MISTAKE IN IDENTITY
Huawei founder Ren Zhengfei struggling to prove telecom giant is independent of Chinese government,
Huawei Technologies founder Ren Zhengfei once recommended that his senior executives watch a TV series called Proof of Identity. In that 2009 series, a communist spy who had infiltrated the nationalist army during China’s civil war struggles for years to prove his loyalty and identity after the communists prevail.
Today, 32 years after he founded the telecom giant with $3,000 (U.S.) of borrowed money, Ren is struggling to prove that Huawei is a private enterprise and independent of the Chinese government.
The task is more urgent than ever. In recent months, the Trump administration has said China could use Huawei’s equipment to spy on other countries, although it hasn’t offered proof. Critics accuse the company of being controlled by the Chinese government. Huawei has repeatedly denied these allegations, saying it is owned by its employees and wouldn’t spy on its customers.
Regardless of the issues of ownership and control, which have been subjects of heated debate, Huawei’s struggle stems in part from its own internal conflict. The company has been deeply influenced by Western competitors. Huawei wants to help determine the world’s technological future, and Ren himself has said the company may need to adapt to get there.
But, at its core, from its organizational structure to the way it builds employee loyalty, Huawei closely resembles the Chinese Communist Party itself.
Ren’s management thinking “will naturally carry very deep imprints of the Communist Party culture,” according to a 2017 book, Will Huawei Be the Next to Fall? (A different version was published in English as The Huawei Story.)
Although effusive in tone, the book — named after the sort of question Ren often poses to employees to inspire urgency — offers hints of why Huawei has struggled to reconcile its global ambitions with its Chinese values. The book benefits from access, including interviews with more than 100 top executives. The lead writer, Tian Tao, a management professor, has been a friend of Ren’s for two decades and Huawei sometimes gives out copies as gifts.
Huawei disputed that its internal identity contributed to its problems. Citing strong financial results, it said in a statement that “overall, Huawei’s identity is accepted by customers across most of the world.”
Huawei isn’t the first Chinese institution to grapple with how to relate with the rest of the world.
Since the late 1800s, China has debated how much it should learn from the West while retaining what many people see as core Chinese values: patriotism, loyalty, collective values over individual rights. The idea is known as “Chinese substance, Western application,” and it calls for seeking the tools for China’s economic and military revival without embracing ideas such as individual rights, rule of law and transparency.
That model served China well for decades. But it falters when institutions such as Huawei reach out to the rest of the world. Many in the West worry that Huawei doesn’t share their values and that it could become an actor for an authoritarian state. It will take more than a few rounds of media interviews to overcome that mistrust.
In a September speech, Ren instructed the company’s public relations department to highlight the Huawei values that align with the West to help reach consensus.
“We have our own value system. We don’t accept the Western political value system completely,” Ren said.
Still, he added: “Their civilization was built in thousands of years. A small company like Huawei won’t be able to change it.”
Judging from the book, his speeches and other appearances, Ren seems to be a student of Western learning. He has said he admires U.S. political and legal systems because they offer better protection for businesses — not an unusual idea among China’s business class. He paid IBM consultants for nearly two decades to help Huawei institute U.S.-style corporate management.
“Only by learning from them with all our humility can we defeat them one day,” Ren was quoted as saying in the book.
Still, while Huawei is eager to learn from the West, its soul is steeped in Communist Party culture.
Huawei’s structure looks strikingly similar to the party’s. Each is run by a senior group of seven officials, with similarities even further down the line. It calls its management training program its Central Party School, which is the name of the Communist Party institution that trains promising cadres.
When it comes to team-building and loyalty-building, Ren turned to the party’s system of self-criticism, in which cadres confess to their misdeeds.
“This is the Chinese heritage,” the book’s authors wrote. “Western companies will never understand it. Even if they understand, they won’t be able to practise it.”
Huawei’s hard-charging corporate spirit — known as “wolf culture” to outsiders and employees and as “striving culture” to executives — can trace its roots to the party. When Huawei came under attack a decade ago after some employee suicides made headlines in China, Ren remarked, according to the book: “What’s wrong with striving? We learned this from the Communist Party. We’ll strive for the realization of communism until the end of our lives.”
Although Ren is Huawei’s chief executive, he has said he holds no decision-making power except for vetoing proposals and removing executives from their posts. Huawei’s board secretary, Jiang Xisheng, told journalists last week that Ren had limited veto power.
But within Huawei, he is clearly the paramount leader.
“One can’t use one’s veto and impeachment power too often. Once or twice a year would suffice,” he was quoted as saying in the book. “Nuclear deterrence only works when the bomb remains unexploded.”
Huawei’s pledge to remain open isn’t likely to be enough to win over those put off by its culture. To win trust in the West, Huawei may have to change its DNA.
The same goes with China. When value systems are incompatible, and the two sides see each other as existential threats, it will be hard to find solutions.