At the end of our meeting, one of my fellow inquisitors leaned over and told me “We’ve just been to a master class in politics” and I’d have to agree. Ren Zhengfei, the founder of Chinese equipment maker Huawei, dealt easily with questions of security, expansion plans, succession planning, retirement, his relationship with the Chinese Communist Party and human rights issues.
Speaking via a translator, Ren told us he is going to spend the next five to ten years reinventing Huawei, taking it away from its roots as a centrally controlled Chinese company and making it into a global de-centralised conglomerate. It’s a move from “international” to “global” – rather than sending out Chinese managers to run local operations that don’t have any true autonomy, Ren says he’d rather “those who can hear the gunfire direct operations on the ground”, and that it will be a painful time for HQ as it moves from control to a support function.
But that aside, Ren is upbeat about the future of the company. Don’t expect to see Huawei list on a stock exchange any time soon – Ren says that would change the company in a way he’s uncomfortable with. Today the company focuses on the customers – all too often he says listed companies focus on their shareholders and returning a profit to them. By ensuring that he doesn’t have to return an ever greater percentage of his revenue to shareholders, Ren can not only keep costs down but ensures customers feel they’re getting a good level of value for their money.
This intrigues me. I’ve dealt with a lot of companies over the years that say they’re customer centric. So many, in fact, that it’s almost become code for “but we will stiff you if there’s a buck in it”. Monopoly rents, cosy duopolies, not being quite evil enough to get regulated – most listed companies seem willing to operate at the edge of the acceptability envelope, sometimes stepping over the line and upsetting their customers to the point where either they flock to another provider or, if that’s not possible, the cold dead hand of regulation falls on the industry.
Locally, Ren is just as upbeat about New Zealand. We are, he says, one of the leaders in the world when it comes to telecommunications. We clearly are very dear to Ren and to Huawei – two of the three mobile operators are using Huawei kit and Ren will have been talking UFB with the government and lobbying Chorus to use its gear.
And to that end, Huawei will set up an innovation centre with Telecom NZ to help develop all the various bits and pieces that both fixed and mobile deployments will uncover.
That’s great news – as Huawei moves to a global model, where centres of excellence drive Huawei’s business, that places us if not in the inner circle then within cooee of it.
Huawei’s point of difference is often seen as being the cheapest provider around – Ren says that’s not so. If anything, the difference is maths.
Huawei’s R&D team have developed pretty smart algorithms to cope with multiple aerials, multiple spectrum ranges, multiple generations so instead of paying for a 2G and 3G network, customers paid for one network. That means the network deployment costs are a lot less which means in effect, as Ren says, Huawei is sharing the profit with its customers.
It’s a nice way of looking at it and customers seem to love it. Huawei has the lion’s share of the 4G deployments around the world and there’s no sign of it slowing down. There’s really only one speedbump on the horizon, and that’s the increasingly hysterical noise coming out of the US Trade Representatives Office about Huawei’s security risk.
Ren says Huawei isn’t doing anything in the US and isn’t likely to but it will work everywhere else, including New Zealand. Quite how that gels with the government’s proposed GCSB and Telco Intercept bills remains to be seen.
Ren is a consummate public relations man. He knows how to play to the crowd, how to get the most out of a joke even via a translator and how to say the right things at the right time, without appearing too smooth. He also has manners – and when he poured himself a glass of water, he made sure to pour one for the extremely competent, hard working translator by his side. I can’t think of another CEO at that level who would be so charming.