily come from outside of China, but also from within.

Thomas L. Friedman: One thing that strikes me in learning the Huawei story today and talking to your colleagues and listening to Mr. Ren now, is that you guys really had to fight your way to the top.

Ren: You know, we have always had lots of cuts and bruises, so we're not that concerned to add several more.

07 Thomas L. Friedman: When I talk to Chinese people, I find they're proud of Huawei. Are you like a rock star in China, Mr. Ren, when you go down the street or into a restaurant, like Steve Jobs and Bill Gates have been in the US?

Ren: I actually think I'm quite a pathetic person. If I go out on the street, people will take photos of me. This means I have no freedom at all. I'm not like the pop stars in other countries, who have their own private jets and can go wherever they want for their holidays, and I cannot hide myself from the public. I can't even enjoy a cup of coffee on the street.

I'm actually afraid of holidays, because there is nowhere I can go. I could only choose to stay at home, drinking tea, watching TV, or taking a nap. So holidays actually feel like tough periods for me. The mid-autumn festival is approaching, but I have no clue where I will spend those three days.

Thomas L. Friedman: But what do Chinese people say to you on the street?

Ren: They say, "Can I take a photo with you?" And then they post the photo on the Internet. I have very little privacy. Wherever I go, people spot me, take photos with me, and post the photos on the Internet. I often feel like a rat that can't find a hole to hide myself in.

08 Thomas L. Friedman: So I want to go back to one of the hard questions. I had a senior American official say to me that Huawei has a little device, the size of a pin head, which can be installed on its PCBs or cell phones for the purpose of espionage, to create backdoors. This official said that we can't trust Huawei. He said to me, "Tom, if you only knew what I know, you would never buy a Huawei phone or use Huawei's 5G equipment."

Ren: I would say that this is more like fantasy or science fiction. If Huawei was that capable, why would we sell 5G equipment? I think, for any company, there will always be some areas that are highly sensitive and closed off to journalists. But when The Associated Press came to Huawei, we gave them a lot of time to film our entire exhibition hall, including the circuit boards of our new 5G base stations. We also allowed them to take photos of all our equipment. Huawei is a business organization. What is the point of Huawei developing a tiny device, like what you just mentioned?

09 Thomas L. Friedman: It's very interesting. I've never seen a company that so many people had such strong and contradictory feelings about. "Great." "Love it." "Dangerous." "Espionage." Why is that?

Ren: The world will always have two extreme positions on things. If those who call Huawei a great company said Huawei was actually a little squirrel missing its big tail[1], then those who currently call Huawei a dangerous company would stop saying so. The two sides compete with each other, making exaggerations and trying to see who can get more attention.

10 Thomas L. Friedman: Who are your role models in technology? Bill Gates, Steve Jobs, Gordon Moore, Robert Noyce, or Jeff Bezos? Who are the people you look up to as role models?

Ren: Since I was young, I've held great admiration for all those outstanding figures, including great scientists like Einstein and Turing. When I was young, China was still quite closed, and I couldn't see much of the outside world. But I still admired them a lot, because they had created great development opportunities for humanity.

11 Thomas L. Friedman: As we come to the limits of Moore's law, what's the next frontier for Huawei? 6G or basic breakthroughs in science and physics? What's the next mountain that Mr. Ren wants to climb?

Ren: AI.

Thomas L. Friedman: So what do you mean by that? Why and how?

Ren: We are building a platform to support AI.

Thomas L. Friedman: So this is a software platform, basically?

Ren: Both hardware and software. On September 18, we'll announce an AI cluster that connects 1,024 Ascend chips. This will be the fastest and largest AI platform in the world. So we don't create all the AI applications ourselves. Instead, we will provide a platform to enable all of society to participate in the development of AI.

Thomas L. Friedman: Are there other competitors around the world with an AI engine as powerful as Huawei's? Is Huawei catching up or is it leading in that area?

Ren: Google and NVIDIA can do similar things. It's just that Huawei is currently doing this better.

Thomas L. Friedman: What do you think AI will unlock in the next 10 years? What changes will we see with such a powerful AI engine? What will be its impact?

Ren: Our production line can now turn out a complete premium mobile phone every 20 seconds with basically no manual operations. If you have time, you are very welcome to visit our production line.

Thomas L. Friedman: What about the future? Would it take just two seconds to produce a phone in the future?

Ren: I think it will be faster in the future. We will have more advanced manufacturing with even fewer manual operations. It won't be down to just two seconds though.

Thomas L. Friedman: Incredible.

12 Thomas L. Friedman: When you look at America today, with our President saying, "No Huawei, nothing, you'll never eat in this town again", "We're going to pull American businesses out of China", "I'm going to win, you're going to lose." What do we look like to you? 

Ren: I think the reality might be the opposite of what you just said. The US might lose.

Thomas L. Friedman: Why and how?

Ren: If the US opts out from globalization, how would it win? The US is sitting at the top of the world with many cutting-edge sciences and technologies. It's like the snow on the top of the Himalayas. This snow creates value only when it melts into water, and then flows down the slopes of the Himalayas to irrigate the land at the foot of the mountains. The land can then produce harvests, and people can share in these harvests.

If the US blocks the snow water from flowing down the slope, those companies at the very top of the mountain will be left out in the cold. Their employees will have to feed themselves. If there is no water to irrigate the farmland at the foot of the mountains and they cannot share in the harvest, then how can they have enough money to buy, say, steaks?

The US has strong advantages in the high-tech sector. If the US does not sell its technologies to other countries, I think it's highly unlikely that the US will achieve a trade balance. If that happens, then how can US workers expect a pay rise?

Thomas L. Friedman: Are we possibly facing, therefore, a digital Berlin Wall and an end to globalization?

Ren: Possibly. If the US government continues its current approach, it's possible that a wall like this could come down between us. If that happened, US companies who have dominant positions in the global market would see a reduction of their global market shares. They would probably be able to only maintain half of the market share that they hold now. As a result, they would have to slash their budgets and lay off employees. The lives of Americans will be made more difficult, instead of better.

Thomas L. Friedman: So if Google can't sell Android and Microsoft can't sell Windows and Intel can't sell chips to Huawei, that won't be a small thing for American workers and companies. There'll be a huge impact.

Ren: Indeed. They will have to reduce their operating budgets.

13 Thomas L. Friedman: You've talked about AI and the next-generation technology businesses being a natural evolution of Huawei's business. Are there other businesses Huawei is interested in exploring in the future which don't follow this natural evolution?

Ren: We don't have time or resources to solve other problems. Huawei's addition to the Entity List has caused a lot of holes in our businesses, and our priority now is to fix these holes. It's not a time for us to get involved in other businesses. Huawei is like a bullet-ridden aircraft with hundreds or even thousands of holes. We need to fix these holes, or we will be unable to fly back home.

14 Thomas L. Friedman: So, on the Department of Justice, one last question, would there be any restrictions on what they could bring to the table to discuss? Or is it simply that you're open to talking with them about whatever is on their mind, you're saying, provided they come with a proper attitude? Just so I can clarify that.

Ren: There are no restrictions on what we would be willing to discuss with the Department of Justice.

Thomas L. Friedman: As long as they came with the right attitude?

Ren: Yes, exactly.

Thomas L. Friedman: I can't wait to get to Hong Kong and share this with the world.

Ren: I think that once the information is shared, something will happen. You know, the US is in a leading position when it comes to AI. The US has the most advanced super computers and the most advanced storage capabilities in the world. But the two must be connected at high speeds. The analogy is this: On an ordinary road, once the vehicle arrives at the destination, it is already late.

Thomas L. Friedman: And that's where 5G comes in?

Ren: Yes. You either need fiber or 5G. And fiber and 5G are the very areas where the US is currently lacking capabilities. The US is placing hope in 6G. But even for 6G research, Huawei is leading the world. However, we do not think the commercial use of 6G will begin for at least another 10 years. I don't think the US can afford to miss out on the next 10 years of AI development. At the moment, the speed of evolution for AI is doubling every three or four months. So, everyone has to run very fast to catch up. Maybe by the time we catch up, I will have already died. But no matter what, society will continue to develop.

Thomas L. Friedman: But what you're saying is that they can't run fast without Huawei right now?

Ren: Yes.

Thomas L. Friedman: I'm really excited to be the conveyer belt for what I think is a very important conversation. Thank you.