Chapter 19 Join the ranks of the "giants"

Ren Zhengfei said: "Our friends are Motorola, Alcatel, Lucent, Nortel, Siemens, NEC, and Ericsson... We call our competitors friends." He is a friendly businessman, no longer a "bad boy" who "makes trouble", and gradually wins the favor of the "giants". Now, Ren Zhengfei frequently visits overseas to visit his "giant" friends, and warmly welcomes their visits. They chat happily about the industry situation together.Looking at a person's circle of friends can tell his identity and status, and it can also reflect the strength of his company.From this perspective, Ren Zhengfei is joining the ranks of "giants".

With the development of the new technological revolution, a "global village" is gradually formed, and the connection is unprecedentedly strengthened, "I am in you, and you are in me".Blindly shouting competition, fighting hard, will be very passive and be hostile everywhere.Now the shopping malls no longer blindly emphasize "big fish eat small fish", but pursue a win-win situation. Cooperation in competition and competition in cooperation are the principles that Huawei adheres to.Ren Zhengfei said: "We call our competitors friends, and our friends are Alcatel, Siemens, Ericsson, Motorola, etc. We must hide our capabilities and bide our time, learn from Rabin, trade land for peace, and would rather give up some markets and some interests , but also cooperate with friends and businessmen, become partners, jointly create a good living space, and share the benefits of the value chain.”

In the early days of its business, Huawei was weak and adopted technology "bringing doctrine". It established joint laboratories with Texas Instruments, Hewlett-Packard, IBM, Motorola and other companies early on to obtain their technical support. In the U.S. market in 2003, Huawei and Cisco were at odds, but now the thaw has begun. In December 2005, Chambers visited Huawei's headquarters in Shenzhen and started an "ice-breaking journey".In the meeting room in Bantian, Shenzhen, the two laughed loudly and shook hands intimately for the first time, as if the past fight had never happened.Both parties are aware that mutual benefit and win-win results are in their respective interests.

Before Chambers came to China, Ren Zhengfei and Thomas Gansvent, President of Siemens Communications Group, imagined the prospects of two TD-SCDMA joint venture companies in China.Ren Zhengfei also talked with Alcatel President and COO Jan Maiting at a private party in a vineyard in France to talk about the company's operations in the telecommunications manufacturing industry. In the past, they only used the word "respect" to treat Huawei's opponents, but now they start to look at Ren Zhengfei with admiration.Ren Zhengfei has a large number of world-class friends. The presidents of Motorola, Nortel, 3Com, Cisco, Alcatel and other companies have formed good friends with Ren Zhengfei.Through this strategy, Huawei has won a favorable external environment and created conditions for marching into a world-class enterprise.As of January 2005, it has established partnerships with 20 of the world's top operators.

As the saying goes, great teachers make great disciples.In his award-winning speech in Stockholm, the economist Paul Samuelson said humorously and yet seriously: "How can I win a Nobel Prize? One of the conditions is to have a great mentor." Huawei has chosen exactly IBM, a world-class teacher, has added a decisive weight to its internationalization journey. On Christmas Eve in 1997, Ren Zhengfei led Huawei executives to the United States, where they visited Hughes Electronics, IBM, Bell Labs and Hewlett-Packard.During the visit, IBM CEO Gerstner left a deep impression on Ren Zhengfei.

In 1993, 51-year-old Gerstner took over IBM. At that time, IBM’s cumulative losses reached 16 billion U.S. dollars. Many media in the United States said: “IBM has already entered the grave with one foot.” It was not favored at the time.After several years of arduous reforms, IBM came back to life, and Gerstner created a miracle. In 1998, Huawei has been established for 10 years.Huawei's product development and market sales have achieved major breakthroughs. The company's sales have reached 8.9 billion yuan, and it can compete with the world's first-class telecom equipment manufacturers.However, Huawei's problems have also been exposed.During the start-up period, Huawei developed rapidly and played a significant role in driving the market.With the rapid development, extensive management and diseconomies of scale are becoming more and more prominent, and the cost remains high but the income does not increase.

Huawei invests 10% of its sales in product development every year, but the proportion of wasted R&D expenses and the development cycle are more than twice the industry's best level.R&D costs are doubling every year, but R&D efficiency is declining year by year, and many products even lose their commercial value before they are developed.Huawei's achievements are driven by Huawei people working overtime. "We don't have time to do things well at one time, but we always have time to do things again and again!" This is a true portrayal of Huawei people. Through investigation, Ren Zhengfei found that the problems faced by Huawei were similar to those faced by IBM back then. For the dream of a world-class enterprise and for Huawei to develop faster, Ren Zhengfei decided to "learn from IBM" and carry out reforms.

In August 1998, Huawei and IBM jointly launched the "IT Strategy and Planning (ITS&P)" project, and began to plan the business transformation and IT projects that Huawei needed to carry out in the next 3 to 5 years, including Integrated Product Development (Integrated Product Development, IPD) ), Integrated Supply Chain (Integrated Supply Chain, ISC), IT system reorganization, financial unification and other 8 projects, IPD and ISC are the focus. Ren Zhengfei said at the IPD mobilization meeting: "There are still many good managements in the world, but we can't learn everything. The result can only be an idiot. Because this is managed here, and that is managed there. It cancels out to zero. So we only learn from one consultant, only from IBM."

Ren Zhengfei mentioned the implementation of IPD as a matter of life and death for Huawei: "IPD is related to the company's future survival and development! Departments and organizations at all levels must fully realize its importance. Wear 'American shoes' by 'cutting the feet to fit the shoes'" 'Pain, in exchange for the joy of system operation." When learning about IBM's management experience, he especially emphasized: "Learn to understand how IBM does it, learn from other people's advanced experience, and listen to the advice of consultants." When receiving IPD training from IBM experts, many Huawei people do not understand He didn't want to learn, so Ren Zhengfei gave a strong order. In 2000, Ren Zhengfei had no room for negotiation at the Huawei Cadres Conference: "Cadres who don't learn IPD, don't understand IPD, and don't support IPD, I will be laid off!"

Huawei's business process reform follows the steps of completing the reform of the internal links of the enterprise first, and then extending to the upstream (supplier) and downstream (customers) of the value chain; the ISC reform follows the first completion of procurement, inventory, transportation and order fulfillment, etc. Internal links, then construction and optimization of the ERP system, and finally the development of e-commerce in order. According to an IBM consultant, before Huawei reorganized its supply chain, its management level was far behind that of other companies in the industry.The timely delivery rate of Huawei's orders is only 50%, while the average level of other telecom equipment manufacturers in the world is 94%; Huawei's inventory turnover rate is only 3.6 times per year, while the international average is 9.4 times per year; Huawei's order The fulfillment cycle is as long as 20-25 days, and the average level of international telecom equipment manufacturers is about 10 days.Restructuring the supply chain has reduced costs and laid a good foundation for Huawei to become a world-class enterprise as soon as possible.

In the first half of 2003, dozens of IBM experts withdrew from Huawei.So far, after five years of business process reorganization, Huawei has basically established a complete end-to-end business process, greatly improving R&D efficiency, saving costs, and laying the foundation for internationalization. "Big T" refers to the world's top telecom operators, which are powerful, have a broad market, and are very picky about equipment suppliers.These top operators implement global operations, and entering their procurement list means entering the markets they cover, and their procurement behavior has a good demonstration effect for other operators. After 1998, Huawei has become a backbone enterprise in the domestic market.Although Huawei is already the best company in China, it is not yet the best company in the world.Before Huawei went abroad, the customers it faced were not world-class companies. If your customers are not world-class, it is difficult for your company to be world-class.Therefore, Huawei decided to approach world-class customers and open up a world-class market for itself. In the past, Huawei used first-class technology to enter the second-tier market, mainly wandering in Asia, Africa and Latin America, and could not enter the territory of the world's mainstream operators.And to win the recognition of the world, you have to win the recognition of mainstream operators.After entering the preferred supplier list of British Telecom's "21st Century Network", Huawei began its journey to serve world-class customers. On November 21, 2005, Huawei and Vodafone, the world's largest mobile communication operator, formally signed a global procurement framework agreement.Since then, Huawei has entered the list of Vodafone's strategic suppliers. On February 16, 2006, at the 3GSM Global Conference in Barcelona, ​​Spain, the two parties jointly announced that Huawei would provide customized mobile phones to 21 countries where Vodafone operates in the next five years. After Vodafone, Huawei ushered in the 3G equipment supply agreements of Japan's eMobile and American CDMA operator Leap. eMobile is the only operator in Japan that has obtained a 3G license. The signing of this agreement will build a commercial network covering 1/2 of Japan's area. Dr. Qianben, president of eMobile, said: "Why did we choose Huawei? As far as 3GHSDPA is concerned, it is very important that they can focus on this technology and can be said to be world-class. The most attractive company for us is not Japanese manufacturers, not American manufacturers, but Huawei." Leap is one of the mainstream CDMA operators in the United States, and the number of users ranks fifth in the United States.The U.S. market is very picky and places great emphasis on technological innovation capabilities. Even the top European operators have not made much progress here, and this contract fully proves that the U.S. market recognizes Huawei. Not long after, Telefónica also chose Huawei as the main supplier of its VivoGSM network in Brazil to build a GSM network that can evolve to 3G in the future.Huawei has gradually won the favor of world-class customers, and constantly improves its own quality in dealing with customers. By serving world-class customers, Huawei has taken another big step towards becoming a world-class enterprise.Now, Huawei has been recognized by world-class operators such as Vodafone, Telefónica, KNL, and Telekom Hellenic, and has become their partner.