Chapter 54 Conjecture that Huawei will not go public

As a capital- and technology-intensive communications industry, sufficient capital has become an indispensable "leg" for the rapid growth of enterprises.While companies across the country are scrambling to apply for listing on the GEM, Huawei, the country's leading technological entrepreneurial enterprise, has no plans to go public.Why is the wolf-like Huawei not listed?Is Huawei "not short of money"?What are Huawei's development goals?These have become a "mystery" to the outside world. The reasons for going public are always similar, while companies that are not listed have their own reasons.The outside world has speculated a lot about Huawei's non-listing.

Huawei is not short of money? In 2009, Huawei maintained a momentum of strong growth in the international market—becoming the second largest supplier in the global wireless access market; successfully delivered the world's first LTE/SAE commercial contract in Oslo; Terminal 100G solution... It is noteworthy that Huawei, which has flourished in the international market, has also accurately grasped the market opportunities in China's first year of 3G.According to data in Huawei's 2009 annual report: In 2009, Huawei achieved contracted sales of US$10 billion in the Chinese market and won the largest market share in China's 3G market.Currently, Huawei ranks first in China Unicom's WCDMA network and China Telecom's CDMA2000EV-DO network equipment market, and ranks second in China Mobile's TD-SCDMA network equipment market with a market share of more than 30%.It is understood that by the end of 2009, Huawei had paid 68.5 billion yuan in various taxes to the state. In 2011, Huawei's net profit was 23.8 billion yuan, with a net profit rate of 12.8%.As of December 31, 2010, Huawei's available cash flow was RMB 38.1 billion.

It can be seen that Huawei is not short of money now.If listed instead tied hands and feet. Usually the main reason why a company does not want to go public is that there is no need for financing. This kind of company subjectively does not want to become a public company, neither wants to accept the supervision of listed companies, nor does it want the public to share the results of the enterprise. It seems that Huawei's cash flow is very sufficient, but Huawei has also been short of money. When the IT bubble burst in 2001, Huawei was also hit. In 2003, Huawei used 3 billion yuan of internal shares to give more than 80% of its employees the right to purchase.

This is Huawei's unique financing method - internal employee stock ownership plan.Huawei will distribute internal options to old employees based on performance, and the purchased shares will receive dividends at the end of the year, which also closely connects employees with the company. Huawei's financing method is like parents borrowing money from their children, the interest is paid as they are, and part of the assets is mortgaged to the children.This financing method is undoubtedly reciprocal, and is very popular among Huawei employees. Most employees are very happy to own the company's internal shares. The company can also obtain financial support when there is a problem with capital turnover, and Huawei's shares have not flowed out.If the employee who holds the shares wants to leave the company, the company will redeem the shares.

Is it time to go public? Many people think that it is only a matter of time before Huawei goes public.Ren Zhengfei also said, "We are not not going public, but looking for a suitable opportunity." According to a book, Ren Zhengfei also said that the day Huawei went public might be the day he retired. With its price advantage, Huawei once occupied developing countries, but for those developed countries in Europe and the United States, the price advantage is not enough. Huawei is facing the challenge of increasing its overseas popularity. As a private enterprise, Huawei has reached a limit, and Listing will undoubtedly become a step up for Huawei.

The joint acquisition of 3Com by Huawei and Bain Capital in the past two years may be a shortcut for it to enter the overseas market.Huawei's current debt ratio is 50%, which is considered safe.In fact, in 2000, Huawei set up a team specializing in capital operations. According to internal sources, Ren Zhengfei has also tried to sell 20% to 30% of the shares to world-renowned companies such as IBM, Motorola, and Intel since 2001. , and at the same time absorb 5-6 companies to invest in and become Huawei's partners, and each company's shareholding ratio does not exceed 5%.Ren Zhengfei has always hoped that after the private placement is completed, he will go overseas as a whole to go public, but the world's giants don't buy it, and the result is nothing.

Complicated shareholding structure? After Huawei implemented full shareholding in 1997 to 2001 after equity transfer options?The internal shareholding structure is already quite complicated, and even the employees who hold Huawei shares can't figure out how much the things on hand are worth. According to public information, in 1987, Ren Zhengfei registered and founded Huawei in Shenzhen with a capital of more than 20,000 yuan.However, Huawei has gradually developed from an initial small switch agent to its current scale, and the "shareholding model" in its early start-up has contributed a lot.In the 1990s, Huawei's annual sales nearly doubled, and the return on employee equity reached 100% at its peak.Since 1994, employees have been paid a fixed annual dividend of up to 0.7 yuan per share, and the return on investment has reached 70%.

Until 2001, when Huawei carried out option reforms, the company no longer sold shares to new employees, and at the same time, the stocks of old employees were gradually converted into options.The majority of employees' income from options is no longer dividends, but the value-added part of the company's net assets corresponding to the options, and the exercise period is 4 to 10 years. A person in the post and telecommunications system who bought Huawei stocks in the mid-1990s said that at that time, Huawei’s listing became the hope of people who bought Huawei stocks like him, and those who bought Huawei stocks from outside like him at that time There are many people in the post and telecommunications system.But then Huawei conducted a repurchase operation on these in vitro stocks.

In the early years, the local post and telecommunications system still held Huawei shares in the name of the telecommunications "tertiary industry company". When employees subscribed, they only received subscription certificates from the "tertiary industry company". Being repurchased, some are still entangled in it.Huawei has been working on the liquidation of external equity for 10 years, but because it is too complicated, the specific process and current situation are still little known. What is also dazzling is Huawei's many intricate capital increases, as well as the establishment and transfer process of affiliated companies.But even the "old people" who have been in Huawei for many years can't figure out how many affiliates Huawei has, and the relationship between the shares of various trade unions under their names and the personnel of post and telecommunications and telecommunications administrations from various places who came in in the early years.According to Huawei's 2009 financial report, Huawei has a total of more than 95,000 employees worldwide, with nearly 70,000 stockholders. Individual employees hold more than 70% of the shares, which shows the complexity.

Wang Yuquan, President of Frost & Sullivan China, one of the world's top five telecommunications consulting companies, said that although employee stock ownership has greatly stimulated the passion of Huawei people and largely contributed to Huawei's good performance over the years, the more this problem drags on, the more difficult it is to solve The bigger it is, the complicated internal equity relationship may be an important reason for Huawei's delay in listing.