Chapter 23 Chapter Four Moving Ahead in Adversity

Half of it is flame, half is sea water - when the surprise soldiers rushed in, Ren Zhengfei sounded the "winter" alarm three times in 2000, 2004 and 2008 respectively. In the past 22 years, Huawei has experienced the baptism of crisis awareness. In 2000, Ren Zhengfei put forward the "winter theory" for the first time, and it has been more than 10 years since today.Huawei's sales revenue increased from 15.2 billion yuan in 2000 to 185.2 billion yuan in 2010, a 12-fold increase in 10 years.In the international market, from the third world to developed countries, Huawei competes with the world's largest communication equipment suppliers, and is invincible and fierce.

In 2000, Huawei established R&D centers in Silicon Valley and Dallas, the United States. This was the first time that Huawei had established R&D institutions in developed markets in Europe and the United States.But at this time, Huawei's overseas market still occupies a very small share. Of the 2.65 billion US dollars in sales, overseas markets only contributed 100 million US dollars. Under the above circumstances, Ren Zhengfei said "winter is coming" for the first time. At that time, many people had difficulty understanding the meaning behind this sentence.In fact, as an entrepreneur, Ren Zhengfei is well aware of every change in the market.Throughout the late 1990s, the compound annual growth rate of China's telecom market was three times that of the national economy.Combined with Huawei's previous performance of doubling every year, it also made Ren Zhengfei in 1999 judge that Huawei at that time "will still double."

However, the split of the telecommunications market has brought about unstable factors. The construction of telecommunications networks in various provinces has stagnated. For the first time, the annual growth rate did not exceed 50%, and Ren Zhengfei felt the "chill". From a global perspective, 2000 was a year when technology stocks plummeted and the Internet bubble burst. The Nasdaq Index fell 56% a year. Cisco, Ericsson, Motorola and other telecom equipment giants bid farewell to the state of continuous growth.The giants, including Lucent and Nortel, are all mired in losses. In the first half of 2001, with the large-scale layoffs of Nortel and Ericsson, Cisco's huge loss of 2.6 billion US dollars, Lucent was almost merged, and the winter of network and telecom equipment suppliers finally arrived.Ren Zhengfei, president of Huawei, has long predicted that this day will eventually come. At the end of 2000, he wrote "Huawei's Winter", which is widely circulated in the industry.

Ren Zhengfei wrote in the article: Have all the employees of the company considered, if one day, the company's sales decline, profits decline or even go bankrupt, what should we do?Our company has been in peace for too long, and too many officials have been promoted during peacetime. This may be our disaster.The Titanic also went out of the sea amidst cheers.And I believe that day will come.How do we deal with such a future? Have we thought about it?Many of our employees are blindly proud and optimistic. If too few people think about it, maybe a crisis is coming soon.Being prepared for danger in times of peace is not alarmist talk.

When I visited Germany, I was very touched to see how quickly Germany recovered after World War II.At that time, their workers united and proposed to lower wages instead of raising wages, thus speeding up economic construction and making the post-war German economy grow very fast.If the crisis of Huawei really comes, will it be enough to cut the wages of employees by half and let everyone live on a little cabbage and pumpkin?Or can we save the company by laying off half the people?If this is the case, the danger is not dangerous.Because, once the danger is over, we can gradually make up wages, or promote sales growth, and bring back those who were forced to lay off.This is hardly a crisis.If doing both at the same time can't save the company, have you thought about how to deal with it?

For the past 10 years, I have been thinking about failure every day, turning a blind eye to success, and I have no sense of honor or pride, only a sense of crisis.Maybe that's why Huawei has survived for 10 years.We all have to think together, how to survive, so that we can survive longer.The day of failure will definitely come, and everyone must be prepared to meet it. This is my unshakable view, and this is the law of history. Huawei has been yelling wolf, shouting too much, and everyone doesn't believe it.But wolves do come.This year we will discuss the crisis extensively and discuss what crisis Huawei has.What is the crisis in your department, what is the crisis in your department, what is the crisis in your process?Can it be improved?Can the per capita benefit be improved?If the discussion is clear, we may not die and continue our lives.How to improve management efficiency?We write some management points every year. Can these points improve your work? If you improve a little, we will move forward.

... Thousands of sails pass by the side of the sunken boat, Wan Muchun in front of the sick tree.The slump in Internet stocks will definitely have an impact on construction expectations in two or three years, when the manufacturing industry will enter contraction inertially.The current prosperity is the inertial result of the surge in Internet stocks in the past few years.Remember a sentence: "Extreme things must be reversed", this winter of network equipment supply will be as cold as it is too hot for people to understand.If there is no foresight and no prevention, it will freeze to death.At that time, whoever had cotton-padded clothes survived.

Ren Zhengfei also put forward 10 countermeasures in the article: (1) Balanced development is a short piece of wood; (2) There is an essential difference between the system of responsibility for things and the system of responsibility for people, one is the expansion system, and the other is Convergent system; (3) Self-criticism is an excellent tool for innovation in thinking, morality, quality, and skills; (4) Qualifications and the virtual profit method are an orderly and effective system to promote the company's reasonable evaluation of cadres; (5) Do not blindly Innovation is the only way to reduce the huge organization; (6) Standardized management itself includes monitoring, and its purpose is to effectively and quickly serve business needs; (7) To face changes, we must have a calm mind and the psychological quality to withstand changes (8) Templating is the magic weapon for rapid management and progress of all employees; (9) Huawei's crisis, shrinkage, and bankruptcy will definitely come; (10) Quietly respond to external discussions.

This paper-backed article is not only a wake-up call to Huawei, but also especially suitable for learning in the IT industry.The subsequent bursting of the Internet bubble made this article widely circulated. Since then, "winter" has surpassed seasons and become synonymous with crisis.Many domestic media and corporate internal magazines reprinted this article, and many entrepreneurs and MBA students read it intensively as important materials. At that time, Huang Hongsheng, chairman of Skyworth Group, believed that this article expressed the feelings of all business people.Lenovo Group Marshal Yang Yuanqing distributed this article to all middle-level cadres, asking them to study it carefully.Liu Jiren, chairman of Neusoft Group, recommended reading to his subordinates before the company's 10th anniversary.

In fact, Huawei's first winter warning was originally made by Ren Zhengfei for the company's internal, but it made the entire Chinese business community feel the chilling influence. In March 2001, Ren Zhengfei went to Japan to learn Buddhist scriptures. In Japan, Ren Zhengfei had an in-depth exchange with Professor Takeuchi Ryoki, the national adviser of Japan. After returning to China, Ren Zhengfei wrote in the article "Northern Spring": Huawei is not yet in the winter position, but at the end of autumn and the beginning of winter, we must earnestly learn from others, accelerate the overall improvement of work efficiency, improve the rationality and effectiveness of the process, cut unnecessary organizations, streamline redundant employees, and strengthen Staff self-training and quality improvement.Only by being prepared for danger in times of peace and before winter comes, can we make padded jackets.

What is success?Just like those companies in Japan, they can still survive after a narrow escape.This is real success.Huawei didn't succeed, it just grew. Ren Zhengfei's premonition was right. In 2002, Huawei's sales revenue fell for the first time, from 25.5 billion yuan to 22.1 billion yuan.If domestic telecommunications restructuring and the Internet bubble are the external causes of this phenomenon, then Huawei's extremely high domestic market share and setbacks in overseas market expansion are internal causes. The overseas market, which has been painstakingly managed for 5 years, was less than 5% of the overall sales in 2002. There is no good business model, and the cost of developing overseas markets has remained high for a long time.Ren Zhengfei's "winter" speech is indeed at the right time. After the first winter warning, Ren Zhengfei also predicted a spring. In 2002, Ren Zhengfei realized that spring was coming, and delivered a speech titled "Meet the Challenge, Practice Hard Work, and Welcome the Coming of Spring".He clearly pointed out: "Everyone always says what is Huawei's winter? What is a quilted jacket? It is cash flow, and the quilted jacket we prepared is cash flow." Ren Zhengfei revealed at the time: "Fortunately, we still have billions in cash flow in the bank. People are asking whether we should issue more and distribute more. We said that we will see after we overcome the difficulties." In that winter, Lucent cut off 50% of its employees, Nortel cut off 2/3 of its employees, and its market share dropped sharply. At that time, Marconi, one of the world's top 500 companies, dropped its stock to 6 shillings. At that time, Ren Zhengfei had a clear understanding of international acquisitions. He was still preparing cotton-padded jackets instead of bargain-hunting acquisitions. He said: "Six shillings are as cheap as rubbish. If our company wants to buy it, we can buy it. , but we still have $4.2 billion in debt after buying it, so we don’t have that much energy.” After one or two winters, Lucent and Marconi finally couldn't hold on, and later carried out mergers and acquisitions with Alcatel and Ericsson respectively. Ren Zhengfei said that surviving is the real way out; universal customer relationship is a differentiated competitive advantage; we must strive for greater market share and contract value; company scale is the basis for future operator cooperation.But Ren Zhengfei refused to call it the top 500. He asked the company to put an end to the term top 500 from top to bottom, and never said to enter the top 500. He said that only when Huawei collapsed and rose again, could it enter the top 500. He realized at that time that the company is a supply chain, and the future competition is the competition of the supply chain.Huawei's supply chain is connected to hundreds of manufacturers, including manufacturers, distributors, and agents. It is a very large system.This system should be regarded as Huawei's allied army, and small jackets are delivered one by one, and cotton jackets for autumn and winter are enough.And Huawei did survive the winter three times safely. "If you win, you will raise your glasses to celebrate, and if you lose, you will desperately rescue each other" is the embodiment of Huawei's wolf nature.Huawei, which has always been low-key, has always tightened the nerves of its internal employees.From "Huawei's Winter" to "How long can Huawei's red flag last" all reveal Huawei's sense of crisis, and worries about the future require team unity and not lose wolfishness.Ren Zhengfei believes that only in this way can Huawei find cotton-padded jackets for winter. It is this kind of self-denial, low-key and calm, and forward-thinking that give Huawei the power to give Huawei time to self-improvement, self-adjustment, self-optimization, and integration of internal strength; when winter really comes , Huawei has found a "padded jacket" for the winter, maintaining the momentum of sustained and stable development.