Huawei's Business Management Wisdom: The Winning Strategy of China's Wolf

Author: Cheng Dongsheng et al
Publisher:
Publish Date: 2005-05-01
Features: As one of China's most profitable electronics companies, Huawei Technologies Co., Ltd. has been steadily moving toward the goal of becoming a global giant. Its success stems from its technological evolution from imitation to catch-up and then to leadership, as well as its unique corporate culture and management practices. This book introduces the unique business philosophy and management methods that have helped Huawei thrive in the marketplace, offering readers valuable insights into how to establish themselves in the business world.
Bell Labs, originally part of AT&T (American Telephone & Telegraph Company), had a monopoly on telecommunications operations, generating enormous profits that allowed the lab to allocate up to $2 billion to $3 billion annually for research. Supported by this substantial funding, Bell Labs produced a remarkable number of innovations. In the 1960s, it generated one patent per day, and by the 1990s, the figure had risen to four patents daily. Since its founding, 11 scientists at Bell Labs have won six Nobel Prizes in Physics for their work there, making significant contributions to human technological progress.
Originally focused on fundamental scientific research, Bell Labs shifted its research and development efforts toward product-oriented work after being acquired by Lucent. However, its overall research capabilities remained far ahead of the global competition. In his youth, Ren Zhengfei deeply admired Bell Labs, and the founding of Huawei made him a competitor with the company in certain product areas. When Ren Zhengfei finally had the opportunity to visit the institution he had long admired, he was naturally very pleased. At Bell Labs, Ren Zhengfei listened to a report from senior technical executive Martin.
After visiting other high-tech companies in the U.S., Ren Zhengfei observed that none of them were content with simply following others' technologies. American high-tech firms viewed imitation as unsustainable, believing that long-term success required independent R&D. This was precisely the path Huawei had been pursuing since its inception. In the early 1990s, the domestic telecommunications equipment market was dominated by international giants like Alcatel, Lucent, and Siemens, and no one would have believed that Chinese companies could develop their own program-controlled exchanges.
Shanghai Bell initially relied on technology and equipment from Bell Labs but later imported those from Alcatel. From the very beginning of Huawei, Ren Zhengfei consistently advocated for self-reliant R&D, arguing that otherwise, core technologies would fall into the hands of competitors, leaving the company at a disadvantage in the market. He repeatedly reminded Huawei employees: "The ability to master core technologies is the lifeblood of Huawei." Huawei's goal was to leverage technology as a core competitive advantage to achieve profit margins exceeding 10% in manufacturing and gradually expand its technological leadership and profit space.
In the early 1990s, Huawei accumulated its initial capital by acting as an agent for Hong Kong's HAX exchange. From the moment it started as an agent, Ren Zhengfei aspired to develop its own products, a desire that became the driving force behind Huawei's foray into self-owned technology development. During the agency phase, Huawei continuously studied foreign exchange technologies. Whenever HAX engineers conducted on-site maintenance on sold products, Huawei would send its own engineers to assist. Subsequently, Huawei invested all its resources into developing the semi-mechanical, semi-digital entry-level product JKL000, at a time when its technological level was not much different from that of its competitors.
When other domestic competitors saw Huawei launch JKL000, they began producing 2,000-line exchanges, but Huawei immediately set its sights on developing 10,000-line equipment. At that time, the international market considered 10,000-line exchanges the mainstream technology.
P119 The company's strengths in organizational management, corporate culture, and other aspects were formidable, contrasting with the relatively weaker and still developing management capabilities of