Chapter 2 Preface to the Atypical Significance of Huawei as a World-Class Enterprise

In the tide of Chinese enterprises entering the international market, a number of large and small technology companies have sprung up like mushrooms after a spring rain, and then fell down one after another. Only Huawei has been growing steadily and making rapid progress. In 22 years, it has developed into the second largest in the world. A manufacturer of telecommunications equipment, in 2010, it was listed among the "Fortune 500 companies in the world" by the US "Fortune" magazine, and it is also the only unlisted company in the world's top 500 companies. The rise of Huawei has completely changed the competitive landscape of the world's communications manufacturing industry, and has attracted great attention from Chinese and foreign business circles. Many companies regard Huawei as a benchmark for learning.What Huawei brings to us is not only a demonstration of the strength of Chinese companies, but also an inspiration for China's manufacturing industry to go global.

As the world's leading provider of telecommunications solutions, Huawei has virtually carried the dream of Chinese companies joining the club of multinational companies.Today, Huawei has completed its transformation from a technology-intensive company to an innovative company, and is making steady progress towards becoming a great international company. Huawei's success has changed the negative impression of "Made in China" abroad to a certain extent, and made "Made in China" recognized by the world.As early as 1994, when Huawei was still very weak, Ren Zhengfei "uttered wild words": 10 years later, the world's communications industry will be divided into three parts, and Huawei will account for one of them.The companies that used to rank among the top in the world's communications equipment manufacturing industry are now nothing but people, and Huawei's "ambition" to divide the world into three parts has become a reality.

In 1998, Ren Zhengfei wrote "We promise to allocate 10% of sales for research and development funds, and if necessary and possible, we will increase the proportion of allocation" into the "Huawei Basic Law".His approach has established Huawei's technology-based genes. Over the past 20 years, with the development of communication technology and changes in the communication market, Huawei has followed closely with self-developed technologies and products. Today, Huawei already has a telecom infrastructure network solution, business and software, and professional services for an all-IP converged network. and terminal four major business areas, providing a complete set of solutions for the telecommunications industry.

Huawei's road to internationalization has been developed through repeated defeats and repeated defeats.In developing the international market, Huawei follows the strategy of entering from the low end, forcing the international giants to be unprofitable in the low-end market with the advantage of high quality and low price, and is willing to "voluntarily withdraw". Make profits in the international market, complete continuous investment, and gain new growth points in the international market when the domestic market is in a downturn.This is also different from Haier's strategy of "difficult first and then easy".Because the telecommunications industry has a complex industry chain, strict controls, and high technical barriers, it is different from the home appliance industry. If you start to choose the most difficult market, it is tantamount to "suicide".Choosing an internationalization path suitable for the telecom industry is another reason for Huawei's success.

Huawei's internationalization is relatively solid and effective.From a product follower and imitator to an overall leader in technology and the market, Huawei's transformation has benefited from the broad perspective brought by its global operations.As one of the few domestic Chinese companies that can compete with global industry giants in the mainstream product field, Huawei's success and failure in the communications industry over the past 10 years is worth learning and thinking about. "For Huawei to survive and develop, there is no 'panacea'. It can only use what others think is 'stupid', which is hard work." Ren Zhengfei interpreted Huawei's "secret" of success in this way.In fact, Huawei's success is multifaceted, and the key lies in the enhancement of its comprehensive strength, the leap in technology research and development capabilities, the improvement of market development and service capabilities, the optimization of the supply chain, and the internationalization of management and other important factors.

Ren Zhengfei's "continuous innovation, turning market pressure into innovation, and then transforming innovation into competitiveness, so as to stand at the forefront of the market" has become the consensus of Chinese high-tech enterprises. In October 2010, the famous British financial magazine "The Economist" awarded Huawei the prestigious "2010 Global Company Innovation Award". What's even more rare is that when we are increasingly anxious about the direction of the "post-world factory era", Huawei's growth model has provided us with the most valuable inspiration.

After China entered the WTO in 2001, it officially integrated into the global economic integration. With the advantages of "low cost + industrial cluster", it established the status of the world's factory and became a bright spot of the global economy. This bright spot has benefited a large number of enterprises. And profoundly affected the structure and direction of China's economy.However, the good times didn't last long.A few years later, the domestic low-cost model with low added value as the core, under the attack of multiple internal and external factors, has continuously slipped into the channel of diminishing marginal returns. "Sweatshops" not only face the pressure of the market, but also become a curse for the hearts of the people.Especially in the current situation where the global economy is falling into inflation and production costs are rising sharply, many companies that rely on low cost for their livelihoods are struggling to survive or even die, and many companies in China have not been spared.

Therefore, the state pointed out the future direction for enterprises - "independent innovation" as early as 10 years ago.However, "independent innovation" is not easy for enterprises. It requires the soil of knowledge, the cultivation of talents, the breakthrough of systems, the improvement of management, and the guidance of culture... Many enterprises seem to be at a loss for this. on the verge of extinction in this economic crisis. In the same bewilderment, our eyes lighted up—Huawei's growth path seems to be a bridge for Chinese companies to reach the other shore.Huawei is both "labour-intensive" and different from it because its "labour" is a "knowledge-based workforce" that can create high added value. Value, the power to germinate innovation.This model can not only be owned by Huawei, but also replicated by the IT industry. One of China's greatest competitiveness for many years to come should be a "Huawei-style" growing "knowledge-based workforce" team.

At present, Huawei has a total of 100,000 employees, of which technical research and development personnel account for 46%, marketing and service personnel account for 33%, management and other personnel account for 9%, and the remaining 12% are production personnel. For more than 10 years, Huawei has maintained such a ratio, and the human resource allocation has shown a "smiling curve" with "high on both sides of R&D and market". Huang Shaoqing, a researcher at the Private Enterprise Research Center of China Europe International Business School, pointed out that the distribution of added value in the supply chain has changed. extend.The secret to maintaining this "smile curve" is that only in this way can the company be guaranteed huge profits.

Looking back at Huawei's 22-year mental journey, it can be said that the key to its success lies in its successful interpretation of the role from "follower" to "surpasser".Since it invested in independent research and development around 1990, it has taken Siemens, Ericsson, Alcatel, etc. in Europe and the United States as examples, and followed the road of imitation and innovation. It patiently followed the giants and insisted on high R&D investment regardless of cost. , while maintaining forward-looking research and development, perseverance, creating opportunities, and constantly encroaching on the opponent's market from low-end to mid-end, and then to high-end.

As a persistent and patient "follower", Huawei finally broke up the formation of the "leaders". In 2010, when the North American giant Nortel collapsed and Nokia Siemens and Alcatel-Lucent were struggling, Huawei had successfully entered the second place in the industry. At this time, it was not far from the last leader, Ericsson. Ren Zhengfei began to think about how Huawei can play the role of "leader" without getting lost when role models are about to disappear: "What is the concept of leading? It is 'Dan Ke'. Dan Ke is a mythical figure. He put his own Take out your heart, light it with fire, and illuminate the way forward for future generations. We must also lead the way forward for the communications industry like Dan Ke.” Ren Zhengfei said that the biggest challenge Huawei faces in the future is, “Leading the way is an exploration. In the process, because the future is not clear and uncertain, it may pay a great price.”Therefore, in 2010, Huawei made a high-profile entry into cloud computing, and in the next decade, Huawei will be the leader in the era of cloud computing. Ren Zhengfei said: "The information industry has entered the 'cloud' era, and it needs a more open mind and a more rapid and accurate market response capability. On the cloud platform, it will take us not too long to catch up with and surpass Cisco. We want to catch up with Google in the cloud business. We used to rely on Western companies to lead the way, and now we have to participate in leading the way, and we have to work hard to contribute to the world like Western companies.” When analyzing Huawei's limitations, Ren Zhengfei talked about the importance of "people", especially "some particularly smart people" may be considered "especially 'stupid' people" under certain cultural mechanisms, because " They were ahead of their time and incomprehensible."However, the management mechanism established by Huawei in the past 20 years has focused on "teams" and collaboration, and largely lacks a culture that understands a small number of "smart people." Some people in the industry say that Apple’s success lies in the fact that it has made good use of a small number of top talents with great innovation capabilities (first of all, Jobs himself). Its characteristics are that it greatly promotes its personality and encourages innovation; "Several" top talents who seem to be sloppy, have frequent inspirations, and occasionally get one.The success of Huawei lies in the good use of a group of software engineers called "second-rate talents" by Ren Zhengfei. Its characteristics are teamwork and uniformity. It usually manifests itself in the sincere cooperation of tens of thousands of software workers (engineers). , work hard, define goals, and achieve them.The difference in culture and mechanism between the two will affect Huawei's lead in the next decade, because the former is more inclusive and open, while the latter is too self-disciplined and closed. As the leader of China's international high-tech enterprises, Huawei's benchmarking significance lies in the fact that it has explored a path for the development and management of high-tech enterprises in China. This path has become clear from chaos because of Huawei.Huawei has successfully explored a business model, operation model, operation process, internal mechanism and management system with Chinese characteristics and in line with international standards, and creatively solved the problem of how to successfully implement the international advanced enterprise management model in China, realizing the foreign advanced Sinicization of the management system. At the same time, Huawei has also successfully explored the corporate values, strategic management system, R&D management system, marketing system, cadre management system, human resource management system, financial control system, and supply chain system of Chinese IT companies.It has successfully taken the thrilling leap from "surviving" to "going out" and then to "surpassing". Relying on its unique internationalization strategy, it has changed the industry's competitive landscape and allowed competitors to change from "ignoring" Huawei to "emphasizing" Huawei. "Huawei, to" look up" Huawei. Ren Zhengfei said: "Being a company is a state of survival, and it is the survival of the fearful; running a company will always have countless crises, and will always face the critical point of collapse; running a company is always humble, and you must keep in mind the role of time." Perhaps, the future of Ren Zhengfei and Huawei will be as full of hardships and ups and downs as before, and there will be hardships, but for entrepreneurs who have experienced the global economic crisis and endured the test of more than ten years of winter, he will be able to deal with it calmly; For a company that "fears death" with the goal of surviving, Huawei will definitely live better and be built to last!