The southern mainland city of Shenzhen used to be a key foothold for US tech giant Apple as factories there once churned out iPhones and other of the company’s lucrative products. When spiraling costs pushed Apple and its partner Foxconn to ditch Shenzhen and move their assembly lines inland to central China a few years ago, the pullout was seen as a crippling blow to the city.
But within a few years that felt like the blink of an eye, Shenzhen has transformed itself into a burgeoning IT hub and one particular homegrown company is making Apple antsy.
Sleek smartphones loaded with all the drawcards of iPhone 7 — if not already more, like ultra-fast processor, curved screen or dual cameras for SLR-like photos — that come at a fraction of Apple’s price are fast chipping away the iPhone-maker’s user base in China.
Huawei is now the darling of increasingly discerning, patriotic Chinese consumers, as they become less enamored of overseas offerings that come with a fat markup.
Apple may still have its cult following among young people but Huawei phones are pulling in buyers for the top-notch cost performance. But don’t think the products are cheap iPhone knockoffs. Huawei has, for instance, partnered with the vintage German camera maker Leica to add an artistic touch to its lens and thus photos.
Huawei has given Apple a run for its money and kicked it from the top three best-selling smartphone brands in China. In the first quarter alone, the Shenzhen-based firm shipped more than 34.5 million phones.
The latecomer’s triumphant crossover to the highly competitive consumer electronics segment has given Huawei more bragging rights, on top of the fact that it constantly rules the roost in the global business-to-business telecommunications hardware market.
Huawei now looks like a combination of Apple and routers and networking firm Cisco Systems.
And those who still cling to Apple or Samsung products may be unaware that they rely on Huawei’s softswitches, servers and network protocol systems to stay connected: the company has provided core equipment and maintenance for 64 out of 130 commercial 4G/LTE networks worldwide, and for 55 out of 90 next generation 4.5G/5G networks currently under trail. There’s no exaggeration that Huawei helps the digital world stay online, and like it or not, Huawei has got you covered.
Still a non-listed company, Huawei is under no obligation to disclose its books but a People’s Daily report has revealed that its aggregate revenue in 2016 hit the 520 billion yuan (US$76.5 billion) mark – a 32 percent jump from a year earlier – five times that of Alibaba and higher than that of Baidu and Tencent combined.
That figure can put Huawei in the top 100 of the Fortune Global 500, dwarfing Intel, Cisco, Oracle and Ericsson.
The staggering size notwithstanding, Huawei remains an obscure Chinese company, even more so than its other compatriot peers.
Perhaps the only thing that Ren Zhengfei (任正非) doesn’t mind is having a little more publicity about how the juggernaut started from scratch.
Ren founded Huawei in 1987 after painstaking efforts to pool some 21,000 yuan as registered capital, mostly borrowed from skeptical relatives and friends. It had a staff of 14.
Born to a peasant family in the poverty-stricken southwestern province of Guizhou at the end of the Japanese aggression, Ren wouldn’t have founded Huawei had he not been made redundant in Deng Xiaoping’s radical disarmament drives in the 1980s to squeeze the size of the military.
Ren’s job in the People’s Liberation Army as an engineer was considered as an iron rice bowl. It must be out of his wildest imagination that he would one day build an empire with business spanning across 170 jurisdictions employing more than 180,000 workers.
He was quoted as saying in his first ever one-on-one interview in 2015 that being a private entity, he would never allow Beijing to tap or monitor any telecom network that Huawei built.
Nonetheless, Ren’s party membership and Huawei’s close dealings, in particular during its early years, with the PLA make all the misgivings somehow sensible.
In 2011, a US government panel vetoed Huawei’s acquisition of server producer 3Leaf on the ground of such misgivings. It has been suggested that Ren was indeed a PLA colonel when he founded the mobile gear maker with funding and transfer of military technologies from the army, and he had access to unlimited loans from a number of state lenders.
The panel went so far as to accuse Huawei of having longstanding contracts with Iran, the Saddam Hussein regime and the Taliban in Afghanistan, although Huawei said nothing was substantiated.
It has also been revealed that the father of Ren’s ex-wife was a deputy governor of the western province of Sichuan and spoon-fed the once floundering company with stable, fat orders from local state-owned enterprises.
Huawei’s growing heft is thus plagued with legal suits and dramas of espionage, wiretapping and anti-wiretapping. Australia, Taiwan, Canada etc. all banned or at least scrutinized Huawei’s bidding and marketing for national security concerns.
Ironically, the company once also found itself on the receiving end of such infiltration following Edward Snowden’s 2014 bombshells that the US National Security Agency had been hacking the servers of a number of Chinese companies including those of Huawei.
That silent cloak-and-dagger rivalry escalated into Beijing’s diplomatic tug of war with Washington that year and the Obama administration insisted back then that its investigation of Huawei servers never targeted any commercial interests.
Still, Ren doesn’t have to lose any sleep over the West’s phobia about Chinese firms, with Huawei’s global monopoly of telecom network equipment, the buoyant demand in Africa, East Europe, South Asia and belt and road countries as well as its fast growing consumer business that has already become a new pillar of revenue.
What Ren thinks that worries him most is that his subordinates are nowhere near being workaholics that he himself has exemplified since Huawei’s day one.
Ren wants everyone at Huawei to make all sacrifices to the company but others think he is hysterical when trying to instill his workhorse mentality.
It is said that a senior vice president couldn’t handle the pace and pressure after four years at Huawei and he had to write four letters to Ren begging consent to his resignation. The VP’s reason to leave – to spend more time with his wife – set off Ren, who chastised “why don’t you divorce her and come back”, followed by a hail of vehement, colorful broadsides.
Only three of the original eight VPs are still under Ren amid reports that even ultra generous remuneration packages have failed to make people stay thanks to Huawei’s sleazy reputation of being a manic, high-tech sweatshop.
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