Background
Ren Zhengfei was born on October 25, 1944 in Guizhou, the eldest of seven children.
正非 任
Ren Zhengfei was born on October 25, 1944 in Guizhou, the eldest of seven children.
After completing secondary school (he almost failed in the second year because of a major famine in China), he attended Chongqing Construction Engineering College, and then joined the army as a military technologist. There Ren led a military research institute, made two remarkable technological inventions, and attended the national science conference in 1978. When China cut down the construction engineer and railway corps, Ren retired from the army around 1982.
Ren founded Huawei in 1988 with 30 employees. Starting as a small distributor of imported PBX products, Huawei accumulated knowledge and developed its own PBX in 1989. Huawei invested heavily in R&D and launched the C&C08 digital telephone switch into China’s mainstream telecommunication market in 1993, which grew rapidly in the 1990s and was dominated by foreign suppliers, such as Siemens and Alcatel. Based on excellent technology and low price on equity, Huawei triumphed over foreign companies, and was ranked fourth in domestic switch vendors by 1998.
In the early years of its development, Huawei’s culture was strongly influenced by Ren’s military background. Discipline, hard work, and purpose were the main drivers of Huawei’s employees. Ren asked each new employee to take an oath on ‘Duty, Honor, Company and Country’ when they first entered Huawei (the character of ‘Huawei’ also has strong connections to the glory of the country of China). Huawei incorporated the ‘wolf’ spirit as part of its indispensable corporate culture: a sensitive nose for good opportunities, aggressiveness, and unyieldingness. This spirit drove the company to achieve a six-fold growth between 1996 and 1998. In 1999, it developed the world-class GSM mobile switch system.
Huawei grew rapidly, with revenues of US$1.2 billion in 1998, and Ren set an ambitious goal to catch up the sales of IBM in the coming eight years as a world-class enterprise. Ren consulted innovation management from IBM and advocated a Western management style: ‘We are against the traditional Chinese management culture or the insistence on Huawei’s own system. If we were going to innovate and survive, we would have to learn the successful management skills of western countries . . . So we must know IBM’s way and learn its advanced experiences’ (Wu and Ji, 2006). Ren set the schedule for Huawei, benchmarked with IBM, and consulted many world-leading companies such as Hay Group, PwC and FhG, and applied advanced management techniques such as IPD (integrated product development), ISC (integrated supply chain), and ESOP (employee stock option plan).
Although Huawei gained 85 percent sales growth in 2000, Ren alarmed the managers of Huawei with the prospects of the collapse of the global communication equity market in his famous lecture called ‘The Chill Winter of Huawei’ in 2001. After selling its subsidiary of telecom power conversion products to Emerson, Huawei got US$750 million cash to increase the speed of its expansion into overseas market. Under the banner of ‘valiantly, spiritedly, cross the Pacific Ocean,’ Ren had a stirring lecture for the overseas campaigners on 18 January 2001: ‘every manager in every department needs to be internationalized. Anyone who cannot fit the internationalization priority standard will lose his position . . . In this era, an entrepreneur could be awesome if he has the vision of global strategy.’
Huawei’s first attack on the US market was interrupted by Cisco’s patent litigation in 2003. However, Huawei made its mark in European and emerging markets, and by 2004, its overseas sales had surpassed those of the domestic market. In 2006, Huwei’s contract sales reached US$11 billion, and 65 percent of the contract sales came from the international market, which had become the major driver of sales growth. As many Chinese companies’ benchmark in internationalization, Huawei in 2006 redesigned its global brand and set a new mission: that ‘Huawei has maintained a strategy of continuous customer-centric innovation. Product R&D is responsive to projected and actual customer needs’ (Huawei Year Report, 2006). In 2007, Huawei became a leading communication equipment vendor in the global market, with 62 000 employees worldwide, serving 31 of the top 50 telecom operators, including Vodafone, BT, Telefonica, FT/Orange, and China Mobile. As far as market share is concerned, Huawei is no. 2 in the worldwide share of the optical network hardware market; no. 2 in the worldwide share of the broad-band access market; and no. 3 in the worldwide share of the carrier ethernet switch/ router market. Huawei has also become one of the few vendors in the world to provide end-to-end 3G solutions.
Under Ren’s leadership, Huawei invests over 10 percent of its sales revenue in R&D every year, and its registered patent amount is no.1 among all companies in China. Ren has further demonstrated his confidence and skill in cooperation with foreign partners. Based on their enterprise networking business asset, which was valued at US$178 million in 2003, Huawei entered into a joint venture named Huawei-3Com with 3Com for internet protocol-based routers and switches, eventually selling its 49 percent stake to 3Com in 2007 for US$882 million. Huawei and American security firm Symantec formed a joint venture company in May 2007, developing security and storage appliances to market to telecommunication carriers. Ren is CEO and Huawei owns 51 percent of the new company, Huawei-Symantec Inc.
Ren is committed to fulfilling Huawei’s responsibility as a global corporate citizen. Huawei has established many kinds of scholarship in Chinese and African universities, and has donated telecom equipment in rural areas of Africa. After the tsunami that devastated parts of Southeast Asia in 2004, a total of US$2.5 million worth of emergency communications equipment and US$2.5 million cash were donated to affected countries, including Indonesia, Thailand, Sri Lanka, and India. Ren sees Huawei’s role: ‘as an integral part of the society in which we operate, Huawei firmly believes in contributing back to the local countries and communities in which we operate’ (Huawei Year Report, 2006).
He joined the Communist Party of China in 1978.
Ren is shrewd, courageous and resolute in management, but filial at home, which is vividly expressed in his affectionate essay, ‘My Father and Mother,’ in Huawei’s company newsletter. Ren called on all new employees to mail their first year’s bonus to their parents, and suggested that all employees wash their parents’ feet in holiday-time family reunions. It is said that Ren has contributed most of his stock to his employees and only owns about 1 percent of the shares in the company. Nonetheless, he is undoubtedly the spiritual leader of Huawei, and an exemplary model for many Chinese entrepreneurs.
