Huawei CEO interview "We will definitely climb to the top, and will come back alive"

Huawei's CEO, Ren Zhengfei, Born in Guizhou, China in 1944. Graduated from a high school in a mountainous area to the Chongqing Institute of Building Engineering (now Chongqing University). After engaging in civil engineering-related work, he joined the People's Liberation Army engineer unit as a factory construction manager. Established Huawei in 1987.Business Insider Japan
  • HAMADA KEIKO, BUSINESS INSIDER JAPAN



On May 18, the CEO of China's communications equipment giant, Huawei (Huawei Technology), responded to interviews with Japanese media such as Business Insider Japan at its headquarters in Shenzhen.

Although the interview was scheduled back in April, the Trump administration triggered export restrictions on Huawei on May 17. After that, it was all the media could ask about.

Mr. Roh talked for nearly two hours while talking about important topics, from the influence of US measures to the anger towards President Trump and the essence of the 5G technology.

The impact of US export restrictions

—— The day we arrived in Shenzhen, the United States triggered import restrictions on Huawei products to US companies and export restrictions to Huawei. How do you see this move? What kind of influence does it have on Huawei?

The global economy is definitely on the way to globalization, in which the world needs to be united. If a country shuts down and tries to make a product, the scale of production of the product does not increase, and the cost increases. Then it will not meet the needs of society.

Economic globalization means making use of the strongest things in each region. For example, for screws, we prefer to use Japanese products. Making high quality products like Japan in other countries will increase costs.

If we go against globalization, the economy will be confused. Especially in countries like Japan. The Chinese market is still growing and Japan needs this market. For the American economy, I do not think it would be good to give up on the Chinese market.

Limited impact on smartphone production

Reuters

—— It is a violation of the US Constitution against the US Defense Enforcement Act (the US government agency prohibits the use of equipment and services by US government agencies such as Huawei and ZTE) in 2018. Have you has filed a lawsuit and is there any possibility of taking such measures this time? Or do you seek international arbitration in cooperation with the Chinese government? Do you choose a way of reconciliation that renovates the management team like ZTE or accepts US surveillance?


We do not choose the way like ZTE. It is the same as Chinese companies, but it is a completely different company.

It does not seek international arbitration. We have to move the country for international arbitration, but we can not do that for one company. There is something else that needs to be done as a country.

The US lawsuit has not been considered yet.

—— What is the impact on Huawei's smartphone production when supply of parts semiconductors from the US stops?

I think that there is an impact, but I think that it is limited to a part and not a big one.

However, we can not expect such high growth as ever. Sales in the first quarter of 2019 (January-March) were 39% higher than last year, but slowed to 25% in April. It will not reach a full year increase of 20% (due to export restrictions).

—— If semiconductor imports from QUALCOMM (of a US company) stop, do you produce semiconductors yourself?

There is no need to have Qualcomm supply it. Because Qualcomm is paying a patent fee (we will advance our own development).

I was thinking about selling to a US company

The place according to the coverage of the Japanese media is a room that imitates Meguro Gajoen that Mr. Tsutomu made at the request of his wife. His second language is Japanese, and he likes to go to drugstores when he goes to Japan as a family.Business Insider Japan
—— Did you prepare for the core components, such as semiconductors, in anticipation of measures this time in the US? If you were preparing, what do you think of in-house development and procurement from outside the United States?

2002-2003 was a turning point for Huawei. From that time on, we had a feeling that we would ascend to higher heights.

At that time there was neither money nor stock food. The team who climbed the mountain from the opposite direction to us had plenty of sleeping bags and food. If you climb from different directions and get to the summit, there will always be competition. At that time, I thought that Huawei would lose.

So, in 2003, I thought about selling Huawei to a US company (US communications giant Motorola) for US $ 10 billion. After almost all negotiations, he had signed the necessary contracts and was ready for the celebration.

However, the representative of the US company, who took office just that week, denied the negotiations, and the sale went back to white. Erickson's CEO later heard that "the missed opportunity" was missed from No. 2 of this US company.

We thought that one day we would go on a high mountain with the United States. From that time, we were trying to dare to wear the "American hat" through our own sale. I thought that it would be Chinese to work even with American hats. I was thinking so far and trying to avoid a fierce battle with the United States.

I was thinking about entering the travel industry

There was a cityscape of Kyoto in the facility that invites customers. It was so elaborate that it might seem like a movie set, and even posters of "Shinagawa Odori" were ordered and pasted. In fact, it is said that it will be served here to customers invited to sushi and Teppanyaki.Business Insider Japan

In fact, I was thinking about the plan after the sale. For example, Chinese tractors were often defective due to oil leaks at the time, so if you buy a large or small tractor company and improve the quality of a $ 1000 tractor with our technology, you may be able to sell for $ 2000. We could have become the largest tractor company in the world.

There was also an idea to enter the travel industry. We also talked with China's railway manager to consider running Swiss alpine trains in areas called the Golden Triangle through Sichuan, Tibet and Yunnan. The train department managed to get some trains, but they told me to pull the trains, and I was instructed them to take them back.

At that time, the $ 10 billion form was huge for us. If that is the case, we think that we could have had great success when switching to the travel industry.

But once the sale went blank, executives talked about the future of their company and as a result decided not to sell it unanimously.

But if you choose that way, you will have to compete with the United States after 10 years. I said that it would be better to be prepared for that time and started preparing.

I secretly started to prepare the company. There wasn't a lot of light coming up with that job, so some of the team's members told me that they didn't emphasize their own work in-house, saying that they were jealous of me. To that extent, the work was not well understood in the company.

However, at that time it was unanimously decided to try hard in the telecommunications industry without selling the company. The opponent is also strong, so I do not know if I can win by all means. But he told me that I would only stop returning the mountain path that I had climbed.

"Trump missed the opportunity to become a great president."

Reuters
—— In the previous interview, President Trump was named “great”, but what do you think about it again?

In terms of tax reduction, I still think that he is a great president. Tax cuts are a plus for industrial development. The evaluation does not change now.

But, he did one thing wrong. Today he threatens one country, the next day threatens another. In such a situation, who can take the risk of investing? This is not good.

In the future, there may be a choice to produce 5G related equipment in the United States, but now, this won’t happen even if the United States calls. If you suddenly get arrested, billions of dollars of investment will be wasted.

Because of the personality of President Trump, stocks are falling in the United States. He missed the opportunity to become a great president.

—— Is it because Huawei or a Chinese company that you are targeted from America? Do you think you are losing or gaining from being a Chinese company?

I have previously spoken to former Albright Secretary of State for three hours. At the time there were no sanctions, but he could understand our suffering, as neither American advanced technology nor key parts could be used. On top of that, he said, "Furway is great." I saw it off to the elevator and told me, "I knew it well," many times.

Why were we able to grow in such a difficult situation? That's because the government (the destination) has been in a position not to do what was officially said to be useless.

It does not go to Australia or the United States if asked. We can not force the service where we are told we are not needed.

In addition, it can not answer whether it is a loss or gain that it is a Chinese company. It is because I do not understand well.

Let's create free trade zone in Japan, China, Korea

Matsuyamako Campus, where Huawei is promoting construction. It is located in Dongguan City, one and a half hours by car from Shenzhen. The total area is 1.2 million square meters, lined with castle-like buildings that image Europe.This is a research and development department only, and in the future, 25,000 to 30,000 employees will work.Business Insider Japan

——What kind of relationship do you want to build with Japanese companies in the future? Although Japanese companies already supply Huawei with many parts.

Compatibility with Japanese companies is very high. Japan is strong in basic research and is the strongest country in the field of material chemistry and parts in the world. The world of the future will be the world of intelligence. Sensing is more important than anything else, so sensors are important. The basis is material.

If 5G is introduced, an industry of US $ 400 billion will be created. Good Japanese products will be used more and more. Japanese companies and Huawei are friends who climb the mountain together. We can climb using many Japanese products. I want to expand the information industry together.

As Taro Aso says, “After the embargo on the US, there are Japanese companies that supply parts to Huawei, and we must be prepared to influence Japan” (May 17) Grateful. I think it's great to have made a remark like it was in a great deal of pressure.

Huawei was a small company, and it used to be quiet and quiet. But under pressure from the United States, my spine was stretched.

I think Japan, China and Korea have to create free trade areas. If a Free Trade Agreement (FTA) is concluded between Japan, China and Korea, ASEAN and the EU may enter there.Linking it with the China-wide band all-in-one plan will also lead to a connection with Central Asia. Japan will definitely play a major role in such a large economic zone.

China is the country that follows. China still has some institutional arrangements. Each other's collaboration must be a business, not a supremacy ahead.

The concept of a border does not exist in the next generation of young people

Business Insider Japan
—— Do you think the world will be united again?

As far as railways are concerned, as each country insists on railway standards, rail widths differ from country to country, causing freight transportation to be inconvenient.

The world must be connected. Even when moving from 3G to 4G, there were three types and costs were high. 5G finally came to one standard.

What value does 5G offer? The cost per bit for each one will be one tenth, or even one hundred. People can then be educated in any region that is not economically rich. Little children will be able to see the world.

The development of network technology accelerates the development of humanity. Isn't it possible to bring great unity to humanity through the network?

I was asked by a politician a few days ago. "Does the national consciousness and nationalism of the young people of the next generation be strong?" I think that the concept of the border no longer exists in the next generation of young people.

Another famous American reporter told me on another occasion. It seems that the daughter's niece's supper (Faway Vice Chairman and Chief Financial Officer) has tens of thousands of fans globally. People with similar consciousness are connected even if they have different ideologies.

Seventy to eighty percent of the world's population lives in economically poor areas, and when a closed network is created, they are forced out of the market.

5G brings happiness to humanity. For this purpose, two networks are not necessary, and they must be connected. In that sense, I do not think that the world will push for division.

Supper has not lost pride or confidence

Huawei's niece, vice chairman and chief financial officer, leaving his home in Vancouver, Canada with a bodyguard on May 8.Reuters

—— Mr. Liu Shen was arrested and prosecuted in Canada on suspicion of engaging in an illegal financial transaction with Iran. What is your current candid feeling?

He has not violated the law. There is no basis for American points, but it will eventually be finalized by court decisions.

His situation is not so bad. They are under arrest but have their own space, and they are using this time to acquire a doctoral degree. I'm not losing my pride or my confidence. It will be a long road, but she has the patience to endure it.

There was a close interaction with Japan at the shrine. She immediately headed to Japan when the Great East Japan Earthquake occurred. There was only one other person on the plane with her. There was an exchange with a Japanese woman who used to be, and it seems that he received a letter this time.

Huawei's technology and products were born from learning in Japan

In Huawei, snacks such as fruits and yogurt are distributed free of charge at 8:30 pm daily for employees who work overtime.Business Insider Japan
—— I think Huawei's technology is at the top in the world, but is it time to create new services and new values? In the 5G era, it is necessary to provide new value, such as how to change people's lives, not just manufacturing equipment for communication equipment that makes things?

The most important thing is customer-oriented. There are cheap things in China, but everyone still buys Japanese products because the quality is great. Japan is customer oriented. We need growth speed and thinking about existing markets, but that's not the best.The most important thing is customer satisfaction.

Our production system is learned from engineers who retired from Toyota, etc., and incorporates Japan's quality control system.

As a result of continuing to learn from Japan, quality products were created that forced us to buy our 5G base station. In terms of performance and output, despite reaching 20 times that of 4G, the volume can be reduced to one third or one quarter, the weight to 20 kg, and the power consumption to one tenth. did it.

If it can be made this small, there is no need to build a new steel tower to install it. We can not make steel towers in the old city with dense population like Europe. But Huawei's base stations can be easily attached to existing poles and walls.

We have been researching materials that do not show rust even after 20 years. Extreme story, you can also put a 5G base station in the sewer.

Reuters


Such evolution has exactly the needs of people. You can make steel towers on large lands like China and Africa, but you have to lift it with a crane and it costs money. However, with our products in Europe, the installation cost is reduced by 10,000 euros and maintenance is easy. When it comes to, people in Europe are forced to buy.

The United States has a vast place and money. In these areas you can also understand the idea of buying a slightly delayed model.

Japan is also densely populated, and it is not suitable for constructing steel towers in narrow towns. There is no reason not to use small base stations, good performance, or even products that can be installed on lands of different climates from Hokkaido to Okinawa.

For us, customers are not the only people with money. Employees who are sent to Africa are paid three times more than they were in China. In an area where there is not a lot of profits, it is possible to develop services even if paying a lot of salary to employees, because Huawei is not a listed company.

We place emphasis on providing better service to people than financial statements. We have installed almost every base station in Everest. No one lives in Everest, but having a base station can save the climber's life.

We will continue to put customer satisfaction first and foremost.

Sanctions in the United States have boosted internal unity

A factory in Shenzhen to produce the latest Huawei smartphone "P30". All factory lines around the world are unified at 120 meters. Six years ago 86 employees were required in one line, but now 17 people. One smartphone can be produced in 28 seconds. It is said that such production system was learned from the method of Japanese companies.Business Insider Japan

—— Huawei is a company that is always at risk, but what is the biggest challenge internally now?

There is no big crisis inside. There was a crisis before President Trump's inauguration. It was because the employees were wealthy and lazy.

Sanctions in the United States intensified unity within the company. Employees became more struggling, and those who could not struggle were leaving the company. Even if the number of employees is 180,000, they are still aiming for the same place.

We invest over $ 20 billion annually in research and development. Few companies are investing in such a single field (communication technology).

Because listed companies are concerned about financial statements, they are just a conservative choice and can not invest much in investment. Because we are unlisted, we can work harder on achieving our strategic goals than on our financial statement figures. There is no risk in that sense.

—— Huawei is the most successful private company in China, but what has been the hard work so far?

I can not answer easily. It was because it was only suffering.

Most of the sufferings encountered by private companies have been experienced. The biggest pain is the inability to get a loan. Anyway there was no money. All my personal income has been invested in the future of the company. Even in 2000, I had no house to live in, and I lived in a room with no air conditioning that the 30-square-meter west sun that my wife had borrowed.

However, there is a way to overcome such suffering. It is to keep the law. Conversely speaking, our safety is secured by not crossing the red line.

How to secure profits on the premise that we do not go beyond the line? It has no choice but to work hard. We ask everyone to work a little more and provide customers with better quality and higher value.

I work eight hours every day and rest on the weekends, nothing can be accomplished

Huawei's new product launch was held in March 2019 in Paris. The latest P30 and P30 Pro smartphone models have been released.Reuters

—— Currently, China's private sector is in a difficult situation, but what is the possibility from now on?

China-US trade friction will stimulate and accelerate China's economic reforms. I want to say that the environment gets better by it.

Huawei has not violated the law, and there is no evidence from the United States. At first, the United States might have thought it was easy to kill.

When we enter Europe and the United States, we are considered to be a company that came from communism. That is why I could not survive without obeying the local laws. Conversely, when returning to China, it is said that capitalism. Just because you are bothered by the two-way, if you do not take action according to the norm, you will cross the dangerous bridge yourself.

—— What is the management philosophy that Huawei maintains everywhere in the world? Isn't it an idea of "a struggler" (There is a basic idea that Huawei will reward those who struggle).

I work eight hours every day and rest on the weekends. It is an individual's choice to work this way, but is it possible to achieve something?

People who make really good products may take longer than others. Still, we call those who make such efforts "strikers."

It depends on the person who works if you become a struggler. The people who worked hard for many years made the result struggling, giving shares of the company, and rewarding their contributions (Fuway has all shares owned by him and his employees).

A picture of this former Soviet fighter is heavily displayed in Huawei's office. Is it a sign of your determination to live and return?Business Insider Japan


—— He says he is a pupil of Israel's former Prime Minister Rabin, but what did he learn?

Mr. Rabin set boundaries between countries to avoid the crisis of war. I think that there was a long-term view and I was able to do this.

We also tried to treat other companies in a friendly manner. It does not attack competitors and continues to strengthen technical communication. We are at the top in the field of (5G) standardization, but we are not doing anything to attack competitors.

Mr. Rabin gets peace in exchange for land, and we get peace in exchange for the market. If you can think like Mr. Rabin in each country in the world, humanity will be successful.

If I mentioned another person (Steve to be respected), Steve Jobs. If he lived a little longer, I wondered what change had occurred in the field of IT.

Finally there is a picture I want to show you. This is the former Soviet Union fighter Ilyushin during World War II (but Mr. Roh gave each one a copy of the picture of Ilyushin who was battered to the press).

Huawei also climbs to the top of the mountain. And if you meet America at the summit, you will hug. And we will always come back alive.

(Interviewing and shooting: Keiko Hamada)


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