Chapter 39 "Confused" listing

In August 2001, the Yinguangsha incident shocked the Chinese stock market. People did not expect Yinguangsha to be a mess. The "Yinguangsha Trap" published by Caijing magazine caused an uproar in the Chinese securities market.After more than a year of in-depth investigation, the reporter pointed out that "a complete scam" was behind the skyrocketing stock price of Yinguangsha in the past two years.Not long after the article was published, the China Securities Regulatory Commission filed a case against Yinguangsha, and a number of people involved in the case were handed over to the judiciary. The stock price of Yinguangsha fell from more than 30 yuan per share to more than 4 yuan, setting a record in China's stock market with 16 daily limits. .This tragic ending is undoubtedly a heavy blow to some companies preparing to go public.

With the development of society, the wave of openness and democratization is on the rise.Enterprises must also be open. Listing not only needs to raise funds, but also accepts public supervision. This not only provides impetus for the standardized development of enterprises, but also enhances the image of enterprises virtually. A branch of the "Great China", ZTE, which is also in Shenzhen, has long been listed, and has become the "big brother" of China's communications industry. However, Huawei has been slow to enter the stock market.Regarding the rumors of Huawei's listing, there are different opinions in the market, but Ren Zhengfei did not make any statement on this. The confusion of a listing is like looking at flowers through fog, which makes it difficult for people to see clearly.The listing of Huawei, which has always been mysterious, can be described as confusing and confusing.

Huawei has become the leader of the domestic industry, but it has been slow to enter the stock market.In recent years, there have been rumors about Huawei's listing, but Huawei has remained silent. The reason why Huawei has not entered the threshold of the stock market for a long time is very complicated.Perhaps it is Ren Zhengfei's paranoia. He firmly believes that only technology has a foothold, and he dismisses the stock market.Perhaps he was out of consideration for the stable development of the company, but went public early to avoid risks.Perhaps it is because he understands the national character of the Chinese people better. Many Chinese people like to talk about tact and are complex opportunists. They always enter the stock market with a "gamble" mentality.He personally experienced the stock market boom in the 1980s. Thousands of people poured into the stock market and became millionaires overnight, but most lost nothing.This kind of mentality has caused the unhealthy development of China's stock market, and the "soap bubble" is getting bigger and bigger.

In fact, Huawei has been planning to go public for a long time.Since 2003, the name of Huawei has become more complicated. Huawei has been divided into eight: Huawei Technologies, Huawei Mobile, Huawei Software, Huawei Investment, Huawei Holdings, Huawei Training Institute, Huawei Services, and Huawei Property.The spin-off is a good thing, it can straighten out the complicated equity and make the company's business clearer. Huawei's internal equity is a big problem. Internal equity is complex and involves the vital interests of employees, which is difficult to sort out for a while.On the surface, Huawei has sufficient cash flow, but there are also many hidden dangers. When the IT bubble burst in 2001, Huawei was also affected, and its growth began to slow down. In 2003, Huawei used 3 billion yuan of internal equity to give more than 80% of its employees the right to purchase, alleviating the shortage of funds caused by the delay of Huawei's 3G business, stabilizing the core workforce, and tide over the difficulties together.With such a large and dispersed equity financing, once there are problems in the operation in the next three years, it will face a severe risk of a run on the bank.Therefore, Huawei's internal shares are very risky.

Ren Zhengfei has always advocated steady improvement, focusing on the survival and development of the enterprise.Through his early life experience and arduous entrepreneurial career, he knows that it is not easy to survive, so he does not want to perform "shock therapy" on Huawei. Since 2001, Ren Zhengfei has been in extensive contact with large international companies such as IBM, Motorola, Intel, Marconi, and NEC.According to internal information, Huawei intends to sell 25% to 30% of the shares, and at the same time absorb investment from 5 to 6 companies to become Huawei's partners.In order to balance the interests of all parties and not lose control, each company's shareholding ratio cannot exceed 5%.Ren Zhengfei hopes that after the completion of this private placement, he will go overseas for an overall listing.However, the negotiations were declined by the giants, and the result was nothing.

In order to reduce the cost pressure of 3G construction, major domestic telecom operators began to merge, and Huawei's share in the domestic market accounted for 3/4. The merger of operators will have a long period of integration, so the procurement of telecom equipment may be delayed, while overseas Investors' expectations for China's 3G market will also change, which has some impact on Huawei's listing. Due to various reasons, Huawei has not been listed for a long time, but if Huawei wants to enter the international market smoothly, listing is the best choice. In the process of Huawei's internationalization, it is relatively smooth to enter the developing countries, and it can easily enter the market by virtue of its price advantage.Developed countries are different, the European market is relatively easy, while the North American market is struggling.

Huawei's multinational territory is not small, but there are also hidden worries.In public tenders in many countries, Huawei has won orders with its price advantage.But now some European and American equipment manufacturers can also provide more generous quotations, and Huawei's living space has been squeezed. It is very difficult to establish a brand overseas. Although Huawei is strong enough in the eyes of competitors, operators still suspect this high-tech company from China because it is the only one that is not listed. The telecommunications industry is a high-input industry, especially requiring a large amount of research and development funds, which makes them have a considerable "thirst" for capital.If Huawei wants to go international and realize its dream of being a world-class enterprise, it needs the support of the capital market. It is a good choice to increase its popularity in the international capital market and enhance Huawei's international brand influence through overseas listing.

Competition among global communication equipment manufacturers includes not only brand, technology, quality, price, and service competition, but also competition in financing conditions.Although Huawei's sales in the international market are on the rise, the high marketing expenses make its net profit very low, and the overall overseas business is still in a state of loss.Although Huawei did not disclose the exact figure, it is clear that it is under the pressure of capital. As domestic competition intensifies, overseas markets are increasingly important to Huawei. In 2006, Huawei's revenue from overseas markets accounted for 65% of its total revenue.On the journey of internationalization, Huawei frequently encounters "friends" with open guns and dark arrows.In the face of competition from Cisco, Nokia, Motorola, Siemens, Ericsson and other world-class companies, Huawei also needs a listed brand and financial support.

Huawei is aggressively attacking overseas markets. With its first-class technology, it does not hesitate to attack everywhere with ultra-low prices.If Huawei wants to get rid of the ultra-low profits caused by vicious competition, it must jump out of the price war and reshape its international image. If you want to establish your own brand as soon as possible, the acquisition of internationally renowned brands is a shortcut.Considering Huawei's possible series of acquisitions in the future, the only solution is to go public once and for all.Only by solving the pressure of capital and getting rid of the shackles of cash flow, will Huawei have greater room for appreciation in the international market in the future.

To some extent, Huawei has reached a limit to a certain extent. If it wants to make a breakthrough, it must break the existing shackles, break the mystery and move towards openness and transparency. Overseas listing is the only way to achieve this goal. It is also the driving force for Huawei to go beyond the limit. Ren Zhengfei said: "We are not not going public, but we are looking for a suitable time. The current job is to do a good job in internal management and maintain a stable financial position, which is beneficial to the company's development." Huawei's current debt ratio is about 50%. %, at a safe level.

Now that Ren Zhengfei's year of obedience has come, he is plagued by many illnesses, and he has been unable to find a suitable successor. In order to realize the dream of a world-class enterprise and realize "doing what one wants without transgressing the rules", individuals cannot guarantee that they will never make mistakes. Make fewer mistakes.Ren Zhengfei has said many times: "The day Huawei goes public is the day I retire." In recent years, Huawei has shown some signs of going public.According to former Huawei executives, in 2000, Huawei set up a special capital operation group. According to the plan at the time, Huawei wanted to divest some assets first and introduce foreign capital to establish a joint venture.But this keeps hanging. Since 2002, Huawei has been planning to go public. There are no fewer than ten investment banks (mostly from overseas) that have contacted Huawei, including famous investment banks such as JP Morgan, Merrill Lynch, and Morgan Stanley. According to these investment banks, there are many opportunities for Huawei to go public. Great difficulty. In the second half of 2002, some domestic media reposted an exclusive report first released by overseas media: Huawei is actively preparing for an overseas listing.A Hong Kong newspaper even quoted a foreign report saying that Huawei is planning to go public in Hong Kong, and Morgan Stanley has entered Huawei's headquarters, preparing to assist Huawei in listing at the end of 2003. However, on November 23, 2002, when an international journalist group from the United States, Hong Kong, Macau and other countries and regions visited Huawei, Vice President Fei Min said: IPO is inevitable, but I will choose the right time. In 2002, Huawei planned to go public on Nasdaq in the United States, but in 2002, the U.S. stock market fell all the way, the stock market was depressed, and fell into the swamp of a bear market.Cisco, Lucent and other companies' stock market performance was sluggish, and the entire stock market was in a period of oscillation.Helpless, I had no choice but to go back home. In 2003, the US-Iraq War brought about a continuous downturn in the global capital market. The "SARS" toss, the vast majority of investors canceled their investigation and visit plans to listed companies in the Mainland and Hong Kong, and many major investment plans were cancelled. From January to April 2003, financing in the Hong Kong capital market hit a historical low since 1997, many new shares could not be issued, and ZTE also suspended the issuance and listing of H shares. Huawei's carefully planned listing has missed the stock market every time.Going public is of positive significance for Huawei to clarify the complex equity structure, accelerate the process of internationalization, ease financial pressure, and build the Huawei brand. It seems that listing or not listing is no longer a problem.The question now is when and how to go public.It's not that Huawei doesn't want to go public, it's just weighing the pros and cons and choosing the right time.What Ren Zhengfei considers is that the listing must ensure the stability and inheritance of Huawei.Therefore, he has to choose his opportunities carefully.Once the opportunity is ripe, meet the world.