Ren Zhengfei's Interview with South China Morning Post
March 24, 2020
01 Tammy Tam, Editor-in-Chief, South China Morning Post: Good afternoon, Mr. Ren. We are from South China Morning Post, based in Hong Kong. Thank you so much for taking our interview today. As the saying goes, there are two sides to every coin. We finally made a go at interviewing you, but the flip side is that we can't meet in person due to the COVID-19 outbreak. But with advanced communications technology, we can try it this way. We really appreciate it!
Today, COVID-19 is spreading rapidly around the world. Luckily, the Chinese mainland has contained it. Speaking of the epidemic, can you talk about its impact on Huawei's production? How has Huawei responded to this epidemic? Can you tell us what's going on in your company?
Ren: There is definitely some impact, but as we live in an ever-changing world, we must adapt to changes. This change has had some impact on us. Our growth isn't as fast as before, but over 90% of our production and R&D activities are back to normal.
Even during the Spring Festival, we had over 20,000 scientists, experts, and engineers work overtime. Why? We are working against the clock on production continuity, since the US may increase its sanctions against us.
First, the company started working back on February 1. Since then, our production capacity went from 70% to 80%, then to 90%, to over 90%. However, we rely on many companies along the global supply chain for our materials. So we are facing some difficulties. Many small companies and factories in China are not well-equipped to defend against the virus, so they have difficulties returning to work. We are helping them address their lack of protective materials like masks along with hygienic conditions and other problems. We're also encouraging local governments to let them return to work, so that they can pick up the pace in supplying components to us.
Second, we provide decent incentives for truck drivers transporting our goods. Today, it is not easy for them to get food on their route, so we prepare snack boxes for them. What's in the snack box? A thermos of hot coffee or tea, yogurt, sandwiches, and masks. We have also set up tents in places where they unload goods. They can eat there. This way, these drivers have the initiative to transport goods for us.
Third, air freight is costly, up three to five times, because many flights have been canceled. We must cover these additional fees to address customer needs and continue supplying them. So the entire supply chain has had some impact on us, but the impact is limited, so we can still guarantee our supply.
We also have a lot of maintenance personnel. To guarantee smooth communications, we can't always have them at home. They need to go to different sites to maintain networks around the world. The more severe the pandemic is, the more people need network services. So they can't just stay put. We worked to provide better hygiene and protection for them and also better (financial) incentives. For these employees, we are providing an allowance of 2,000 yuan per day per person in China and 150 US dollars per day per person overseas. This helps them better protect themselves while serving customers.
Besides Hubei, there have been very few confirmed cases in our company. There hasn't even been one case on our Bantian or Songshan Lake campuses. Even for those confirmed cases, mostly in Wuhan, our employees have recovered very quickly.
Tammy Tam: You've put invaluable efforts into this. Just now, you said that you are racing against time, since you need to develop something new before the US tightens its sanctions. Can you tell me what this new thing is? Which one has had a greater impact on Huawei's future, the US sanctions or the COVID-19 pandemic?
Ren: The US sanctions have had some impact on us, but not much. The pandemic also has had some impact on us, but not much either. The impact is very limited, so we can survive both of them.
Tammy Tam: So what's the new thing you mentioned?
Ren: There is no problem for us to survive as a company. But the question is whether or not we can maintain global leadership. Anyway, the US is the leader in many aspects. They have the world's most advanced science, technologies, and education system, as well as the most educated talent. But if we don't have access to these elements to fuel our development, we may lose our global leadership. So we really need to get all these elements done ourselves in the next three to five years. Otherwise, we won't be able to lead the world any longer. So we're investing even more in these areas.
02 Eugene Tang, Business Editor, South China Morning Post: Just now you spoke about racing against time to restore productivity. Has this pandemic had any impact on Huawei's sales or customer demand for equipment? Recently, the situation has calmed down in China, but things outside China are getting rapidly worse. This is the second wave of the pandemic. For international companies like Huawei, how will you cope with this second wave?
Ren: First, when the situation in China becomes more stable, our development may even speed up. People have already seen the role new technologies play in preventing the spread of the virus. Telemedicine, distance education, teleconferencing, and telecommuting all show us how important networks are. People are eager to improve their networks, and so we need to meet their actual connecting needs. Second, Western countries are starting to feel the impact of the pandemic, but quite a few of our projects are about capacity expansion or capability improvement. They don't necessarily need to be completed in the field; they can be completed in an equipment room. This means the pandemic hasn't significantly affected our customer services or development. Of course, there is some impact, but we can handle it.
03 Eugene Tang: You also mentioned the US sanctions just now. Over the course of your personal career, you have learned from many US companies and even drawn wisdom from US politics. However, during the past two years, the friction between the US and China has intensified, and the US seems to be determined to take Huawei out. Ultimately, do you think the US is an enemy or a friend?
Ren: If we want to survive, we have to learn from the best. Even if they fight against us, we still have to learn from them. How else would we become advanced? If a technology company is not advanced, it's bound to die. So if we don't want to die, we have to study hard.
The US sanctions were enacted by a relatively small number of people. They don't represent the American people or US companies. We have worked earnestly with US companies, and we sincerely want to work more closely with the US's science and technology communities, as well as US companies. There are many science and technology research papers available online. Those papers are openly accessible to the whole world. We also read them. We can't be narrow-minded. We must learn from the US, because they are the most powerful.
Eugene Tang: Your open-mindedness is admirable. From a long-term perspective, the friction between China and the US is inevitable. Do you think Huawei is a pawn in this game between the two countries?
Ren: First, I don't know much about the conflicts between China and the US. What they are fighting over is a bit unclear to me. What we focus on is how Huawei can survive. The only way for Huawei to survive is to learn from the best. As Confucius said: "When three walk together, there must be one who can be my teacher". Even if there are less than three people, at least one of them can be my teacher, and so we should learn from them. This is the only way we will have the chance to improve. Narrow-minded populism and nationalism will only leave us behind.
Huawei has over 200,000 employees. Even today, you cannot hear any anti-American slogan from top to bottom in this company. Everyone is learning from the US. We recently even posted some articles on our Intranet released by the US Department of Defense, such as The 5G Ecosystem: Risks & Opportunities for DoD, and another one about Mattis' order on troop deployment. We think they're very well written. They know how to launch an effective campaign against us. Based on their deep insight, we can learn how to further improve ourselves.
Eugene Tang: In the early days when you started your business, you went to the US to learn from their business experience, their politics, and the US Constitution. You say you have a lot to learn from them. In the past two or three decades, from your own experience, what events or periods do you think contributed to the vicious circle we now see between Huawei and the US?
Ren: There was no specific period that caused this, because we've always viewed the US as a powerful country. We've been looking at how companies in Silicon Valley have succeeded. We've worked hard the entire time. The US's legal system is sound, so we learnt from it to standardize our operations. The US's system for separation of powers is also great. For our company, we also avoid centralizing authority in the hands of any one person. All these have laid a solid foundation for our steady development today. There were no milestone events in this development process. We are confused about how we stumbled into this situation, and we will probably move forward in a similarly confused manner.
In short though, we have never shied away from self-improvement or self-reflection. Self-reflection is our company's greatest strength. If you ask a Huawei employee what he thinks he does well, he likely wouldn't be able to answer. If you ask him what he doesn't do well though, he'll talk your ear off. In our company, if a management team keep bragging about themselves, they will be booed off stage; if they talk about what they don't do well, everyone understands them. The more people reflect on themselves, the more outstanding they can become. People who know where they don't do well make changes. This is the "self-reflection" that is part of Huawei's corporate culture.
The US is a good example of self-reflection. In American movies, the US government is often set to be the loser. As the impeachment against Trump continues, he keeps working as usual. This is a self-correction mechanism. We should learn from this mechanism and avoid letting any one person have all the say. Otherwise, the company would be in great danger. We learn from whatever the US does well, regardless of the conflict between us. That doesn't matter in the end.
04 Tammy Tam: What you said about learning from the US is very interesting. Could you share how you've planted good things from the US in the Chinese soil? Many people say there are certain things in the West that just wouldn't work in China. But Huawei has set a different example. You have learned from American culture, ideas like the separation of powers, and aspects of the legal system. I was wondering how you cultivated a company like Huawei in China. Was there any struggle during this process?
Ren: No, no struggle within the company. Before we launched this corporate-level transformation, consultants from IBM warned us that it would diminish the authority of our top leadership. They made it very clear at the very outset that this transformation would place all authority in our business processes. That means authority would be vested in the processes, rather than top leadership. What top leadership could do was setting rules. The ultimate goal was to make me a puppet, because the more I became a puppet, the more successful this transformation would be.
Every link in a process has a certain scope of authority. We learned this from the West. If we want to intervene in matters beyond the scope of our authority, we would have to change rules. We have the authority to change rules, but rules cannot be changed overnight. There must be discussions, just like the legislative process in the US, which can take years, but a legislative proposal will become clearer and more practical through debate. It may be impossible to make things that are too idealistic a practical reality. However, it's often the case that the things that we have come to agree on through debate do gradually become a reality.
Therefore, the higher the leadership at Huawei, the less authority they have, because all the authority has been delegated to lower levels. That's what we have achieved through our transformations.
Though the model of process-based authority originated from Western countries, companies in the West still give too much authority to their CEOs. Their CEOs have the final say in almost everything. What if a CEO is asleep at the wheel? What if a CEO fails to answer an important phone call?
Many things at Huawei could run their course without the CEO even noticing them. There are different kinds of cycles in business, big, medium-sized, and small, which run their course and improve on their own. They may require different kinds of authority allocation and different oversight mechanisms. We have learned methodically from the world's leading management practices.
Eugene Tang: Just now, you mentioned the concept of taking foreign things and making them work in China. Huawei's ownership structure is really unique. It's a structure seldom seen in businesses anywhere in the world, with the exception of John Lewis Partnership, a long-standing department store in the UK. Why did you choose this structure when you founded Huawei? Could you share your thoughts with us?
Ren: First, Huawei is different from, for example, a real estate company. At Huawei, it's the brains of our employees that create wealth. I cannot put these brains in my pocket. They are independent individuals. The company relies on the brains of our employees to create wealth. Some employees might create more wealth than others, and we reward them based on how much they contribute to the company.
Second, tech companies thrive on the foundations they built in the past. Employees' past achievements can continuously create value for the company. Even if we immediately awarded bonuses to employees for the achievements they made in the past, it would be unfair if we use them for free today.
That's why we have adopted a Contribute and Share system where employees share in the benefits of their past hard work. We distribute shares to employees in recognition of their past contributions. This way, they can continue to benefit from the contributions they made in the past, as these still create value for the company today.
I didn't come up with this structure at the very beginning; it took shape gradually. In a word, we need to recognize the contributions employees made in the past and give them rewards, but the proportions of the rewards need to be assessed according to the actual contributions of our employees. This approach can help bring our employees together.
Eugene Tang: As an employee-owned enterprise, you'll never need to go public, right?
Ren: Maybe someday. We haven't given it any thought.
Eugene Tang: You have three rotating chairs, each of whom is in office for six months at a time. People outside the company don't really know how the rotating chair system works, or how the position is handed over every six months. As you just said, a company can collapse if its CEO is asleep at the wheel. Under this structure, how do you downplay the role of personality of each rotating chair and ensure consistency throughout the management team?
Ren: While in office, the rotating chair serves as the foremost leader of the company. The other two non-acting rotating chairs provide assistance and serve as a constraint. The Executive Committee of the Board of Directors (BOD) and the BOD also serve as a constraint on the rotating chair in office. The BOD Chairman presides over the Representatives' Commission, and has the authority to remove incompetent executives. Rotating chairs cannot simply do whatever they want while in office, as there are constraints on their authority. At Huawei, authority is locked up in a cage, which is to say that authority is constrained by rules and collective decision making.
The rotating chair in office works in accordance with the company's rules and regulations. The other two rotating chairs also need to fulfill their due responsibilities; they're not left idle. It's just that they do not make the final decisions. They actually need to prepare themselves to further advance the company's transformations once their terms start. They don't just manage transformation projects once they take office. They conduct sufficient surveys, prepare transformation solutions and related documents well in advance, and will present many documents for discussions once they are in office. If a rotating chair doesn't prepare in advance, he will run out of time, as his term will end even before he gets all these documents prepared. So he must get prepared before he takes office.
All rotating chairs fulfill their due responsibilities, either in the short-term or long-term. Each rotating chair needs to oversee the implementation of a transformation project that they might launch when they take office. The rotating chair in office doesn't have the final say in a transformation project; instead, it is determined through collective decision making. This way, this won't affect the consistency across the company that much.
This rotating chair system is mainly designed to protect our managers. When an executive is in office, you don't see their whole clique of managers rising with them. Say the rotating chair currently in office doesn't like a manager, he cannot remove this manager on his own. Instead, the rotating chair must discuss it with the other two rotating chairs, four executive directors, the BOD Chairman, and other BOD directors. Together, they decide how managers are deployed. That's why we don't have a high attrition rate of senior managers or experts.
We have strong talent succession plans and have very stable managerial teams. Managers are not afraid of their upper-level leadership. They feel it doesn't matter whether their leadership likes them or not, as their leadership might step down in just a few months. For managers, all they need to do is to prove their capabilities with the results of their work.
Our rotating chair system enables the company to stay fresh and ensures the stability of our managerial team. When a rotating chair is not in office, they are busy making preparations for their next term. They travel around the world to provide guidance. Their guidance is valuable as they remain part of the senior leadership. They talk with representatives from different departments, so that they can develop well-thought-out plan for how they will advance transformations when they take office, and get fully prepared for this.
When in office, they take prompt actions to deal with the issues that come up. When not in office, they need to recharge their batteries, because they won't have much time to do so while they are in office. This can help create a reasonable cycle. This rotating chair system has been successful so far.
We've also implemented a tenure system for members of the BOD Executive Committee. All seats on the committee come up for election every five years. Some members might not be re-elected next time. Even if a member is excellent and elected again, they can only serve a maximum of three terms. There is an exit mechanism for senior managers. If they serve lifelong tenures, there won't be opportunities for young people to grow and shine.
When a rotating chair is in office, they work with many other BOD directors and executives. They are actually cultivating the next generation of leaders. We are still figuring things out, so we cannot say for sure that we're doing everything well.
05 Eugene Tang: Huawei is not a listed company, but it still publishes its annual report in the way a listed company does. This is a bit unusual. I assume that at the beginning, there must have been opposition within the company to the idea of sharing its business data and sensitive information with the world. How did you come up with this idea? Why did you decide to do this?
Ren: We bid for thousands, maybe even tens of thousands of international contracts every year, and each time we bid, we need to submit an audit report. If we don't, we are not qualified to bid. So we turned to the most authoritative companies and asked them to perform audits. Right now KPMG is our external auditor. They audit all of our businesses across more than 170 countries, and produce an audit report in March every year.
We make our audit reports publicly available so that our customers can trust us. When we submit a bid, the customer's board of directors often check our reports. An audit covers more than financial statements; it also covers many other details. If we don't have strict management systems, there will be chaos. Then how will international carriers and customers trust us?
We aren't just publishing our financial statements. We are showing the world that we are open. In addition to financial statements, we also publish many other things. This is something we need to do. We are not a listed company, but it doesn't mean we have more freedom or can relax our management. To be accountable to our customers around the world, we first need to make things openly available, because every bid requires audit reports and the contracts may need to be approved by the customers' boards of directors. From this point of view, we are not forced by anyone to publish our financial statements; it's just something we feel we need to do.
Moreover, there was never really any opposition within the company. Everyone understands we need to make these things public.
06 Eugene Tang: Huawei has a unique corporate culture. Some employees criticized this corporate culture, calling it a "wolf culture". They say that while China's wider technology sector has the 996 work schedule, Huawei has a 007 schedule, where employees work from zero hundred hours on day one to zero hundred hours on day two, for seven days a week, without rest. What's your opinion on the work-life balance in China's business world?
Ren: First, Huawei doesn't have a 996 schedule – I don't know which company first used this phrase – and we definitely don't have a 007 schedule. The standards we use for our employment contracts are high, higher than what is legally required in China, because we are also subject to EU audits. We cannot work too much overtime, because workers in the EU are restricted in this regard. Our junior employees are not allowed to work too much overtime even if they want to, and our regulations do not allow for overtime pay past a maximum number of hours. For some scientists and high-end talent, they may spend more time on their work because they are driven by a sense of mission, but they don't do this all the time. Sometimes they attend meetings and brainstorming sessions for several days, but that is normally at nice scenic spots like parks with cherry blossoms in Japan or the countryside with lavender fields in France, where they can sit and discuss and chat. This lets them work and rest as they need. This is flexible. We don't have a 996 or a 007 schedule.
Regarding the "wolf culture", we believe wolves have three characteristics: They are highly sensitive; they work as a team; and they persevere. One of the most notable characteristics of wolves is their acute sense of smell. Similarly, we need to be highly sensitive so that we can identify customer needs and technological trends for the next 10 to 20 years. This sense of smell is important to wolves because it helps them find food, even on the frozen tundra. Similarly, we need to be sensitive to market needs, customer needs, and new technologies.
Second, wolves don't work alone; they work together. For us, that means teamwork. We need this kind of teamwork. Google does this very well, and they have an "Army of PhDs". We have learned from Google in this area, even if we also reposted an article revealing the other side of the coin. We advocate for the strengths of this model while also analyzing its weaknesses as we form our own. No individual in the world can succeed just on their own. Currently we are trying out our "Tu Dandan model". Tu Dandan is a young lady who works as a team leader at Huawei. She proposed a model where teams would be made up of three PhD degree holders and two master's degree holders. We later added two engineers and an administrative assistant or clerk to this model. Administrative work can then be handled by the clerk, and the engineers can help with the experiments. The engineers are not necessarily very experienced or have high academic degrees, but they can learn and grow under the guidance of the top talent in their team and may even outperform them one day. This is the type of teamwork we want to promote.
Third, wolves are persevering, and won't stop until they get the job done. We don't want managers to run away whenever they encounter difficulties. Transferring them to other positions or even demoting them takes promotion opportunities away from young people. Instead, we say if we must die, let's die on the battlefield. Even if we can't handle the main fight, we can still cook for the team. You will be rewarded when the team succeeds, no matter what role you play. You may be a team leader at one point and then later on work in a supporting role, such as serving as a "cook", providing logistics assurance, improving work environment, analyzing different scenarios, or supporting other team members. Right now, I personally play a supporting role. I talk with employees to help them identify their problems and coordinate with others to solve them. Therefore, we don't let managers switch their positions arbitrarily, because this gets in the way of young people in other teams. You should try your best to overcome difficulties on your own battlefield, or provide support at the rear. There, you may have more time to learn and thus get back to the front line one day. You should always stay with your team.
The term "wolf culture" may be misunderstood by people outside Huawei. For us, it represents high sensitivity, teamwork, and perseverance. We don't have a 996 or a 007 schedule.
07 Eugene Tang: When the Belt and Road Initiative was rolled out, Huawei had already been exploring emerging markets in Africa, Southeast Asia, and Latin America for over a decade. Why didn't Huawei start with high-end markets or more profitable markets when it started going global?
Ren: Back then, there weren't many good opportunities out there for us in the Chinese market. In order to survive, we had to turn to the global market. When we decided to go global, we started with the war-torn Africa. Many Western companies had evacuated, but Africa still needed communications networks. Many parts of Africa were at war when I visited there. We currently have the highest market share in Africa, which came out of our long-term efforts starting right then and there.
Only when we became more advanced were we able to enter high-end markets. When we just started our internationalization efforts, we were not advanced at all. We were not an advanced company even in the Chinese market. In our early days of development, the Chinese market was 100% dominated by Western companies. We could only make some simple products and serve in niche markets. That way we grew little by little.
When China just started reforming and opening up, it was highly underdeveloped. Western equipment was in high demand and highly coveted in China. Western companies didn't need to promote their equipment because many Chinese companies lined up to buy their equipment. Western equipment was quite popular in China because their technology was mature and advanced. Many of the employees Western companies sent to China were familiar with Chinese culture and spoke fluent Chinese and English. They were good-looking and had good manners. They got their business done by drinking wine, talking about philosophy, and playing golf with their customers. They didn't have the "wolf culture" and didn't have to work very hard, so we had the opportunity to gradually catch up. We didn't take over their market; instead, they lost it themselves. With persistence and decades of hard work, we have gradually come out on top.
Second, Huawei is not a listed company, so we invest heavily into the future. When we assess managers, an important indicator we look at is soil fertility. We don't just look at how many crops they have harvested, but also how fertile their soil is. We want to make sure the soil is fertile enough to support our growth next year, the year after that, and even 10 or 20 years down the road. During a test, senior executives were asked: What is the "manure" in our soil? Our Rotating Chairman Eric Xu gave the right answer: Invest in scientists, experts, and engineers so that they can research advanced elements of the future. The investment into the future largely relies on scientists and top business leaders. The biggest merit of scientists is that they spend money generously. How can they do scientific research and apply their findings without enough money? That's why we have always poured a lot of money into scientific research. This year, that amount will exceed 20 billion US dollars. Last year, it was over 15 billion US dollars. We increased this year's budget by 5.8 billion, so it should be over 20 billion. We take this kind of investment seriously.
We are not a listed company, so we don't need to maintain high profitability to get as much money as possible out of investors. We know that the fertilizer we put in the soil will help our crops grow the next year. Then why don't we invest boldly now? A consensus within the company is that we must increase soil fertility. We cannot overburden the soil by harvesting all the crops in one or two years. What if no crops grow the next year?
Eugene Tang: Huawei's business footprints now span the globe. You have personally visited every emerging market across the seven continents and five oceans. Which market makes you proudest or gives you the greatest sense of accomplishment? Which market gives you the biggest sense of frustration?
Ren: Of course, the Chinese market is the largest, but outside China, the European market gives me the greatest sense of accomplishment. Almost all European countries like us.
Our rise in Europe is also the result of our own transformation efforts. There are many old buildings in Europe, and the streets there are narrow. We can't put up a lot of towers because these old buildings couldn't bear the weight of the equipment. What was the solution then? SingleRAN. It is our light, compact, and powerful wireless system, which helped us make inroads into Europe and go further and further. Today, our 5G base stations are also the lightest in the world. They can be lifted with one hand and installed on a wall, in a drain, or on a pole. It's that simple. Why do so many people in Europe like our products? Because we solve their problems.
We've never had a sense of frustration. There have been difficulties, but difficulties are not setbacks. We also have business in some underdeveloped countries like South Sudan. In these places, we make sure our employees have living standards as high as wealthy Swiss and provide them with a pleasant working environment that is up to European standards. Our culture of dedication doesn't mean our employees must live difficult lives.
Our goal is to serve humanity. We don't just go after lucrative markets. We also do business in markets where we don't make money.
Tammy Tam: Under China's Belt and Road Initiative, what can Huawei do for the countries involved? Does Huawei face any difficulties in bringing its technology to those countries?
Ren: The Belt and Road Initiative is mainly about infrastructure construction, which involves huge investments. Our contracts are usually for short-term projects and involve much smaller sums of money.
Our customers are very wealthy and make more money than us, so they can buy our products without taking huge loans from banks. We sign small contracts with our customers, and compared to the infrastructure construction of the Belt and Road Initiative, the investment required for our projects is much smaller. Therefore, we have no connection with the initiative.
We are doing our utmost to serve our customers in all countries, whether they are involved in the Belt and Road Initiative or not.
08 Tammy Tam: I'd like to ask something about your life and personality. Previously, you were quite mysterious, but you have appeared a lot in the public over the past 18 months. I recently read a story about Huawei's 5G rollout in the Huoshenshan and Leishenshan hospitals in Wuhan, when the epidemic in China was at its peak. As there had been no publicity from Huawei, people essentially learned about it by accident. Is Huawei's corporate culture of keeping a low profile directly affected by your personal style? Why did you choose to keep a low profile until recently?
Ren: I don't know what it means to be high profile and why we need to keep a high profile. In this case, I can say that we weren't deliberately trying to keep a low profile. I didn't even know about the Huoshenshan project myself throughout. No one reported it to me, and I learned about it on the news, just like you did.
The company has an emergency rescue system and management regulations in place. When the earthquake and nuclear leaks occurred in Japan, our employees rushed to the disaster area with network equipment. Emergency rescue would not have been possible if base stations had not been restored.
The same happened during the 2008 Wenchuan earthquake in Sichuan. We installed base stations, and restored communications by connecting them to satellites. This provided wireless communications to the local rescue forces. Otherwise, how could the military on the mountains coordinate the rescue efforts? On the day two dammed lakes were exploded, it was raining, so our employees had to hold umbrellas for the equipment, and took six hours a day to carry diesel oil up the mountain. The rescue efforts were truly demanding.
As a communications company, we have the responsibility to do our part in emergency rescue worldwide. When there are emergencies, we are not a company, but a firefighter squad whose first aim is to solve problems. It doesn't matter whether we get paid or not.
09 Tammy Tam: You mentioned just now that, during emergency rescue, your company is like a firefighter squad. In the past year and a half, during which time Huawei was sanctioned by the US, and your daughter was arrested by Canadian authorities, did you feel then that you were like the leader of the firefighter squad? The number of interviews you gave in the past 18 months exceeded all the interviews you gave in the previous 30 years combined. As both a father and the founder of Huawei, how did you handle the crisis? What role did you play?
Ren: You can call me a firefighter squad leader if you like, but my major contributions have been related to scientific research and production continuity. Meeting the media was only part of my job. Survival is not just about talking. It concerns a great many issues, so I paid a lot of my attention to internal affairs. My major contributions have been to help maintain the company's strength during hard times. This is the most important part of my job.
10 Tammy Tam: Do you think you are a good father? Your daughter has been in Canada for a long time and COVID-19 is now spreading there. Do you worry about her? When was your last call with Meng Wanzhou?
Ren: Before the Spring Festival.
Tammy Tam: Do you worry about her?
Ren: Her husband and mother are with her in Canada, so I don't worry about her. I am not a good father or a good family member. I devote too much of my time to the company. It's one of my greatest regrets. My children are all grown-up now. I wasn't with them when they wanted to play games like hide-and-seek or when they wanted me to read them stories, so it's normal that we are not very close. The same happened with my wife and me. It's understandable that we are not that close, as I don't spend much time with her. This is also a regret. This often happens with scientists. They may look like a fool in life, but are very bright when it comes to research. I have focused too much on my work, and I neglected my family, so I am not a good family member.
Tammy Tam: How is your relationship with Meng Wanzhou? How do you feel about your relationship with her?
Ren: When I said that my children and I are not very close, I mean I am sorry towards them because I didn't give them much support when they were growing up. They had to rely on themselves. That doesn't mean we have a bad relationship. I just feel sorry towards my family as a father and a family member.
Tammy Tam: Her case is still pending. Have you thought about the worst-case scenarios? As her father and the founder of Huawei, how will you help your daughter get justice? What's the next step?
Ren: We trust that the Canadian judicial system is open, fair, and just. This case will be resolved through the efforts of lawyers and the courts.
Tammy Tam: You talked with Meng Wanzhou on the phone during the Spring Festival, as you just mentioned. Could you tell us what you talked about?
Ren: We just chatted.
Tammy Tam: Are you prepared for the worst possible result? How would you deal with that?
Ren: I don't think the worst possible result could ever happen, because there are very few companies, even in the West, that are as well-behaved as us. Backed by the power of their whole state, the US intelligence system spent over a decade scrutinizing Huawei but still found no evidence of any wrongdoing.
Tammy Tam: To be frank, you were dashing along when you talked about Huawei, but your answers to questions about your daughter Meng Wanzhou were fairly short. It feels like you are not good at expressing personal feelings, including your feelings towards your children. Do you think that's true? Do you miss Meng Wanzhou? Do you just not know how to say that you miss her?
Ren: Of course I miss her. We're family. But missing her can't help. There's still a legal process we have to get through, step by step.
11 Tammy Tam: I'd like to ask you a follow-up question. You were once a soldier. Did that have a big impact on your character? Does that have anything to do with the regret you feel towards your family members, including your daughter? Is that impact big?
Ren: When I was young, joining the army was the best option for me. I was very lucky to have been given the opportunity to work in the Liao Yang Chemical Fiber Factory. Looking back now, we were like migrant workers. When the country decided to build that factory, no work unit wanted to be stationed there. The conditions there were tough and the Cultural Revolution made many things chaotic. No one wanted to work, so the army was dispatched instead. There weren't many technicians in the army, so soldiers like me who weren't really experts were sent to work on this factory instead. That was how we got the chance to work there. I think we were lucky because the factory introduced that super-advanced French chemical fiber equipment. This was a huge opportunity for us, so we poured ourselves into work, and didn't care enough for our families. I was thousands of miles away from them. What could I do? We didn't have mobile phones or WeChat back in those days. It was really difficult to call home. Sometimes, even when the call connected, we still couldn't hear each other, even if we shouted. So I could only write them letters that said simple things. Do I regret that? I do. Everyone has regrets in life.
12 Tammy Tam: When you mentioned Huawei's culture, you said Huawei would avoid the practice of "every new sovereign bringing his own courtiers". As the founder of Huawei, how do you view yourself? Do you think of yourself as Huawei's spiritual leader? What is your role at Huawei? People outside the company think of you as the symbol of Huawei, a spiritual leader. Would you ever consider retiring completely, or will you just keep working for Huawei?
Ren: There will be a day when I will retire. All people eventually pass; no one can live forever. When will I retire though? That is something that will have to be decided when the time is right. I'm not Huawei's spiritual leader. I'm a puppet leader. With our rotating chairs, the Executive Committee of the Board of Directors, and all the other governance bodies we've put in place, I'm like a puppet here. I only play a symbolic role, like a clay idol in a temple. Without it, the temple would look empty, but in truth, the idol doesn't really do anything. I don't manage any specific things. I'm not even involved in management appointments. Whether or not I'm at Huawei has no real impact. I've been a puppet for a while, and I'll continue to be one in the future. I'm just a clay idol, getting smaller and smaller every day. One day, I'll disappear.
Tammy Tam: You are still the spiritual leader, not just a clay idol.
Ren: I'm telling the truth. Really.
13 Tammy Tam: I have a question about your personal life, personality, and work style. You made Huawei a global tech leader. What is your biggest concern going forward? How worried are you that Huawei might lose its leadership position? Are you more concerned with your daughter or with Huawei's position? No matter whether you are a clay idol or a spiritual leader at Huawei, is there anything that keeps you up at night?
Ren: What's most important to us is that we need the right external environment if we want to advance into a new domain. It's impossible for us to enter a domain and lead the way by ourselves. China needs to place more emphasis on basic education, especially in rural areas. Throughout the history of China, many leaders were born or grew up in rural areas. This means rural areas are also a cradle for talent, so it's important to promote basic education in these areas. Basic education paves the way for basic research, which in turn leads to basic theories and then to breakthroughs. It is unlikely for us to be a leader without making breakthroughs.
China has made great progress in education and culture over the past 70 years. But if we look at the international environment and the role China plays, the country has a long way to go in basic education. Basic education will help turn the sparks of technological advancements into something really great. Over the years, Huawei has partnered with countless scientists and hundreds of universities worldwide, which has enabled our development. Hopefully, in the coming years, China will become a country with all the necessary elements, not only in manufacturing and engineering, but also in coming up with new theories and all other elements. I hope China will develop further in basic education and provide the right environment for many companies to lead the world. If you are not a leader in the information industry, chances are your products or services won't sell.
Tammy Tam: When you step down, how would you like others to see you? As an entrepreneur or a thinker? A good father or a somewhat bad father?
Ren: I hope that I am "the forgotten one". People should forget me and spend their time learning science and technology or making contributions to society. I'm just an old man. What's the point of remembering me? People should think more about the future and the world. Young people should not have to bear extra weight on their shoulders. Huawei doesn't relish in its history and has seldom documented what it has been through.
We have implemented sunset provisions for our corporate files. We learned this from Trump, who requires that for every regulation added, at least two be repealed. Huawei sunsets a corporate file five years after its release, otherwise so many files would drag the company down.
I think young people should move ahead on light feet. I don't want anyone to remember me. My biggest wish is to drink coffee in a café unnoticed.
During the COVID-19 outbreak, I went to many parks in Shenzhen, where there was no one else around. I also went to cafés and empty shopping malls. Shenzhen is a nice place to live, but I wasn't able to enjoy all its beauty because I'm a net celebrity and I get recognized everywhere I go. People took photos of me and posted them online. It would be sublime if nobody noticed me in a café when I'm old, with a hat on, a walking stick in my hand, and wrinkles all over my face. I wish to see, with my own eyes, the splendor of my country. People should forget me, and I will be "the forgotten one".
14 Tammy Tam: I don't think your dream will come true. You will always be recognized no matter where you go. Just now you brought up Trump. What's your opinion about him? Do you have anything to say about him? Why did he sanction Huawei?
Ren: The US sanctions and our sunset provisions are two different things. Trump requires that for every regulation added, at least two be repealed. This has inspired us. Over the course of three decades, Huawei has developed an excessive number of corporate files that have never been repealed. When all our files are still in effect, we have to follow them all. This problem has made operations a nightmare. The sunset requirement of Trump reminded us that we must have our own sunset provisions. At first, we called it "Trump Sunset Provisions", which was shortened during internal reporting. This is Trump's creation. Before that, we had no idea about how to get rid of legacy procedures. Later we learned about this and took off the extra weight of the legacy procedures. Our company has become more nimble, and our HQ workforce has shrunk.
15 Eugene Tang: Here's a question about cyber security. Could all countries in the world reach a consensus on global cyber security standards?
Ren: Survival is everyone's ultimate goal, and security comes next. Everyone in the world agrees on that. Europe was the first to set cyber security standards, including the General Data Protection Regulation (GDPR). This is a very good initiative. When everyone abides by the GDPR, sooner or later cyber security won't be an issue.
Huawei supports European standards and has been investing heavily in R&D to reconstruct our networks. As Huawei has gone from a small company into what it is today, our network architecture has been built up along the way, but it's unclear whether this architecture will be able to adapt to the future framework. That's why we are bringing in many talented people who will help us reconstruct our networks. If we can completely meet Europe's high standards and simplify our networks over the next few years, then our ability to serve humankind will increase significantly. We believe the global community will reach a consensus on cyber security and privacy protection.
Eugene Tang: You often say that Huawei's network equipment is secure and has no alleged backdoors for the Chinese Ministry of State Security. How do you convince your customers of this, especially your customers in Europe, which you said is the most important market for Huawei?
Ren: To begin with, our network equipment is secure. We don't have any malicious intentions. But can we meet the European standards in terms of technological capabilities? We will continue to work on that. Our European customers have worked with us for over 10 years, and some for even 20 years. They have gained a deep understanding of Huawei through years of cooperation, and know that we have no security issues. Over the past 30 years, our network equipment has served three billion people in more than 170 countries and regions, without causing any cyber security or privacy protection issues. This proves that we have no cyber security issues in traditional networks.
Second, our future network architecture needs to adapt to new social developments such as cloudification, massive amounts of traffic, and AI. Cyber security and privacy protection will remain our top priorities; otherwise, no one will dare to use our network equipment.
16 Eugene Tang: As the US is now pressing Apple to develop network equipment, will there be two different 5G standards in the world in the future?
Ren: The US is a technology powerhouse, and is fully capable of doing so. Some US companies have a cash reserve of hundreds of billions of US dollars. We believe they are fully capable of developing network equipment. However, I still think there will be only one 5G standard worldwide. If there were two standards, how could you enter markets that used the other standard? If you limited yourself within your own market, could you ensure companies that use the other standard would not break into your market and take your place? The US used to dominate the world market. If the US decided against joining a unified world standard, it would put restrictions on itself. This would be a pity. Therefore, we believe that the US is technologically capable of leading the world and creating new products. But there should be only one standard worldwide, because we all need to interconnect with each other, and products that fail to enable this will be of no value.
17 Eugene Tang: After Huawei was added to the Entity List by the US Department of Commerce, you have made many adjustments to your supply chain in terms of the OS and components. Is Huawei able to eliminate all US elements from its supply chain?
Ren: This isn't going to happen, because US companies need to survive. They can still sell and supply components to us as long as they meet certain standards. We are now continuing to buy these components in large quantities. However, if the US government further increases these standards, US companies will be unable to sell some of their components to us. Therefore, we need to find alternatives to these components. Currently, most US chip makers are still selling to us.
Eugene Tang: So it's not necessary to totally eliminate US elements?
Ren: We are living in a globalized world, and any missing links will cause problems. For example, we were incredibly nervous about component supply when production was suspended for two days in the Philippines due to the COVID-19 pandemic. We put a lot of effort into helping them, offering our own experience in fighting the pandemic. It made us nervous when the Philippines suspended production for only two days, let alone if this happened in the US.
Tammy Tam: Do you mean that US companies are still supplying you with some chips and components?
Ren: US companies can apply to the US Department of Commerce (DOC) for licenses under the DOC's jurisdiction. After these applications are approved, they can supply licensed products to us. The DOC has set a threshold, and any exports above the threshold are banned, while sales below the threshold are allowed. It's not a complete ban.
Eugene Tang: The core of any communications equipment lies in chips. Does Huawei have a complete set of alternative chips?
Ren: Yes, we can achieve self-sufficiency, but we are still buying chips from Qualcomm. I don't know how many chips we will buy this year. In the past, we bought tens of millions of chipsets every year. As long as the US does not stop us, we will continue buying large quantities of chips from Intel, Qualcomm, and many other companies. Why not? These companies have been our friends for decades. We can certainly make chips by ourselves, but we still buy from other companies, as this is the foundation of our survival. We cannot stop buying from others just because our own chips are cheaper. Otherwise, if we found ourselves in trouble one day, other companies would be reluctant to sell to us, and we would collapse. Therefore, we will keep buying even if we have our own chips, so that we always have a Plan B.
Eugene Tang: Do Huawei's chips include software design?
Ren: Of course.
Eugene Tang: Can the chips made in China fully meet Huawei's requirements?
Ren: Chinese chip makers are now capable of producing low-end and mid-range chips, but are not fully capable of producing high-end chips. All chip makers need time to develop.
18 Eugene Tang: Huawei is facing pressure from the US. In addition, COVID-19 is affecting the production of smartphones worldwide, as well as sales and demand. Would you please share your forecasts for your business results in the networking and consumer segments this year?
Ren: I don't think COVID-19 will have any huge impact on our annual plan. Sales at the retail stores of our Consumer BG may be affected a little. However, the surging demand for equipment required for online learning and telecommuting has made up for the declining sales of other products. Our overall sales have grown significantly recently, and there are no signs of decline.
19 Eugene Tang: During our visit to Huawei, we saw a lot of advanced equipment and learned about your vision for 5G. Mr. Ren, how do you see the future of 5G, big data, the Internet of Things, and AI? How do you think these technologies will change China?
Ren: I don't think these new technologies will just change China. I think they will change humanity. For example, our 5G technology has been used to build campus networks for Huawei's facilities in Songshan Lake, Dongguan, and oil fields in Saudi Arabia. 5G will not just support massive amounts of traffic, and 5G would be a failure if it only served this purpose. 5G has many other functions, for example, supporting high bandwidth and enabling low latency, which can be used for industrial controls and manufacturing. Currently, about half of all manufacturing factories, such as aircraft factories, could use 5G to enable automated and AI-powered management. However, 5G still can't support some high-precision manufacturing work, so we need to work on that.
Businesses' adoption of 5G technology is part of the B2B market while consumers' use of 5G is part of the B2C market. We believe that 5G will create tremendous value in the B2B market. Businesses can use 5G to create cutting-edge things.
For example, 5G can help automate surface mining in Brazil, eliminating the need for manual operations. It can also enable autonomous driving on large farms, allowing tractors to work 24/7. People would only need to fuel these tractors. If agricultural machinery is able to work 24/7 in some of the more challenging areas in Africa, we could see real miracles.
New technologies can serve a wide array of purposes. 5G is still in its infancy, and its functions still need to be improved. Take the anti-jitter function as an example. We need to conduct more mathematical and other theoretical research to ensure the stability of 5G networks for millisecond-level jitter, so that 5G can play a vital role in high-precision manufacturing.
5G development has just begun, and it has brilliant prospects. We believe that the US has some great ideas and approaches that they can use to overtake us. Huawei cannot serve all businesses and all people, so we need to work with more partners.
20 Eugene Tang: Do you think COVID-19 is an opportunity or crisis for Huawei?
Ren: We sincerely hope the pandemic will be over soon. Throughout history, humanity survived numerous plagues, and the COVID-19 pandemic will be over eventually. Modern medical technology is very advanced, and we are more capable of containing epidemics than ever before.
In ancient China, emperors fought epidemics by hanging moxa sticks on their doors during the Dragon Boat Festival. Guangdong apparently cured more than 90% of the confirmed cases with traditional Chinese medicine, although I'm no expert and just saw this on the news. I believe that through concerted efforts, humanity will eventually overcome COVID-19.
21 Tammy Tam: Many people see Huawei as a victim of the US-China trade and tech war. How do you view Huawei's future development? You just said that Huawei is racing against time for fear of being overtaken by the US. Do you think Huawei will be overtaken by the US? How far ahead of the US are you? Do you feel a sense of urgency?
Ren: Playing catch-up is the norm in our society, and no one can stay ahead for ever. If someone is chasing us, it will drive us to run faster so we are not surpassed. Those who are left behind also need to run fast in order to catch up with those in front of them. So I believe playing catch-up is a good thing for companies, as it drives companies to move forward.
22 Tammy Tam: Do you have anything to say to President Trump?
Ren: We should all work together to serve humanity. That's the ultimate goal of any company.
23 Tammy Tam: Finally, I would like to ask you, Mr. Ren, a question on another topic. As Huawei is under attack from the US, many people from the Chinese mainland have said that Huawei represents Chinese enterprises. This has become a kind of populism. However, you yourself are using Apple's products. What do you think of people considering Huawei as a symbol of China?
Ren: Huawei itself is a global company, with a high proportion of non-Chinese scientists. We currently have 40,000 non-Chinese employees, who are mainly middle- to high-end talent. Therefore, our success can be attributed to our global operations.
I just hope that China can place more emphasis on education, become on par with the US and Europe in this regard, and boost the creativity of Chinese children. Only by doing this can China contribute to basic theories over the next several decades.
Don't think that we must overtake the US or Europe in basic theories. This thought is wrong. Any basic theory will ultimately benefit all of humanity, and China needs to contribute to humanity in this regard. China cannot simply take without giving back, and should contribute much to basic theories, which sometimes take decades to bear fruit.
Qualcomm's channel coding schemes for 5G long message transmission were developed based on a paper of a US mathematician in the 1960s. Our channel coding schemes for 5G short message transmission were based on a mathematics paper written by a Turkish professor over a decade ago. Generations pass before theories are applied to society. We just hope China can contribute more to humanity in the future. These contributions will be theoretical breakthroughs.
24 Tammy Tam: As the US has been trying to impede Huawei's development, President Trump says that they can directly work on 6G. Has Huawei considered working on 6G as of today?
Ren: We have always worked on 6G in sync with 5G. However, there haven't been any breakthroughs in theories or any other aspects of 6G. Therefore, 6G could only be used about a decade from now.
25 Tammy Tam: Some time ago, there was chaos in Hong Kong. Some Huawei stores there were smashed by demonstrators. Do you have anything to say to young people in Hong Kong? Do you have any expectations of them?
Ren: Similar things have happened throughout history. The UK now has the world's most developed textile industry, but around 200 years ago, workers in the UK would smash the textile machines. However, society continued to move forward. Smashing things does not create new opportunities. The textile workers back then were afraid that textile machines might leave them behind. However, even today, the UK is still the world leader when it comes to high-end shell fabric. Other countries still cannot produce fabric as delicate as that made in the UK. The UK is a developed country with high salaries and good social welfare, but it still produces fabric. I think we must learn from advanced human civilizations.
If a phone is smashed, it means one more can be made. The more that are smashed, the more that are sold.
Tammy Tam: Thank you very much, Mr. Ren, for spending so much of your precious time talking with us today. I hope that while you continue to work hard, you and all other Huawei employees will stay safe and sound during the COVID-19 crisis.
Ren: We will work around the clock.