Ren Zhengfei's Interview with Bloomberg TV
May 24, 2019
Q1: Mr. Ren, thank you very much for the time to talk to us. President Trump has described Huawei as a dangerous company. He said, and I'm quoting, "From a security standpoint and from a military standpoint, this is a dangerous company." How do you respond to that?
Ren: I have no idea why he considers us to be a danger. We provide information and communications services to three billion people around the world, including those in underdeveloped African countries and other hardship regions. Like missionaries in the past, we try hard to bring culture (communications services) to the depths of the thickest forests. We have been serving humanity with religious devotion. How is it possible that he considers us to be a danger?
5G is not an atomic bomb. It is a tool for communicating information. The content of communications has nothing to do with the tool. Take a microphone as an example. We cannot say that this microphone is a dangerous tool, because it can transmit and amplify voices. But those who speak with a microphone may say something that poses a threat. How can a tool itself be dangerous?
His accusation is unsubstantiated. Does he have the confidence to analyze the accusation for the public?
Q2: The US decision to blacklist Huawei is being framed by some US lawmakers as a death sentence for the company. Do you see this as a question of life and death for Huawei?
Ren: First of all, the US has decided not to purchase our equipment. This is their freedom in a market economy. They can choose not to buy or sell a product. This is not an issue. But the US believes that we pose a threat to security. We have virtually no presence in its market. How does its security have anything to do with us? It has nothing to do with us.
The US is a country ruled by law. In such a country, what's most important is evidence. But the US has failed to present any evidence to prove that we are a security threat and instead has directly added us to this blacklist. A journalist once asked Mike Pompeo where the evidence was. See what his reply was. He said that they asked the wrong question. So I think it may be wrong to add us to the Entity List.
The US is acting with too much anxiety. This is irrational. The country has dominant advantages all over the world and this has been so for quite a long time. Even if some countries manage to catch up in the future, the US still has its relative strengths. Certain companies make some breakthroughs in certain areas. They should be happy about this, because other players can work with them to provide better services to humanity. How can they consider this a threat?
Is it possible that Huawei will collapse after being put on the list? No, we won't. But our aircraft is bullet-riddled. As you can see in this photo, this is an Il-2 bomber made by the former Soviet Union during World War II. It is actually a portrayal of Huawei. Despite being badly damaged, we don't want to crash and just want to make our way back home. Our current situation is difficult, but it won't cause us to collapse. Adding Huawei to the Entity List may cause us some trouble. But we are repairing our aircraft while adjusting our route back. We will definitely survive.
We will still be a global leader in 5G, as well as some other areas. And our competitors won't be able to catch up with us within one or two years.
Q3: You talk about the aircraft analysis and it's an interesting one. The list of companies that supply Huawei with components, as well as software, and are now cutting off the supply of both is growing. This includes Qualcomm, Intel, and Google. So I guess the question is, how long can you survive without these supplies, in terms of both components and software?
Ren: The US is not the world's police and should not seek to manage the whole world. Other countries can decide whether to do business with us based on their own interests and positions. If a company decides not to trade with us, we'll patch that hole in our aircraft with sheet metal or cardboard. We will keep flying and do the repairs at the same time, so that the aircraft continues to fly. How long can it fly? How should I know? We hope to make it to the top of Mount Everest. That's our ideal. The US shares this same ideal. The difference might be that they climb up from the south, with a backpack full of canned beef and coffee. We are moving up from the north with field rations. Without bottled water, we need to melt snow to drink.
Why does the US go to such extremes when dealing with Huawei? What makes them so scared? The US is so powerful. Why does such a small company as ours deserve so much attention from them? I'm thrilled about this, as we are valued and our role has been exaggerated. What the US has done is publicity, good publicity actually, for us. I'm very grateful for what they have done.
Q4: You talked about reaching Everest. What does that mean? What does Everest look like for you? What is the company's ultimate goal once you reach it?
Ren: I think Huawei's goal is to work hard to develop advanced technologies and provide cutting-edge services to humanity. The US also wants to achieve this goal. What's wrong with us sharing this same goal and providing services to humanity?
Q5: Do you think the recent actions by the US will be more painful for Huawei or for your US suppliers?
Ren: It hurts both.
Q6: In terms of 5G, because there has been a lot of focus on 5G technologies, can you continue to offer the same quality, in terms of 5G technology, without US components?
Ren: We don't have problems with 5G. We can maintain the quality of our most advanced products.
In terms of the services of core networks, have you developed your own chips that can replace US supplies?
Do we have a timeframe when those in-house chips developed may be able to be used as a substitute for some of those US supplies?
Ren: Actually, we have been using our in-house chips for a long time. We used to have a "1+1" policy – half of the chips we used came from Huawei, and half from US companies. This could protect the interests of our US suppliers as well. We could also verify that our products worked in real-world scenarios this way. If the US imposes more restrictions on Huawei, we may have to use more of our in-house chips than those from the US. If Washington allows US companies to continue selling chips to Huawei, we will continue buying US chips in large quantities. US companies and Huawei have a symbiotic relationship. We will not discard our partners just because we are able to make chips on our own; otherwise, no one would be willing to cooperate with us in the long term.
Our goal in making our own chips is not to substitute other companies and create a closed system. Our goal is to better understand future technologies. We don't intend to completely substitute the chips of US companies. We hope to maintain long-term, amicable relationships with US companies. The point is not that we will replace the chips from the US when ours are already. We've been using our own chips all along.
Q7: Are you looking to change your supply chains at all to ensure that you have the components that you need? Is that a process that you're looking at now?
Ren: No. We will keep our existing supply chains unchanged, and will continue placing purchase orders with US companies. If they can no longer provide supplies to us, then the proportion of our in-house products will increase. It is up to us to find ways to solve our own problems.
Q8: As it stands, Huawei is the leader in 5G technology. Can the actions of the US be an advantage to your competitors like Nokia and Ericsson?
Ren: Yes, it will be good for these companies. When they can make more money, they can better serve humanity. Both Nokia and Ericsson are great companies. Many years ago, when the EU wanted to sanction Huawei for dumping practices, Sweden and Finland were the first to object. I would say this was due to prompting from Ericsson and Nokia. We have treated each other well, and we have never seen each other as an adversary. Isn't it a good thing if they can secure more market share and assume more responsibility for serving humanity in place of us?
Q9: You talked about having two-year lead in terms of 5G on your competitors. Does that lead get eroded?
Ren: Of course. If we fly slower because our aircraft wings are riddled with bullet holes, our peers can certainly catch up because they can fly faster. But we are fixing these holes, and when this work is done, we will fly faster.
Q10: How much damage do you expect to be felt in the consumer division of your business – smartphones and laptops, which depend on US chips and US software?
Ren: Huawei is definitely impacted. The precise extent of impact will be assessed by the respective product line or department. They will find alternatives, or remedies, so to speak. We will pursue reasonable progress. Our growth rate may not be as high as predicted, but we will still see growth. The fact that we can continue growing in the most challenging environment shows that we are a great company. Of course, I have never bragged about myself in my whole life; I'm just praising myself this time because we are facing the biggest difficulty so far.
Q11: And you have bragging rights because earlier this year you overtook Apple as the No. 2 smartphone maker as your smartphone sales in the first quarter jumped by 50%. And because you do have the goal of becoming the No. 1 smartphone maker in the world, does that goal now have to be shelved?
Ren: Apple is huge. Two years ago, we became a bit bigger than them – like a peach. In the next two years, we may have become smaller than them, like a plum. But a plum is still fit for consumption, even though it may taste bitter.
So you still want to be the No. 1 smartphone maker?
Ren: No. We can scale either up or down. Huawei is not a public company, so we don't aim for big numbers or high profits. Survival is the best thing we can hope for.
Q12: I want to ask about your operating system. We've been told that you want to develop your own in-house operating system. Can you tell us what that's going to look like and when we can expect to see that?
Ren: When it comes to the operating system, the difficulty is not the technology. Building an ecosystem is the most difficult thing. Apple and Google have built robust ecosystems. Huawei has always supported the ecosystems of Apple, Google, and Microsoft. We have followed their lead. There will be new operating systems, for the Internet of Things and the like. Can we develop some simple operating systems? I can't say for sure that we will be doing very well in this, but we will make effort. Just as how we produce other components, chips, and products – we put effort into it.
So the key challenge is building an ecosystem, because Apple and Google spent years building their ecosystems. Will that be a key challenge around OS?
Ren: Yes, you'd be right.
Q13: There are calls by some in China for Beijing to retaliate against Apple. Is that an option that China should be looking at taking?
Ren: Definitely not! If it were, I'd be the first to oppose such actions. Why should we act against Apple? Apple is a great leader in the world. Without Apple, there would have been no mobile Internet, and the world would not have been as colorful as it is today. Apple is like a teacher to us, leading our way forward, and a student would never act against his teacher. If Beijing does so, you can come interview me and I will be the first to voice my opposition to blocking Apple.
Some people say that since the US has blocked Huawei, China might as well block Apple. I've always been against this idea. Apple is a great company that serves humanity. Why shouldn't we use Apple products? Some of my family members are using iPhones, and Huawei phones as well, of course.
Does that nationalism and populism concern you?
Ren: No. We strongly oppose populism and petty nationalism. In a global economy, we must work together to achieve shared success. We live in a big world, and it's impossible for a single company to support the world alone. Again, we strongly oppose populism and nationalism. Even if we can rise to become the world's No. 1, we will partner with others to serve humanity, not just by ourselves.
Q14: President Trump has repeatedly suggested that Huawei could be a factor in any trade deal between the US and China. How likely is that, do you think, from your perspective?
Ren: The US has sued us and we have filed our counterclaim. Now that the cases are undergoing legal proceedings, what do we need to negotiate? We will leave them to the court. We don't have anything to do with China-US trade talks. The US has bought almost nothing from Huawei, and even if they want to in the future, we would not necessarily sell to them. It's better that we wait for the court's ruling. I believe the US justice system is open and transparent.
I just had to bring it up because it's the President saying, Huawei could be a part of these trade negotiations, which is why I brought it up.
Ren: If he called me, I might not pick up. He doesn't have my phone number though, of course.
Q15: Trump says he is master of the art of the deal. You're a deal maker as well. Do you think you could make a deal with Trump if that was a possibility?
Ren: How can we negotiate with Trump after the US sued Huawei? The US is a country ruled by law. We should leave the case to the court.
Q16: You have said in the past that you think President Trump is a great president. Do you still think he is a great president?
Ren: Trump is a great president. He tells the whole world that Huawei is a great company and not to sell us components. As a result, we are winning more contracts and can hardly keep up with the increasing orders. He is a great president because he tells the world how great Huawei is.
Q17: Many people see parallels between ZTE and Huawei. ZTE last year accepted a deal with the US that involved changing their board and paying a significant fine. It involved quite significant oversight as well. Are there any conditions that would be possible to Huawei if that meant lifting the yoke of these restrictions?
Ren: I don't know about ZTE and haven't engaged with them before. The US sued us at the District Court for the Eastern District of New York, where we will defend ourselves. We will see them in court.
Q18: Your daughter is being held in Canada and faces extradition to the US from Canada, and she's facing charges in the US of fraud and breaking sanctions against Iran. Those are the allegations from the US side. President Trump has suggested that he could intervene to help your daughter, presumably you welcome that kind of intervention?
Ren: Canada is a country ruled by law. We will clarify in court how the Canadian government acted illegally during its law enforcement. Meng has not committed any fraudulent activities. We have made this clear in court. Both the US and Huawei should provide evidence in court in the future, and we have our evidence. Meng was treated unfairly, which may have been politically motivated. Since Trump himself is a politician, how could he intervene? He just wants China to offer some benefits to the US. We didn't commit any crime, so why should we ask our country to offer benefits to the US?
Have you spoken with Meng lately?
How is she?
Ren: She is studying while under house arrest.
Q19: Do you think the legal action against Canada and the US is helping your cause, or is there a risk that it inflames tensions?
Ren: The US and Canada took action against us first; we then countersued. Why are we considered to be the one disrupting the social order, when we are merely responding to the call of the US? Why did the US sue us even though they knew that it would disrupt the social order? Why shouldn't we file a counterclaim after they sued us? The US is a fair, open, and transparent country. It has the right to sue us and we have the right to defend ourselves.
Q20: What do you think America's long-term strategy is, when it comes to China? Do you think it is about trying to, as some would argue, contain China's rise?
Ren: I'm not a politician and I don't know about politics. You need to ask President Trump these questions because he is a politician.
You have rich experience and you've built up a phenomenally successful business. You've traveled to many countries and you're very well versed in what happens internationally. There are some who have said that this is the point when we are facing, essentially, a new cold war. Is that a risk?
Ren: I don't think I'm a very capable person. My capabilities are limited to managing this company. I turn a deaf ear to things irrelevant to Huawei and I don't comment on them, including things relating to China. This is because I don't know about the practices of other Chinese companies.
My travels to many countries have been for fun only. I could talk at length if you were to ask me about which places have good coffee, or which places have beautiful scenery, but I am not the right person to ask when it comes to politics.
Q21: OK, let me ask you about technology. Because there are those who say that if we keep going down the path we're going down, we'll have a situation where we, essentially, have two technology ecosystems: one driven by China, one driven by the US. Is that a risk?
Ren: The world has always walked a bumpy road. In the industrialized age, we had different standards for railways: narrow track, standard track, and wide track, which hindered the development of international trade. Back then, everything moved slowly, so the different standards of railways didn't create much trouble. When it comes to communications standards, we had multiple standards before 5G appeared. Different standards drove up costs for users and made it difficult to access communications services.
Since 5G appeared, bandwidth costs have been greatly reduced. In terms of network capacity, 5G is 20 times larger than 4G and 10,000 times larger than 2G, but the size of 5G equipment is much smaller and its power consumption is only a tenth of what 4G equipment consumes.
In this new age, even those without much money can afford broadband services, giving them more opportunities to receive cultural education. In the information society, children even in remote regions can see what the world looks like. Then they will develop faster, grow more harvests, and create more wealth. More people will be lifted out of poverty. All this will benefit society.
I'm not sure whether there will be two systems of technical standards. If yes, when the two sides meet at the top of the mountain, with one climbing from the north and the other from the south, we will not fight with each other; instead, we will embrace each other to celebrate our success in driving the digitization of humanity. We will toast to each other. Since there is only snow at the top of the mountain, we will use melted snow instead of champagne for the toast. Ultimately, we are jointly serving humanity. It doesn't really matter whether there is one standard, two standards, or more standards. What really matters is reducing service costs.
Q22: As you sit here today, what is your assessment of how long this trade war could go on? We've heard a former Chinese senior official say it could continue till 2035. We've heard Jack Ma say it could go on for two decades.
Ren: I don't know how to predict this. I'm only responsible for managing our company. Our business can be scaled up or down. When under attack, our business could be scaled down to the size of a table tennis ball. Then it could be scaled up to the size of a volleyball, and then to a basketball. We can adjust the size of our business anytime.
Q23: The critics of Huawei would say that you've got to where you are through intellectual property theft and government support. What is your response to that?
Ren: We have developed technologies that the US hasn't developed yet. How could we steal technologies that do not even exist? We would need to wait for the US to invent them first. Regarding whether we are supported by the government, we have been audited by KPMG, and KPMG can provide you with our audit report. Jumping to conclusions could result in a wrong judgment. If we were behind the US in terms of technology, would US politicians step up efforts to attack us? We are attacked because we are ahead of them.
Q24: In the past, you faced legal challenges from Cisco, from Motorola, and from T-Mobile. What does that say about the culture of the company, and what steps have you taken to address those issues that came up as a result of those legal cases?
Ren: First, all of these cases have been heard in court in the US. We must respect the courts' judgments. We require all of our employees to never violate any regulations or laws. We have a huge amount of technology. If someone asks what contributions we've made to humanity, I would say we have over 90,000 patents, many of which are patents we have recently obtained for the information society. We have made huge contributions to the information foundation of the digital society. Among our patents, over 11,500 core patents were filed in the US, and the US government has approved these patents. They should come to understand Huawei's contributions to humanity, and the disputes between us may be gradually resolved.
Q25: How did you manage to go from behind your competitors, like Ericsson, like Nokia, to being the leader in 5G? What steps were implemented? How did you manage to make that leap?
Ren: First, we work while others are having coffee. In general, we work much harder than others. Second, individually, we are not that wealthy. We distribute our profits to employees, and this helps attract excellent scientists and talent to join us. I am not super wealthy, although I suppose I am rather rich. It is true that I was poor in the past, but I have been forced to become rich over the past 20 years. As a Chinese saying goes, people gather around you when you share money with them. When we share our money, scientists around the world come to join us or work with us. That explains our fast pace of growth. Perhaps scientists come to join us because in the US, more money is going to Wall Street, not to scientists.
Q26: If at a moment of national crisis, the government came to you and said, "We need your help, we need your cyber skills, and we need access to your network because it's for the good of the country, for the government, for the good of Chinese people," how would you respond?
Ren: We would definitely not install backdoors. We won't ever do such a thing. We are serving humanity, not intelligence agencies. Why would we install backdoors?
You are a member of the Communist Party. You've taken an oath of allegiance to the Communist Party. If the Communist Party leadership came to you at the moment of conflicts between the US and China, do you say no to that oath? Do you break that oath and stand by the company? How do you make that decision?
Ren: According to its oath, the Communist Party of China is loyal to the people. The oath does not include anything against the US.
Just help us understand, what are the practical steps for denying a request like that in China?
Ren: The Chinese government has never made any such requests. According to an article published by a German newspaper, no backdoors have ever been found in Huawei's systems. The UK said it has the toughest and most rigorous oversight regime in the world for Huawei; that's why they trust us and continue to use our equipment. Huawei has a proven track record in security, and we will never accept any request to implant backdoors or collect intelligence for anyone in the future.
Q27: You mentioned the UK. They published a report through your cyber security center there last year, saying that they were very concerned that Huawei hasn't addressed some of the issues that they brought up with Huawei, that those issues posed a risk to Britain's telecom companies?
Ren: This report criticized Huawei in a well-intentioned way. Indeed, Huawei is not without its flaws. If there are issues that need to be addressed, we will make improvements.
You can also ask some US companies whether they would comply with any request to install backdoors, and see what their answer is.
Q28: How would you characterize your relationship with the Chinese government?
Ren: I pay taxes to the Chinese government and abide by Chinese law.
Have you spoken to the government since the blacklisting?
Ren: There is no need for me to do that. Regarding our issues with the US government, we will leave everything to the court to decide. Why would I need to talk to the Chinese government?
There have been reports that they might be looking at offering financial assistance to your company. Is that something you'll consider?
Ren: There has been no such thing. You will be able to see that in our financial statements. If Western banks reduce loans to Huawei, we may apply for more loans from Chinese banks. In the past, we borrowed a considerable amount from Western banks because of their lower interest rates. However, if Western banks refuse to offer loans to Huawei, we will get loans from Chinese banks even though the interest rates are higher. This is only about business. It has nothing to do with the government.
Does the Chinese government, or any of its entities, own any stake, any part of Huawei?
Ren: No, absolutely none at all.
Q29: A lot of this, maybe all of this, comes down to a question of trust and, from the US side, mistrust of Huawei and of China. Do you think there are additional steps, beyond the steps you've already taken, that you could take to improve that trust, whether that is restructuring the company or listing the company? Is there anything you can do to build on that trust?
Ren: We have worked with our customers for 30 years, and we are serving three billion people. The trust our customers and users have in us will not simply disappear because of something someone says to them.
Huawei will not go public in order to earn some people's trust. We are clean, so we don't need to worry about what others have to say about us.
Q30: Are you winning the argument in Europe?
Ren: We definitely do not have the upper hand. The US is very good at influencing public opinion around the world. Huawei's voice is too soft; it's like the sound of the wind blowing against the grass, which is overwhelmed by the sound of the waves at sea. Nevertheless, we need to speak out and make our voice heard. In the past, we believed that silence does not mean cowardice and tolerance does not mean apathy, and we kept stepping back, but they just didn't want to give us a break. So we want to say something. However, ultimately not many people would be able to hear what we say, because the US is very good at influencing public opinion.
Q31: Your business success certainly speaks to the trust that you have clearly built up with many of your clients. But the question of trust applies to the government, and I wonder if there is anything that you feel, personally as CEO and founder, you could have done to improve that trust, or to build that trust?
Ren: In fact, most governments trust Huawei very much. When disasters happen anywhere in the world, Huawei is often among the first to stand up and respond to the disaster. When a devastating earthquake hit Japan and caused a serious nuclear disaster on March 11, 2011, all other companies evacuated at this critical moment. But Huawei employees stayed and headed in the opposite direction towards the disaster-stricken area to restore communications equipment, which supported the repair of the nuclear power plants. When Meng Wanzhou flew from Hong Kong to Tokyo at that time, there were only two people on that flight. One was Meng Wanzhou and the other was a Japanese person.
We are a responsible company that works for the destiny of humanity. After Indonesia was hit by the devastating tsunami, Huawei immediately donated plenty of cash and equipment, and several hundred Huawei employees promptly set out to the coastal area to restore communications equipment, which greatly facilitated the disaster relief effort.
During the magnitude-9 earthquake in Chile, three of our employees were trapped at the seismic center and lost contact with us. The rep office called me, asking whether they should send people to find them. I said that since there might be aftershocks, we should wait patiently; otherwise, the rescue team could also be trapped by the earthquake. After waiting a few days, the three missing employees finally called us and said they were safe and sound.
However, the local director didn't know that Huawei had decided to put lives above all. He asked these three employees to go to repair the broken microwave devices. So they just got their backpacks and headed straight to the center of the disaster area to support the relief effort. We have made a short, three-minute video based on their story, with these three employees playing themselves.
Later, when I went to Chile, the country's richest man gave me a box of fine wine. I then went to see one of the three employees and gave the box of wine to him. He happily accepted and didn't bother to share a bottle with the senior executives sitting next to him. He is such a straightforward, great person.
In addition, Huawei has been working hard in many areas of Africa stricken by infectious diseases, such as plague, Ebola, AIDS, and malaria; many Huawei employees there even contracted malaria themselves. Therefore, Huawei applies a famous rule of the US army for promotion, which says that only people who have been on the battlefield, engaged in battle, and gotten scars can be promoted. At Huawei, people who have never worked in hardship areas will not be promoted to senior leadership positions.
Q32: Let me go back a little bit to your history. I want to paint a picture for our audience of who you are and what motivated you. How did you go from being an engineer in the People's Liberation Army to building and setting up Huawei as a company in 1987?
Ren: My personal experience can be divided into two parts:
The first was when I worked within the system of a planned economy. I had served in the army before the large-scale disarmament, when China adopted a planned economy system. Within that system, I served as an engineer up to the level of Deputy Regimental Chief. But all of a sudden, the army carried out a large-scale disarmament, and many of us had to leave. We were directly thrown into the vast ocean of the market economy.
Thus, the second part of my life was spent working in the market economy. At first, I had no idea what the market economy was about. For example, I didn't understand why people sold something at the price of 12 yuan when it was bought with only 10 yuan. Wasn't that cheating? My thinking was still restricted by past experience. Naturally, I choked many times in that ocean of the market. I also trusted everyone too much. When I worked in a small company, some people cheated me out of money. I tried to get the money back, but I couldn't afford to hire lawyers. So I studied the law on my own to defend myself. After I read the laws of many countries, I realized that the market economy was in fact about two things: the goods and the customer; and the law governs what's in between – the transaction. I can never control customers, but I could get hold of goods and follow the law. That's what motivated our R&D efforts. We must do research on goods and sell them to our customers through legal transactions, if we want to earn money from our customers.
In that situation, I was dismissed by my previous employer, so I had to find another job. It was right after China had adopted the reform and opening-up policy, and begun allowing educated young people to return to cities. The government also allowed these young people to do business, such as selling tea or steamed buns, since they could not arrange jobs for all of them. In Shenzhen, starting tech companies was allowed. So I decided to give it a try and started Huawei. Actually, I set up Huawei because I had no other way to make a living. Ever since founding the company, I have stuck to my original idea, which is to make quality goods and sell them to customers at reasonable prices to earn money. That's the very simple reason why I set up Huawei, and how it has managed to get where it is today.
Q33: What were your ambitions for the company back in 1987?
Ren: At that time, we didn't even have enough food. My only wish was to survive. My daughter was still very little. Her mother often told me that she needed to buy stale fish and shrimp in the market at 5 o'clock in the afternoon and cook them for our daughter to make sure she got enough protein, as children cannot grow healthily without enough protein. Back then, we were only able to maintain the minimum standard of living. It was impossible for us to have any ambitions, because we didn't even know if we could survive. My most famous slogan at Huawei is "survive, survive, and survive". Even today, the story of the damaged aircraft that I talked about is still about survival. I don't have great ambitions.
Q34: Did you ever imagine that you will be sitting here today in this position?
Ren: People who do not have much desire often turn out to be more capable. I have never imagined myself here, nor have I wanted to earn a lot of money. So I hold only a small portion of company shares. I did not even own an apartment back in 2000. My wife and I rented only 30 square meters, or half the size of this meeting room. It faced west and there was no air-conditioner.
There was no turning back for us. If we did, there would be nothing but poverty. But if we moved forward, there would be some hope. There was certainly no hope if we turned back. So we had to bite the bullet and forge ahead. Suddenly, we are seeing the light at the end of the tunnel, and finding ourselves at the top of the mountain.
If the US had not attacked us, we wouldn't have known that we are somebody in the world. Thanks to them, we're now aware of where we stand and we are very proud. Even if Huawei collapsed today, we would still be proud. Because it was Trump, not a nobody, that defeated us.
Q35: To what extent does your military experience influence the way that you run the business?
Ren: There is no turning back. All we can do is to put one foot in front of the other. We have to plod on, powering the grain mill like a donkey. It's the flour we grind that gives us the drive to charge forward. Step by step, we have somehow managed to overtake others and stay ahead. The nature of the military involves facing up to difficulties and challenges and moving forward one step at a time.
Q36: You had another difficult period for the company in 2000. You talked about the year 2000, when Cisco sued Huawei over intellectual property infringement. Compared to that period, is now a more difficult period for the company than 2000, or was that still one of the most challenging periods for Huawei?
Ren: For us, there has been no period without difficulties. Every period is the most difficult.
Q37: It's also being reported that you considered selling the business to Motorola in 2000. I think it's 2000. Is that a happy twist of fate that you didn't end up selling the company?
Ren: I think Motorola was silly in this case. That week, Christopher Galvin was replaced by Ed Zander. Mike Zafirovski, Motorola's second chair, had negotiated with us on all transaction contracts and signed off on all the paperwork.
While waiting for final approval, we all put on floral-print clothes, ran around, and played ping pong on the beach. We then learned that Ed rejected this acquisition.
Years later, when I met the CEO of Ericsson, he said Mike had cried when talking about what had happened. He wondered why this great acquisition had been vetoed.
At that time, we at Huawei were afraid of the US. We knew that we were going to have to square off against the US as we continued to develop. We knew who we were then, so we planned to sell Huawei and go into the tourist and tractor sectors. But the deal failed, so we were engaged in new discussions over whether to continue with technology or sell Huawei to someone else. I was ready to compromise. That's my style. I always compromise if that's the right thing to do.
However, all of our younger executives said they wanted to continue with our business. They all had a technical background. If they gave up technology and went into tourism, they didn't think they'd be good at flying tourist flags. So they decided to stick with technology.
I replied, "We might be in conflict with the US ten years from now. So we need to move forward, and work hard to improve." They unanimously said yes. Now, we're in a hard fight, like an aircraft riddled with bullet holes. But we are not divided. We are even more united – this might have something to do with our forecasts back then.
But can we? We don't know the answer yet. Someone asked me what if the engines and fuel tanks are hit. Don't ask me whether our aircraft can still fly if no one sells engines, fuel tanks, or fuel to us.
These will all be new challenges. We will meet these challenges head-on. We have to play it by ear when exploring the way forward.
As for your question of whether our aircraft can land, I can't say it for sure, because what really matters is that we land safely. Now, this damaged aircraft is still flying in the air. It might not withstand fierce winds and might drop to the ground.
Does this make Huawei stronger, automatically?
Ren: Not necessarily. I would say it's a trial by fire. It helps us reinvent ourselves.
Q38: Where do you think Huawei's greatest opportunities lie in the future?
Ren: As we haven't yet solved the problem with our survival, how can we talk about the future? There is still a question mark over whether the US will give us the license to survive. It's too early to talk about the future.
Q39: Speaking of survival, the company is famous for spending heavily on R&D, 10% of revenue every year, and that in some respect has been a major catalyst of driving Huawei to the forefront of the 5G technology era. Given the actions that the US has taken, does that mean that you're going to have to ramp up that R&D spending even more to develop your own in-house products and components?
Ren: We used to set our prices relatively low based on our costs. This gave some Western companies a hard time; some even went bankrupt. I was not proud of that. But now our prices are set relatively high, higher than those of Ericsson and Nokia, and we have earned a lot of money because of this. Now our salary standards are higher when compared to the West. If we continued to distribute more money to our employees, they would become complacent. To avoid this, we are spending more money on funding scientific research and investing into the future. This is what we call "increasing the fertility of our soil" at Huawei. Apple is the greatest company in the world. Selling at high prices, Apple is like a big umbrella, beneath which many other companies sell products at lower prices and survive. Inspired by Apple, we have also opened an umbrella of our own; only ours is lower. We don't charge low prices, either. This is because we have many measures in place to bring the costs down. With extra money made, we will invest more into scientific research and the future.
As long as we have enough to subsist on, we will continue to ramp up investments. Even in the hardest times, we will still invest into the future. Otherwise, there would be no future at all. If the company suffered losses to the point where we couldn't pay employee salaries, that would be another story. We don't have such a problem at the moment. Moving forward, we will save money that could be saved, but we will not cut funds for R&D investments. Otherwise, the company would collapse.
Q40: When it comes to the fight for talent, we have seen many Chinese students having their visas in the US denied, and some Chinese academics being denied access to the US. Is that a potential opportunity for Huawei to attract Chinese talent to the company?
Ren: It depends on whether our departments in different domains are short of such talent. If yes, of course we are happy to bring them in.
Q41: What do you think will be the most significant technological changes in the future?
Ren: Artificial intelligence.
AI? Is that going to be an increasing focus for the company and for you?
Ren: At the moment, AI chips and AI systems are widely used at Huawei. Without AI supporting our product lines and management systems, our management costs would be enormous and there would be no extra money for R&D. In addition, AI has been widely used in our products.
Q42: How long do you plan to be the CEO of the company?
Ren: I'm not sure. Perhaps I will stay in this position for some time.
Do you have any succession plans in place?
Ren: We've always had a succession plan. My successor is not a single person, but a group of people under which there is another group of people and then another. It's like a chain that underpins a huge succession plan. Our succession plan is not about a single person. What if there was only one successor and that successor became ill? And we are a damaged aircraft. So our succession plan is not about a single person, but about a group of people.
Q43: I just want to bring it back to some of the original topics we talked about at the beginning around the supplies. We talked about how some of the major suppliers, like Intel, Qualcomm, Arm, Panasonic, and Google, are restricting their supply of components and software to Huawei. Just explain to us how you weather that storm. What exactly have you put in place in terms of contingency? Can you just give us a few more details around the contingency plans that have been put in place?
Ren: US companies must assess their own interests and their own situation before making decisions. We support suppliers making their own assessments. There has been a lot of media coverage about this, but what's really going on remains unclear at the moment.
But you started to put contingency plans in place over a year ago. We have been told. What made you take that decision? How did you know? What underpins that decision to start planning for this eventual reality?
Ren: Our contingency plans were not only meant to deal with emergencies, but also to help us become an industry leader. If the industry cannot provide advanced technologies such as more advanced chips and components, we will have to develop them ourselves. But we only develop some of them. We wouldn't be able to afford the costs of doing everything ourselves. We have prepared the core parts of the aircraft, including engines and fuel tanks. But we don't have many components to create the wings. We still need to examine which parts have been damaged and then fix them. Two or three years down the road, you will see whether we have survived or not when you come to interview us.
Q44: You talked about survival. What issue could be a cause that would kill the company?
Ren: The biggest potential killer of Huawei would be a lack of confidence, of willpower, and of unremitting effort.
Q45: One way to look at what happened to Huawei is to look at what China has done to US companies in the past, blocking some of America's top technology companies. So some would argue that, in some respect, the US is just playing catch up in terms of putting in restrictions around Chinese technology companies.
Ren: They are not just limiting our access to the US market; they are closing in on us all around the world. If they just limited our access to the US market, I would be willing to accept that, because I had no particular desire to enter the US market to begin with.
China has restricted many of America's top technology companies from operating here. So some would argue that it's only fair that it's leveling the playing field.
Ren: They are lobbying all around the world against us. It is not an issue of limiting our access to the US market. It is preventing us from buying parts and components. The US is even enacting laws to limit us, but they need to tell us what we have done wrong. The US is a country that exercises the separation of powers, but they reached a verdict on us simply following a vote by legislature. That was unconstitutional, so we filed a lawsuit against them.
Q46: You did talk to the Chinese press and you talked then that China could have reformed and opened up more quickly. I wonder if you think if some of those steps had been put into place around reform, around opening up the market here at an earlier stage, we wouldn't be in the position that we're now in.
Ren: We must not link our matter to the issue of whether China should accelerate its reform and opening-up. They are two different things. I have always been a supporter of China's reform and opening-up, because this initiative has already contributed towards China's wealth, strength, and prosperity, and will continue to do so. China must no longer close its door. It had closed its door for at least 5,000 years, during which China was poor. In 30 years of its reform and opening-up, China has become prosperous. Opening-up is good for China. This has nothing to do with Huawei's fate. I support China's continued efforts to open up.
However, it is necessary to open up step by step. The US is the most open country; but it still doesn't allow Huawei to enter its market, does it? If the US can open up step by step, why can't China?
Q47: As you sit here today, where do you see Huawei in five years' time? What is your vision for the company? What are your expectations for what this company looks like within that time frame?
Ren: I can't imagine what things will be like in five years' time. We'd better first imagine what things will be like in three years. When you come to visit us in three years' time, please bring a rose and lay it before our tomb if Huawei is gone. If Huawei is still here, I will give you a big cake. I hope that when you visit us in three years, you won't bring a rose, but instead, I will be baking a big cake for you. This is what I wish for, but I don't know what will happen in future.
Ren: Survival is always our top priority. Without survival, development won't be possible. I don't have any dreams. I think we still need to be practical and address the problems facing us today.
Q48: Just returning to the question of Cisco and the legal action it took in early 2003. Is there more that you could have done in your position between that period and now to address some of these concerns, whether it is concern about trust or examples of some Huawei employees infringing on intellectual property?
Ren: Even before the Cisco case, we had already attached great importance to intellectual property management. That was why we could settle such a big case with Cisco out of court. However, that case made us more alert. After that, we paid more attention to intellectual property management. Our intellectual property is a great contribution to humanity. We have many constraints inside Huawei in this regard.
Q49: In terms of culture, Huawei's culture is famous for driving its employees very hard to make those wings drive forward and push the company ahead of its rivals. Is that drive, that ambition, that relentless drive to be better, that culture in some ways to blame for some of these examples, whether it's the example of T-Mobile's Tappy robot when you had Huawei employees trying to get intelligence on that piece of equipment. Is that a statement, to some extent, of the culture of Huawei driving employees so hard?
Ren: For specific cases that are still undergoing legal proceedings, we will wait for the court to decide. In general, our management at Huawei is effective.
Has the company ever set up any systems at all or schemes to reward employees for stealing intellectual property?
Ren: Absolutely not.
The US Department of Justice said that there was a bonus scheme that was put in place to encourage Huawei employees to steal intellectual property?
Ren: The US Department of Justice has filed a lawsuit, and we need to wait for court decisions.
And you wouldn't condone such a system?
Ren: Absolutely not.
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