Huawei Technologies is the world's largest manufacturer of telecommunications technology and is based in Shenzhen, Guangdong, the centre for high technology in China. Huawei was founded by civil engineer,Ren Zhengfeiin 1987 after his retirement from the army at 43 years oldi.

 

Huawei's founder, Ren Zhengfei.Photolicensed underCC BY.

The firm began by reselling private brand exchange (PBX) switches from Hong Kong to China. After identifying demand for locally made PBX switches, Ren invested in research and development and hired 50 employees. Huawei started selling its own switches in 1992ii.

From the start, the culture at Huawei was gruelling. To produce their first PBX switches managers and employees worked through the night, relying on power naps when they became too exhausted to continueiii.

Huawei grew rapidly through the 1990s and 2000s. By 1995 the company had expanded beyond China. By 2005 its earnings from international markets had outstripped its domestic earnings. In 2015 Huawei overtook IBM to rank in the top 75 Fortune 500 companies in terms of income and was number 1 in terms of growthiv.

In 2020 Huawei overtook Apple and Samsung as the top smartphone provider globally.vAs of 2021 they employ more than 194 000 people around the world, operate in 170 counties and service three billion customersvi.

The development of Huawei's corporate culture

Ren's military service influenced his leadership style at Huawei from the beginning. He runs the company like an army with a focus on strict rules, clear goals, brave spirit and high efficiencyvii.

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In 1998 Ren outlined his management approach in a document known as the Basic Law. This document included formal rules related to everything from the company's mission to its objectives, growth, distribution of value, as well as business policies related to the organisation, human resources and controlviii.

Ren's leadership helped to develop the corporate culture that has been key to Huawei's success.

Customer-first attitude

Huawei is known for putting theinterests of customers firstand being serious about implementing their commitment. One commonly told story is about Huawei's commitment to serving the rural areas of China where rats would bite through wires and disrupt services. While other telecommunications companies typically saw such issues as outside of the scope of their operations, Huawei committed to solving the problem and developed a wealth of experience producing chew-proof cablesix.

Employee dedication

Huawei also fosters and rewardsemployee dedication.Huawei is well known for its renumeration system, which includes a salary, bonuses, and shares in the company. New employees receive a rank which they can improve through performance evaluations and technical exams. It typically takes about two years to move up a rank to receive a higher salaryx.

Employees are allocated shares based on indicators including competence, scope of responsibility, contributions, attitude and commitment to taking risks. The earnings from shares mean that Huawei employees earn far more than the highest earners at the same age in other industries. A typical salary is higher than the wages of employees at Amazon, Microsoft and IBM. Employee ownership of stocks also creates a commitment to the company as employee's fortunes are aligned with those of Huaweixi.

Employees can choose to sign the controversialDedication Agreementto forfeit leave entitlements in return for positive performance evaluations and access to company shares

xii.

Employees typically work late into the night and sleep in their offices. The company even

places mattresses under employees' desks to encourage overtime. One Huawei employee

suggests, "The pads to us were a representation of hard work in the old days and this idea

has now been translated into the spirit of being dedicated to do the best in anything we do"xiii.

Ren typifies the ethics and self-discipline he expects from his employees. Ren visited Huawei employees in Afghanistan while the country was at war as well as Libya days before conflict started. In a visit to Nepal, he told staff "I promised that as long as I could still fly I would come to tough regions affected by war and disease to accompany you. If I fear death, how canIcallonyoutotoughitout.IfIspuryouontostrivefor,Idosoaswell"xiv.

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Long term vision

Employee ownership helps Huawei to plan for the long term. Unlike publicly listed companies, Huawei is not subject to fluctuations on the capital market. Unlike most other telecommunications companies who make yearly plans, Huawei is able to set plans for the next ten yearsxv.

Huawei's three deputy chairmen rotate through the role of CEO every 6 months, with Ren providing oversight. This unusual arrangement makes the company less vulnerable in the long term if something happens to one of the CEOsxvi.

Gradual decision-making

Rather than rushing to quick decisions, Ren is careful to take time to reflect. He encourages intellectual exchange throughout the company and encourages managers to read outside of their area of expertisexvii. In 1998 he visited IBM and was able to learn how they were able to improve the efficiency and outcomes of the research and development department. Ren successfully implemented similar measures at Huaweixviii.

Is Huawei's corporate culture sustainable?

Although the strong corporate culture at Huawei is widely credited for the company's rapid growth, it has come under scrutiny in the past few years.

Former employees have questioned whether the gruelling workload required to succeed at Huawei is sustainable. One former employee suggested, "I had no time for recreation. Basically, all I did was keep working mindlessly. Often we were still in meetings until 11pm"xix.

He suggested that it was impossible to survive at Huawei unless you signed the "voluntary" dedication agreement accepting overtime without pay and forgoing leavexx.

The intense work culture is not exclusive to Huawei. In 2019 some Chinese programmers coined the phrase "996" to describe the expectations that tech employees in Shenzhen work from 9am to 9pm for 6 days a week. The phrase "996 working, ICU waiting" gained popularity and sparked discussion about the negative impacts of long-hours on employees' health and personal livesxxi.

Although the 996 culture encourages technology workers to regularly work up to 72 hours a week, the standard legal working hours in China is 40xxii.

In the midst of these debates, the city of Shenzhen recently passed new regulations that require employees who regularly work long hours to be granted extra leave to mitigate burnout. It is unclear whether these measures were in response to the 996 work-culture in the city's technology companiesxxiii.

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Huawei's headquarters in Shenzhen.Photolicensed underCC BY-SAHuawei's future

Huawei's corporate culture has not only had negative impacts on its own employees, but beyond the company as well.

Former Huawei employees have spoken out against the so-called "wolf culture" at Huawei which they suggest encourages employees to bend local laws so long as the outcome delivers benefits for the companyxxiv.

In 2018 Huawei executive and Ren's daughter, Meng Wanzhou, was arrested in Canada on the accusation that she committed bank fraud to help the company progress in Iran. Other employees have been accused of bribing government officials to win business in Africa, and of copying the source code of an American competitorxxv.

Alongside these issues, Huawei is facing a hostile political environment in the Anglo-sphere. The so-called Five Eyes security partnership between Australia, the US, Canada, New Zealand and the UK have raised security concerns about Huaweixxvi.

While Ren is quick to rebut their concerns, the Five Eyes nations are worried that Huawei could use 5G infrastructure to conduct surveillance of their citizens on behalf on the Chinese Governmentxxvii.

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The Australian Government went so far as to ban Huawei from building the country's 5G

network, while the other four countries decided to use different providers for the rollout of 5Gxxviii.

While it is unclear whether these concerns are related to broader geopolitical tensions outside of Huawei's influence, they nevertheless impact on the company's future in the Anglo-sphere. As a small part of the company's global operations, however, these five countries are not a priority for Huaweixxix.

The new antitrust rules proposed by the Chinese Government are likely to be of bigger concern for Huawei. These rules, like those proposed in other countries, seek to curve monopolistic behaviour among technology companies and reduce their powerxxx.

After thirty years of growth,Ren Zhengfei reflects on what is next for Huawei. Should recent

developments in the general and task environment prompt a change in direction? Or should

Huawei focus internally on shifting their corporate culture to one that can meet the challenges

of the next decade?

Answer rating: 100% (QA)

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