Chapter 53 Chapter 9: The Puzzle of Huawei Not Going Public

Going public is the dream of almost every company. As long as it has a certain growth and asset scale, going public will become the dream of glory and wealth pursued by the boss and employees; even as long as there is a good enough project and an innovative business model, domestic and foreign companies Venture capitalists will rush in and push you on the fast track to go public! How wonderful it is to go public. Its powerful allure attracts countless companies—to raise funds from the whole society to develop themselves through the stock market, which can reach hundreds of millions or even billions of dollars at any time.Plus, all the money you raise — never pay it back!Is it so easy to get a loan from a bank?

The most attractive thing is that going public can make the boss and employees of the company rich overnight!Therefore, even if countless companies fail to meet the listing standards, they will try their best to conceal the truth, cover up their faults, and go public in a false manner; and if many companies that have already been listed are not well-managed, their executives will often operate in violation of regulations and prevaricate, ranging from not disclosing important information to seriously Then cheat and fake.But the price paid for doing so is usually just the stock exchange's "public condemnation" of the company and a fine of hundreds of thousands of yuan.Because the cost of violating regulations is too small, violations and frauds are repeatedly banned.

However, these "hardly listed" companies often have problems in their own operations, and sooner or later they will be exposed after listing. This is the price paid for listing. However, after a large number of well-run companies go public, they will still encounter various unexpected sequelae. For example, they will no longer be free, must accept supervision, audit, and must accept the services of professional organizations such as legal and financial public relations; must accept the media at any time. Supervision; major initiatives must be accepted, and strategies must be submitted to the "laymen" of the shareholders' meeting for review, voting, and timely exposure; and the public "hole card" often makes the company passive... Even if you are fine with these things, you will be proud in your heart and will Arrogance and self-confidence will lead to blind investment. Once the market fluctuates, it may endanger the main business...

This is the common reason why excellent companies such as Huawei do not go public.A company that is too bad cannot be listed, and a company that is too good cannot be listed.Moreover, any company that goes public must accept a permanent sequelae—transaction costs that cannot be dropped.All these kinds, and so on.There are also many sequelae, such as the fluctuating stock price caused by fluctuations in people's hearts, such as the uncontrollable cash-out of small shareholders, such as the loss of credit caused by competition with upstream and downstream, such as going public and running counter to the spirit of the enterprise, and such as going public to motivate employees, and the result is in front of a group of rich people What about incentives? "Water can carry a boat, but it can also overturn it." Although it is good to go public, it will inevitably bring changes to the company.

According to insiders of Huawei, the main purpose of Huawei's listing is not funds, but Huawei's "internationalization".This includes the internationalization of funds, but also the internationalization of the company's business and management. On August 9, 2010, "New Century Weekly" published an article titled "Huawei's Listing or Not Listing Has Reached a Decision Point".The article said: In 2009, Huawei announced its victory over the financial crisis with record-breaking operating income and net profit; in 2010, Huawei, which wanted to use its strong financial resources to expand its international market through overseas acquisitions, failed repeatedly. .

Repeated failures in overseas acquisitions have been a "curse" for Huawei for many years, which is hindering its further upgrade from China's largest telecom equipment supplier to the world's largest telecom equipment supplier. Too many analyzes have shown that the main obstacle to the US government's acceptance of Huawei is suspicion of Huawei's mysterious background.The prescription to solve this suspicion is also obvious, which is to go public, and it is listed overseas.Taking the initiative to accept the most stringent capital market regulation and disclosing detailed information such as shareholding structure and balance sheet to global investors seems to be the only way for Huawei to upgrade.However, Huawei is reluctant to go public.

Huawei is a company that the capital market is willing to accept, but Huawei has never been active.The reasons, the industry speculates, range from "employee stocks" that are "unclear and chaotic" to the need for expansion in overseas markets. Now, whether to go public or not to go public, Huawei has reached a decision point.In order to show transparency, Huawei has insisted on publishing annual reports every year since 2005.However, its annual report has also been criticized by the outside world for its many problems.On the one hand, Huawei’s annual report release time is irregular. On the other hand, the data items released by Huawei are changing every year. There are often many inconsistencies in the Chinese and English reports, and the financial statements are incomplete. These have been criticized.

Obviously, this is far from the "transparency" that government regulators and the market want to see.Going public, especially going public in overseas markets and becoming an international public company, has become a shortcut for Huawei to solve problems.Of course, for Huawei, going public is just a means, not an end. Through going public, it is more important to establish an open and transparent corporate governance structure, a regulated, credible operating model that better reflects the core values ​​of the company. . But whether to go public or not is actually a problem that has plagued Huawei for more than 10 years.Many Huawei employees said that around 1998 and 2004, there were internal rumors that the company was about to go public, but it finally disappeared.The "blocking tiger" among them is the difficult to solve, the problem of private equity liquidation and related companies that has been suffering for many years.

An old employee who has worked in Huawei for more than ten years told the reporter: "If the company goes public, I am of course happy to accept this generous gift, but from a rational point of view, going public may not be a good thing for Huawei." He expressed concern to reporters. Now, although Huawei employees complain about the company in some aspects, as a Huawei employee, everyone has a sense of belonging and invests money in the company through "fundraising", thus being closely connected with the company.Once a company is listed, the company's shareholding structure must be a part that needs to be dealt with urgently. If the issue of shareholding is not handled properly, it will inevitably lead to distraction.In addition, for some middle and high-level executives who hold a large proportion of shares, there may be a phenomenon of chasing short-term interests.

Ren Zhengfei named his company Huawei with a deep national complex and wanted to gain a place in the international market.For Huawei, which is facing the challenge of increasing its popularity overseas, listing may help it. In 2009, a relevant person from Huawei said that Huawei's goal is to become an international and competitive company, and the company does not rule out any measures that will help achieve the goal.Based on this analysis, market participants believe that the listing of Huawei, especially the listing on the road of internationalization, will help it attract a group of high-quality strategic investors. A strict public company image will greatly promote Huawei to further expand the international market, so as to truly realize its goal of growing into an international company.

Another senior person in the industry said that Huawei's reluctance to go public also has a very practical concern, that is, it is worried that the anti-foreign corruption laws and regulations in Europe and the United States will restrict Huawei's expansion speed in emerging markets. ’, once listed, it will be bound by European and American laws and regulations.” On April 21, 2011, the British "Financial Times" published an analysis article titled "IPO will help Huawei enter the United States". The article said: "Huawei is eager to enter the high-end market in the United States. Whether the company can continue to grow rapidly, Perhaps it will depend on whether it can achieve this goal. If Huawei really wants to allay Washington's concerns, Ren Zhengfei has a way: take the company as a whole public listing, preferably in a market outside mainland China, or at least in Hong Kong at the same time. Listing. This will allay concerns about transparency of ownership and management in one fell swoop.” Many people in the industry believe that although Ren Zhengfei has repeatedly emphasized that "relatives will not succeed", the issue of Huawei's "successor" and the company's governance structure after Ren Zhengfei's retirement will be issues that Huawei will face sooner or later.As for how to establish a sound system and change the company's governance structure, for Huawei, going public is the best choice to maintain stable development. In this regard, some people in the industry also pointed out that it is the best choice for some private enterprises to enter the capital market, disclose their management institutions to the outside world, and take advantage of the advantages of the capital market in corporate management and corporate governance.For Huawei, going public is also the best choice for Huawei.It will make the management of enterprises more standardized and transparent, realize a great leap in institutionalization and internationalization, and be more conducive to international development. There are many family businesses in foreign countries with more than one hundred years old, but after one hundred years, they still choose to enter the capital market and start to use the modern enterprise system in the capital market environment to manage the enterprise to ensure the correct decision-making and stable development of the enterprise. In any case, going public is inevitable. Huawei is waiting for the opportunity to choose a way to go public and weigh the pros and cons.In fact, Huawei's plan is nothing more than to ensure the company's stability and inheritance after listing.