Huawei boss says US business block on telecoms equipment group will backfire
Ren Zhengfei, the media-shy head of Chinese telecommunications equipment-maker Huawei, has broken his silence about the refusal of the United States government to do business with the company on cyber-security grounds.
Speaking to western reporters for the first time since starting the company in Shenzhen in 1987, Ren said a damning US Congressional intelligence committee report published last October – which said Huawei posed a threat to US national security – would backfire.
The 68-year-old Ren said he is not about to step down from running the company. Day-to-day management rotates between three chief executives, although the company founder retains veto rights over major decisions such as the issuing of new shares and board appointments.
When he leaves, he said, he would like to get out of electronics, which is not his first love. "My life aspiration is to open a coffee shop," he said.
Although not about to pop a champagne cork – or brew an expresso – to celebrate, the former People's Liberation Army engineer said he was happy about the problems the company was encountering in the US.
"It helps to promote Huawei around the world that we are a big company that can withstand the difficulties from the US government."
The company, which is second only to Ericsson in the telecommunications equipment market, had sales of $35bn last year and expects to double that figure by 2017. In the first three months of this year it was the fourth biggest smartphone supplier, according to IDC, behind Samsung, Apple and LG.
Ren put the US's attitude down to jealousy at Huawei's technical superiority over US rivals such as Cisco, which sued Huawei in 2003 for alleged infringement of intellectual property rights. Huawei announced at the end of April that it had given up for now trying to break into the US telecoms equipment market. "We will focus on the rest of the world, which is reasonably big enough and is growing significantly," its chief technology officer Li Sanqi told the IDG News Service. The US makes up about 30% of the world's total carrier business, Huawei estimated.
Ren, giving what the company said was a "momentous" press conference while on a visit to New Zealand on Thursday, resorted to toilet humour and a military analogy when describing how the company was reforming its heavily centralised management.
"I don't know whether every request from local teams to go to the toilet has got approval from headquarters," Ren said, but in future more say would be given to Huawei staff closest to customers. "To give you an analogy, we're having the people who can hear the gunfire command the operation."
Ren said on the one hand the intelligence committee report released last October served as advertising for Huawei for thousands of US corporate customers which might not otherwise have heard of the company.
At the same time, by discouraging US telecoms companies from buying Huawei equipment out of fear that it would open the country's key infrastructure up to cyberespionage, the government would deny domestic carriers access to market-leading technology.
Ren said US concern over cyber-espionage has been mounting at a time when Huawei has done next to no business with leading American carriers.
"If you look at Huawei's total market share in the US telecoms equipment market, it is close to 0%. Given that we have virtually no presence in the US telecoms infrastructure market, there is no connection between Huawei and any information security incident that has occurred in the country."
The congressional committee investigation, which was invited by Huawei in a 2011 open letter to the US government, found the company had failed to explain its relationship with the Chinese government and had not made its corporate structure and decision-making processes clear.
Ren said wherever it operates, Huawei obeys local rules and regulations, and that is no different in its home market. Its customer-centric business model, however, is foreign to the west, where public companies are shareholder-centric.
"Shareholders tend to be greedy in the sense that they want to get more money from their customers." As a 100% employee-owned company, Huawei "can control or manage our lust or our greed".
Huawei's fortunes in the UK, where it is a key supplier to BT, are the reverse of the US. Ren put that down to Britain being an "open country".