At age 75, Ren Zhengfei imagined himself with less work. Leaving the company he founded in 1987 was perhaps not one of the options, but he did think about being a little further from the mud and even from public life. However, just over a year ago his plan changed flatly."The president (Donald Trump) hit me so hard that he forced me to continue working, especially in public relations," said the Chinese tycoon in one of the many rounds of interviews he gave during the last year. But his company is not a newcomer to the business and has enough back to withstand this and several blows, although not without suffering in the middle.
This is Huawei, a world leader in the telecommunications structure industry and one of the most important players in the smartphone category that, even last year, surpassed a giant like Apple.
The blow referred to by the businessman is the inclusion of the firm in the US 'blacklist', known as Entity List, since May last year. Being in it can be a lethal blow because it makes it impossible for companies that integrate it to have suppliers in this country without having a special authorization.Although perhaps the strongest punch, emotionally, happened months earlier with the arrest of Meng Wanzhou, Huawei financial director and daughter of the millionaire, accused of stealing information and doing business with Iran disobeying the sanctions imposed by the United States.
Somehow, the Donald Trump government embodied in Huawei its confrontation with China. This cold war between the two countries moved to a more digital level, as the American country seeks to curb the advance of Chinese infrastructure, particularly that of the telcos.
Ren's company is one of the most developed to advance the new generation of connection with the 5G network. Whoever imposes this technology will finally be the one who manages the threads of the communications.
The dispute between the US and China (with Huawei as a spearhead) uncovered one of the backgrounds of that fight: to decide which nation will impose the 5G model (to be replicated by other countries). And, associated with it, another more relevant issue: which of the two will control global information.
"It is not a commercial war but of access to the network as a source of information. The debate is about choosing who is going to spy on you," Emmanuel Jaffrot, consultant and doctor in telecommunications, tells iProUP.However, the United States believes that, because it is connected to the Chinese Communist Party, these ties can be used as a tool for global espionage.
Huawei says it has nothing to hide, although its detractors distrust the relationship that unites the founder and CEO of the firm with the People's Liberation Army.
His link with the army
Its origin somehow also marked its beginnings in the business world. Ren grew up in a humble family, in the rural province of Guizhou. His parents were teaching.
He had to appeal to his academic performance to make a place. After being received at the Institute of Architecture and Civil Engineering, he joined the corps of engineers of the People's Liberation Army with the specific objective of collaborating to build a synthetic fabric manufacturing factory.For almost a decade he played various roles in that body, without military rank, since he was first a technician, then an engineer and finally a deputy director.
"I was a very low-ranking officer. I served for that construction project, not a field unit," he says. But the Chinese government decided to dismantle the body of engineers and this changed the mentality of the tycoon a bit.
"At that time, I was someone who was used to doing what they told me and suddenly I started working in the market economy," says Ren. However, its experience in the logistics service of the Shenzhen South Sea Oil Corporation oil company lasted only a few years. The opening policy of leader Deng Xiaoping led him to think about founding his own venture.That was how in 1987 and with the help of five friends who became investors (they contributed capital equivalent to 5,000 euros) founded Huawei, which means 'Chinese achievement'.
"When we started we didn't have any phones; we only had one of those old ones that are seen in World War II movies. At that time, we were very underdeveloped by that time," says the executive.
His beginnings were as a sales agent for a company of Hong Kong origin that produced telephone exchanges. Most of the companies in the area pointed to the large urban centers, but the businessman knew that the real business was elsewhere.So he turned to a sector that he knew very well: rural villages. In the '90s he grew up first selling products for his client and later manufacturing them on his own.
One of his big leaps was when he got a contract with the State to provide equipment to the Army. Little by little, he tried to deal with Ericsson, present in the Chinese market since the mid-1980s.
From an early age, Huawei focused on research and development as a spearhead on which to leverage its growth. In 1999 he opened his first R&D center in Bangalore, India, and soon he raised the blind of his second headquarters, this time in Stockholm, Sweden.
According to its latest balance, in 2018 it invested more than $ 14 billion in this area. They also estimate that of the 194,000 employees in 170 countries, almost half are dedicated to Research and Development.
To make such a disbursement, Ren explains that it is key not to be limited by the fact of going public. "The listed companies pay close attention to their balance sheets and cannot invest too much because if the profits do not fall and the same will happen with the price of their shares," he deepens.
This bet allowed him to grow in his portfolio of products. The Enterprise unit was incorporated into the Telco business linked to the solutions and services for the implementation of networks, cloud and training for IT professionals; and Consumer, directly focused on user products such as computers, phones, tablets and smart watches.
It was precisely the fact of not relying on the contribution of investors and their "hunger" for good returns (those who contributed the initial capital were detaching from their slice) that led the Huawei CEO to devise a different mechanism: the owners of the company they would not be a group of funds or the founding family, but the employees themselves.
Currently more than 95,000 workers have a minimum participation. These are responsible for electing the 115 representatives who will be part of the commission responsible for selecting the chairman and the 16 directors who will carry out the operational management. However, Ren, with 1.4% of the share, is the main shareholder.Although its core was always in the telecommunications equipment business, especially after its international expansion from the new millennium, in the last decade it took a firm step in the smartphone industry.
In 2011, it shipped more than 20 million smartphones in the world and exceeded 100 million four years later. According to Strategy Analytics, last year it became the second player in the sector with 240.5 million units, behind Samsung (295.1 million) and above Apple, with 197.4 million.
The Consumer division gained strength in recent years. Of the US $ 105,000 million billed in 2018, almost half came from this business unit, while 40% derived from the branch dedicated to telco operators.In particular, its revenue is focused precisely on China (52%), although the EMEA block - Europe, the Middle East and Africa - already accounts for almost a third of its revenues, followed by Asia Pacific with 12.3%.
Meanwhile, the conflict with the United States halted the growth strategy. A quarter of its suppliers are from that country, but also giants like Alpahet (Google) and Facebook obeyed the US blockade and suspended their services for the new Chinese brand phones.
Huawei chairman, Eric Xu, confessed that in 2019 the firm did not meet the goals it had set, although the coup was not so strong. According to the executive, the increase in turnover was 18%, close to the 20% forecast in the forecast. Although he said that 2020 will be "a difficult year."
To cope with the US blockade, Huawei introduced its own Harmony operating system. Ren himself had assured in June 2019 that the impact of the company's inclusion on the 'blacklist' could be around US $ 30,000 million.On the other hand, if he managed to leave behind his fight with the Trump administration, the Chinese company, the executive predicted, could triple his income in the next five years. Now, the future is uncertain.
A robotic arm with the ability to use the touch screen of a cell phone, as if it were a human finger, became the focus of conflict between the United States. and China
From T-Mobile, creator of the technology, they assured that Huawei employees had stolen certain components with the intention of replicating it. They also point out that the company encouraged this type of behavior with special bonuses for employees who obtained secret information about the competition.
The subtraction of Tappy, name with which this device was known, was one of the main points that led to the arrest of the company's CFO, which occurred in Canada at the end of 2018. It was also not the first He complains that the Shenzhen-based holding was against him.The possibility that Huawei acts as a spy arm of the Chinese government is another of the reasons outlined by the White House.
"There is no way that the United States can crush us. The world needs us because we are more advanced. In countries that believe in these suspicions we will curb our plan and in those that feel we are reliable we may move a little faster," Ren points.
Today, the main confrontation goes through the 5G network: while the US It moves its influences to convince the main European nations not to use Chinese infrastructure for this connection, they move between skepticism and distrust.
At the moment, Huawei's position is based on its technological development and its low price to get green light and give free rein to a more powerful connection speed and the possibilities that the new standard promises: smart cities, Internet of Things ( IoT), connected cars and more.Due to its investment, China is ready to complete its deployment this year. On the other hand, both the European Union and Japan and Canada hope to have it ready only in 2025.
"The United States has been attacking our company for more than 10 years, no matter how small the problem is. We did everything so far to keep us tolerant and silent, but this does not mean that we are cowards," says Huawei number one.
Away from the media flashes, Ren took a leading role in providing details regarding the operation of his firm and its connection with the Chinese government. "Even state companies have failed. Is having good connections synonymous with success?"
His successor, he anticipates, will not be one of his children. Ren Ping works in a subsidiary of Huawei and Annabel Yao studies computer science at Harvard, while Meng goes through his extradition hearing to be tried in US territory. That chair will be occupied by a member of the Board.
Meanwhile, the current CEO, who will turn 76 this year, does not plan to leave his chair until he sings victory in the new Cold War 4.0.