Cambridge Business Association
How Huawei Became Huawei
Article

How Huawei Became Huawei

Boss Dai
Huxiu, 2018
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A telecommunications company that once struggled to find its place domestically, Huawei today is one of few Chinese brands that people around the world recognize. How did Huawei become the world’s second largest supplier of telecom equipment and the second largest maker of smartphones? WeChat finance blogger Boss Dai summarizes the twists and turns, wins and losses of Huawei’s journey. The company’s business practices have often been controversial. In January 2019, the United States unsealed a 13-count indictment of Huawei for financial fraud and announced 10 additional charges against Huawei for stealing trade secrets. The United States and China have been negotiating for a solution to the trade war. These indictments place Huawei center stage in the conflict and could escalate tensions between the two countries. Anyone following the US-China trade war will find this article to be useful background on the company’s history and culture. However, Boss wrote the article for a Chinese audience as a celebration of Huawei’s success. The general attitude of Chinese citizens toward these allegations is that they are a part of a political strategy to contain China’s global influence and that Huawei is a “scapegoat” in the trade war. 

Summary

In early 1997, Huawei founder Ren Zhengfei realized his company was at a crossroad. Telecommunications firm Huawei ranked among the top 10 of China’s electronics companies and had more than 5,600 employees. Yet under the surface, Huawei’s internal governance structure was stretched to its limits. There was no R&D process or established decision-making mechanisms. Manufacturing and sales were also in disarray. Huawei’s on-time delivery rate of client orders was only 50%, while those of foreign competitors reached 94%.

Ren realized his authoritarian style of management was no longer working. He had built the company from the ground up with Maoist-style leadership, for example, using his third-in-command to control his second-in-command or using rotations to prevent power imbalances. For him, as for many other Chinese entrepreneurs born between the 1940s and the 1960s, The Collected Writings of Mao Zedong served as a management bible. But after several product failures, Ren realized that his top-down decision-making style wasn’t ideal for the company. After visiting ...

About the Author

Boss Dai analyzes companies and business trends in his WeChat wemedia account World of Boss.

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