Part IThe Story
The Stove and the Factory
Outside Liaoyang, in the industrial northeast of China, in the winters of the mid-1970s, a detachment of army engineers slept in an adobe house that kept out only some of the wind. The temperature dropped to minus twenty-something degrees Celsius. Through the night the men took turns feeding the stove, because if it went out they would freeze, and that was the whole of the arithmetic. In the morning they left the mud house and went to work on one of the most sophisticated industrial projects in the country, a chemical fiber plant whose equipment had been bought from France and whose automated controls were, in the judgment of one of the young technicians on site, among the most advanced in the world.
The technician was a man in his early thirties named Ren Zhengfei. He told the story more than four decades later, in April 2019, at the headquarters of the company he had founded in Shenzhen, to a CNBC correspondent named Arjun Kharpal. His eldest daughter was under house arrest in Vancouver at the time, waiting to learn whether Canada would ship her to New York to face fraud charges. Within a month the United States Department of Commerce would place his company on a list that cut it off from Google, Qualcomm, Intel, and, for a few frightening months, Arm, the British firm whose architecture sat beneath nearly every smartphone chip on earth. He was seventy-four years old. He chose, when asked what had prepared him, to talk about the stove.
"During the day, we were building a highly modernized factory," he said. "The contrasts were stark. For me, it was an exciting experience."
Exciting is a strange word for nearly freezing to death. It is less strange when one considers the arrangement he was describing: survival by night and the frontier by day, the most primitive kind of endurance in service of the most modern kind of machine, and no sense whatever that the two were in contradiction. Huawei Technologies, the company Ren founded in 1987 with 21,000 yuan and five partners who soon drifted away, has lived in that adobe house ever since. It has built roughly seventy percent of the world's 5G base stations, filed more international patent applications than any company on earth for nine consecutive years, and spent $27.5 billion on research in a single year. It has also been accused, with varying degrees of evidence, of stealing source code, bribing officials, abetting surveillance in Xinjiang, violating sanctions on Iran, and serving as a listening post for the Chinese state. Banned in the United States, restricted across the Five Eyes and in ten European Union states, written off in 2021 by a Beijing analyst as "essentially dead," it reported revenue of 880.9 billion yuan in 2025, about $126 billion.
The man at the center of all this insists he is not much of a man at all. "I don't know about technology, management, or finance," he told Kharpal. He described himself as "a bucket of glue." He buys iPhones for his family when they travel abroad. He holds roughly one percent of his company's shares and the power to veto any decision its board makes. He has said that if the interests of Huawei and the Chinese Communist Party ever conflicted, he would choose the Party. He has also said, of the same Party, that in his youth it would not have him.
Every one of those statements is true, or at least on the record, and none of them cancels the others out. This is the difficulty with Ren Zhengfei. He resolves into nothing. The stove keeps burning.
By the Numbers
The House That Ren Built
¥21,000Registered capital at founding in 1987, about $5,000, from Ren and five partners
¥880.9BHuawei revenue in 2025, roughly US$126 billion
~213,000Employees in 2025, more than half of them in R&D
$27.5BR&D spending in 2025, about 21.8% of revenue
165,000+Active patents held worldwide at the end of 2025
~70%Share of the world's 5G base stations built by Huawei, as of 2023
~1%Ren's stake in the holding company, which he can overrule by veto
The Boy Who Was Refused
The family was always slightly on the wrong side of something. Ren's grandfather, Ren Sanhe, was a master chef from Rendian Village in Pujiang County, Zhejiang, a specialist in curing ham, the kind of man whose craft was measured in patience and salt. His father, Ren Musheng, came within a year of a university degree and then lost it when the grandfather died; during the Japanese occupation he went south to Guangzhou and worked as an accounts clerk in a military factory belonging to the Nationalist government, a job that would, two decades later, nearly cost him his life. After 1949 he became principal of the No. 1 Middle School in Duyun, in the mountains of Guizhou, where he met a senior teacher named Cheng Yuanzhao. Ren Zhengfei, born on October 25, 1944, in Zhenning County, was the eldest of seven children: five younger sisters, one younger brother.
He spent his primary and junior high years in a mountain village. By the accounts his biographers have assembled, he was withdrawn and unsociable, and he was denied admission to the Communist Youth League on the grounds that his spirit of collectivism was insufficiently developed. In high school he wore a single-layer coat through the Guizhou winters because the family could afford nothing heavier.
Then, in 1960, the famine reached Guizhou.
Ren was in his third year of high school. The family was starving. The response of the eldest son is the first managerial act on his record, and it is not a pleasant one to read: he imposed a strict system of food distribution on his own household, apportioning rations among his siblings with a rigor that the household seems to have accepted because no one else was prepared to do it. He went up into the mountains to forage wild fruit rather than eat grain. No matter how hungry he was, he did not touch his family's rations. For a while he mixed rice bran with vegetables to fill his stomach, until his father found out and made him stop. None of his brothers and sisters starved to death.
"When I was young, I had no ideals," he would say in 2019. "I only wanted to keep my belly full. That's my only ideal."
There is a coda to the famine that Ren has repeated over the years with the conviction of a man reciting a creed. With the university entrance examinations approaching, his mother, poor as she was, gave him a scallion pancake every morning. He later concluded that the pancake had been crucial to everything that followed. One can read this as sentiment, and it is sentiment. It is also an accounting statement. In a household where every calorie had been allocated by the eldest son, someone had reallocated a fixed ration of oil and flour toward a single bet on the future, and the bet had paid.
In 1963, at nineteen, he was admitted to the Chongqing Institute of Architectural Engineering, later folded into Chongqing University, to study building services engineering. His mother sewed him two white shirts and a pair of sheets. He wore them for four years.
In 1966 Mao launched the Cultural Revolution, and a letter arrived in Chongqing: his father had been dismissed and criticized for his old work at the Kuomintang's 412 military factory. Ren set out for home. On the train, Red Guards moved through the carriages asking passengers about their family backgrounds. He told them his father was a teacher. They pushed him off the train, and he walked the rest of the way.
At home he reported that the university had dissolved into factional fighting and that hardly anyone attended classes. His father told him that knowledge still mattered, and that he should use whatever he learned to help his brothers and sisters. Ren went back to Chongqing. His biographers credit him with teaching himself computing, digital technology, automatic control, logic, philosophy, and three foreign languages in the years when no one was teaching anything; the specifics are difficult to verify, but the pattern is consistent with everything else. He was a man who studied alone, because the institutions were not available to him.
They were not available to him for a long time. He entered the People's Liberation Army's engineering corps, worked as a technician and engineer on automation in the chemical industry, and studied Mao's writings so diligently that he received several awards for proficiency in Maoist theory. He was still refused membership in the Communist Party, for most of his military career, because of his parents' social background and his father's service to the Nationalists. In March 1978, at thirty-three, he traveled to Beijing as one of more than 6,000 delegates to the National Science Conference, the gathering at which the post-Mao state signaled that knowledge would be rehabilitated. He had invented a testing instrument at Liaoyang, because foreign instruments could not be imported and Chinese ones did not exist, and the instrument's value, he said with characteristic deflation, "was exaggerated by the country, which led to a promotion for me." The same year, he was finally admitted to the Party. In September 1982 he sat as a delegate to its 12th National Congress.
A boy refused by the Youth League for insufficient collectivism had become a decorated Maoist theorist, a Party member, a congress delegate. He had been admitted. That year, the army he had been admitted into began to dissolve beneath him.
Two Million Yuan and Ten Square Meters
In 1982 the Central Committee began cutting the People's Liberation Army down to size. "Most of us didn't understand that move," Ren recalled. "Some top military officers didn't understand it, either." The engineering troops were among the first to go, along with the railway and machinery units, because they had never been meant to fight. Ren had been transferred to a scientific research base and had not settled into the new position when the order came. Everyone had to find another job.
His wife, Meng Jun, had gone to work for the Shenzhen Southern Oil Group, a state enterprise in the city that was then becoming the laboratory of Deng Xiaoping's reform. Meng Jun was herself a product of the system that had kept her husband at arm's length: her father, Meng Dongbo, had been a deputy governor of Sichuan province. Their two children, a daughter born in 1972 named Wanzhou and a son named Ping, carried their mother's surname. Ren followed his wife south with the children.
He did not take to it. At Southern Oil he found department heads he considered content with the status quo and uninterested in progress, and he asked that one of the group's subsidiaries be handed to him to run. The request was denied. In 1983 he was made deputy general manager of an electronics company owned by the group, and soon afterward a businessman cheated him out of more than two million yuan.
The figure is worth sitting with. Ren's monthly salary at the time was less than 100 yuan. Two million yuan at that rate is twenty thousand months of wages, which is to say more than sixteen hundred years. "I couldn't really get what the market economy was about," he said in 2019, "so I ended up making a mistake while working for a state-owned company which got me let go. Where was I supposed to go from there? I had no idea."
He resigned. He and Meng Jun divorced. He rented a room of no more than ten square meters and lived in it with his parents and his nephews.
What he did next is the most revealing thing in his early biography, and he tells it almost in passing. He read law. "I read a lot of books on law," he said, "and learned that the market was about two things: the product and the customer. The law governs what's in between, the transaction. We obviously couldn't control our customers, so we had to get hold of the products." A man who had been swindled by a transaction concluded that transactions were the one part of business he could not afford to misunderstand and the one part he would never fully control. The product was what remained. Everything Huawei later became, the obsessive engineering, the spending on research that critics would call reckless, can be traced in some part to a forty-year-old in a ten-meter room deciding that the product was the only thing that could not be stolen from him.
It was a conclusion with an irony he could not yet see.
A Slogan on a Wall
Huawei was registered in Shenzhen in September 1987. Ren was forty-three. The company's registered capital was 21,000 yuan, about $5,000 at the time, contributed by Ren and five other investors at 3,500 yuan each; the five gradually withdrew their money. He named the company after a slogan he had seen painted on a wall: Zhonghua youwei, China has achievements, or China shows promise, or, in the reading his translators sometimes prefer, China is able. The company's own early gloss was more expansive: a heart connected to China, making a difference.
It is possible to overread a name. It is also possible to underread one. A man whose family had been on the wrong side of every political line drawn in his lifetime, whose father had been nearly destroyed for clerking at a Nationalist factory, who had been thrown off a train for claiming a respectable background, chose to name his company after a patriotic slogan. Whether that was faith, insurance, or both is a question the name does not answer. It does not need to.
His friends advised him to chase high margins. He thought that was not a long-term solution. Through a friend he began selling industrial instruments, which did not pay. Then he found the business that did: selling, on consignment, telephone switches made by a Hong Kong company called HAX, private branch exchange boxes for hotels and offices in a country whose telecommunications network was almost entirely imported. "By the time I got my business license," he said, "I didn't have a single penny left. There was no chance for us to step back and start another business. So we gritted our teeth and pushed ahead."
He was not, by his own account, qualified for the industry he had entered. His training was in architecture; his self-taught electronics were analog, proportional-integral-derivative control, already antique. "By the time I left the military, 186, 286, and 386 had dominated the computer world," he said. "I could not keep up with the times." He had thought, naively, that he could make money "playing with this huge industry." He had not realized "the communications industry was so cruel."
The cruelty arrived on schedule. The Hong Kong supplier stopped working with Huawei. Switch prices fell as foreign products flooded the market. Ren decided to buy Chinese-made components and hire people to assemble small exchanges, and then to design his own: a 40-line switch for rural markets, hotels, and small organizations, capable of serving forty users. "In our early days, we relied on only two multi-meters and one oscilloscope to develop the product," he said. That's how we started out. Like his employees, he ate and slept in the factory. In the evenings he made soup for them. Because research took longer than anyone expected and capital was perpetually short, he borrowed at usurious rates to keep the company running.
He also stopped paying full wages. At one point Huawei employees received half their salaries in cash; the other half was recorded in a ledger. Ren then converted the recorded half into shares in the company, redeemable in cash when an employee left. He would later describe this arrangement in an essay he published in December 2011 with a title borrowed from classical poetry, "A Spring River Flows Eastward," and the passage reads like an apology for having invented something by accident: "When I founded the company, I designed the Employee stock Ownership System to unite employees through benefit sharing. At that time, I did not understand the option system, still less did I know that the West was very developed in this area. Only based on my past life setbacks, I realized that I should share the responsibilities and benefits with the employees."
Past life setbacks. The famine rations, the pancake, the two million yuan. A man who had once divided a starving family's food with ruthless fairness was now dividing a starving company's wages the same way.
By 1990 the company had about 600 people in research and development. In September 1991 Ren and his employees assembled a Huawei program-controlled switch; because the products were cheap, demand outran supply. He made mistakes, too. The JK1000 office switch, launched in May 1993 at a meeting of marketing managers, relied on analog circuitry just as the industry was moving to digital, the same error in miniature that had stranded him in the army a decade earlier. Two hundred-odd units sold. The company corrected itself that same year with the C&C08, a digital program-controlled switch that was, by a wide margin, the most powerful available in China.
In early 1993, more than 270 Huawei employees crowded into a small auditorium in Shekou for the company's 1992 year-end meeting. Ren announced that Huawei would push into public telephone networks. Then he handed out 100 gold medals to outstanding employees, and to the boss of the Hongnian Company in Hong Kong, who had backed Huawei at the start. He had hired Xu Wenwei from the nearby Yilida Group to run hardware. His daughter Meng Wanzhou, twenty-one, came to work at the company that year.
Two decades later, when Huawei had become the largest telecommunications equipment maker in the world, Ericsson's chief executive asked Ren where he had found the courage to enter an industry with such high barriers.
— Ren Zhengfei, CNBC interview, April 2019I told him that I didn't actually know that the barriers were so high, and once we had entered the industry, there was no turning back.
From the Villages Inward
The incumbents in China in the early 1990s were Alcatel, Lucent, and Nortel, and they owned the cities. In 1992 Huawei went where they did not want to go. Its salespeople traveled from village to village through China's poorest and least accessible regions, selling switches to county telecom bureaus that the multinationals considered too small to bother with, and only gradually worked their way toward the more developed provinces. The company emphasized service and customization, the things a remote bureau with no technical staff needed most and could least obtain from a foreign vendor.
A reader who has studied Mao, as Ren had studied him for years in the army, will recognize the shape. The countryside encircles the cities. Ren has said frequently that Huawei's management philosophy and strategy are commercial applications of Maoism, and the academics Christopher Marquis and Kunyuan Qiao, whose book Mao and Markets treats him as a central case, describe him as a dedicated communist who has worked to ingrain those values in the firm. Whether the rural strategy was doctrine or simply necessity hardly matters. It worked. The C&C08 went first into small cities and rural areas and then into the mainstream.
It was not only villages. Huawei won the contract to build the first national telecommunications network for the People's Liberation Army, a deal one employee later described as "small in terms of our overall business, but large in terms of our relationships." In 1994 Ren met Jiang Zemin, the Party's General Secretary, and told him that switching equipment technology was related to national security, and that a nation without its own switching equipment was like one that lacked its own military. Jiang reportedly agreed. In 1996 Beijing adopted an explicit policy of supporting domestic telecommunications manufacturers and restricting foreign competitors. Huawei was promoted by the government and the military as a national champion.
There were also the joint ventures. By 1998 Huawei had signed agreements with municipal and provincial telephone bureaus, its customers, to create Shanghai Huawei, Chengdu Huawei, Shenyang Huawei, Anhui Huawei, Sichuan Huawei, and others. Researchers who have studied the arrangements describe them as essentially shell companies through which money flowed to local telecom employees in exchange for equipment orders; in the case of Sichuan Huawei, local partners could get sixty to seventy percent of their investment back each year as dividends. The countryside was encircled with something other than service.
Ren had a plan for the rest of the world, and it ran in four stages. First, neighboring Hong Kong. Second, Russia and South America. Third, Southeast Asia, the Middle East, and Africa. Fourth, the developed countries. The sequence is the domestic strategy written on a globe: go first where the incumbents are weakest or absent, and come to the capitals last.
In 1996 Huawei began supplying narrowband switching products to Hutchison, the telecom arm of Li Ka-shing's empire in Hong Kong. Ren had his eye on Russia as early as 1994, a market wrecked by economic crisis and starved of industrial investment; on April 8, 1997, he was in Ufa, in Bashkortostan, for the signing of a joint venture called BertoHuawei. In 1998 Huawei began operating in Kenya. By 2020 it had built roughly seventy percent of Africa's 4G networks.
The money that made this possible was not all Huawei's. In 2004 the company signed a $10 billion credit line with the China Development Bank to provide low-cost financing to foreign customers buying its equipment; in 2009 the line was tripled to $30 billion. A European trade commissioner, Karel De Gucht, later found that Huawei had used state support to underbid competitors by as much as seventy percent, and when the European Commission opened an investigation into Chinese subsidies in 2010, Huawei offered the original complainant $56 million to withdraw. In 2005 Huawei's foreign contract orders exceeded its domestic sales for the first time, and Vodafone made it an approved supplier, the first Chinese telecom vendor to receive that status. In July 2010 the company appeared on the Fortune Global 500 for the first time, with sales of $21.8 billion. In 2012 it passed Ericsson.
One of the multinationals that had owned China's cities did not survive the reversal. In the 1990s Nortel, the Canadian giant, outsourced production of its entire product line to Huawei, and then much of its product engineering. Nortel went bankrupt in 2009. Its former chief security officer, Brian Shields, later said the company had been penetrated by China-based hackers beginning around 2004 and that he believed Huawei was a beneficiary, though not a direct participant. An extensive analysis by a University of Ottawa professor placed most of the blame on Nortel's own strategic mistakes. The suspicion has never been resolved, and probably never will be.
Tanks and Needles
Ren speaks in military images, and he is unembarrassed by it. "Why do I like to use military terms?" he asked, rhetorically, in 2019. "Because they are simple and easy to understand. When I can't find a better term to easily describe how business works, I use military terms."
The one he returns to most often is not about attack but about focus.
— Ren Zhengfei, CNBC interview, April 2019Tanks can cross a swamp, but needles can pierce hard things through. We have limited resources and technologies. Everything is limited. If we spread things too thin, there is no way we will be successful.
Huawei's term for the method is the "Van Fleet Load," borrowed from an American general in Korea who was famous for the volume of artillery he would pour onto a single position. "At first, we had several hundred employees focus on this point," Ren said, "then we had several thousand, tens of thousands, and now we have hundreds of thousands. We always focus all of our energy on this same single point. Every year we invest more than 20 billion US dollars in it." He credits the idea, with a straight face, to the Americans. Microsoft has Windows and Office; Intel only makes chipsets. "Unlike many Chinese companies that set up many businesses but most cannot be called successful, US companies know how to narrow their focus and then charge forward. We are actually learning from US companies."
That last sentence is not rhetorical. Beginning in 1996 Ren hired IBM and other American and British firms to rebuild Huawei's research and development process, supply chain, finance, human resources, and quality control. The scale of the borrowing was extraordinary for a company that also styled itself a national champion: it imported the operating system of the Western corporation, nearly wholesale, and then installed it in an organization run on Maoist slogans. Ren has credited the "Western management approaches we brought in" with keeping Huawei's costs low enough to undercut the West.
In March 1996 he also invited a group of professors to draft what the company called the Huawei Basic Law, a corporate constitution. It was finished in 1998. The impulse belongs to the same man who later bought thousands of copies of The Qin Empire, a television series about the Legalist reformer Shang Yang, and distributed them to employees. Shang Yang made the state of Qin strong by writing down the rules and enforcing them without exception. Ren, who has said he reads politics, economics, and history but little fiction and almost no management theory, put his reasons plainly: "Fiction tells imaginary stories, and they are too far removed from reality. As for management books, they are written by professors sitting behind closed doors in their offices." Among Chinese leaders he most admires Deng Xiaoping; among foreign ones, Yitzhak Rabin, whom he calls his teacher. Both were soldiers who became reformers. Neither was soft.
The needle has a cost, and it is paid by the people holding it. In May 2006 a twenty-five-year-old Huawei software engineer named Hu Xinyu died of bacterial encephalitis, in what was widely believed to be a death brought on by overwork. In October 2007, about 7,000 Huawei employees resigned and were rehired on short-term contracts, an apparent maneuver around the unlimited-contract provisions of China's new Labor Contract Law; the company denied exploiting any loophole, and local government and trade unions condemned it. In 2018 a departing employee named Li Hongyuan negotiated a severance, received 300,000 yuan from the company's HR department through a personal account, and was then reported to the police by Huawei for extortion. He spent 251 days in detention before being released.
Asked in 2019 whether his military rhetoric intimidated people, Ren did a small calculation aloud. "There are perhaps some employees who have been intimidated by my military-style speeches, because about 160,000 employees have left Huawei. But there are still more than 180,000 employees working at Huawei." Three hundred to four hundred thousand people had joined over the years; roughly half had stayed. He seemed to consider this a vindication.
When Kharpal asked him why he was less famous than Steve Jobs, Ren said it was because he did not actually know technology and had invented nothing. "I am just taking as a bucket of glue," he said. "I stuck our 180,000 employees together, and encouraged them to forge ahead." When the state wanted to give him awards, he said, he felt ashamed.
He is a hard man to argue with on this point, because he has made himself the only witness.
Coincidence
In 2003 Mark Chandler, the general counsel of Cisco Systems, flew to Shenzhen to confront Ren Zhengfei. He brought evidence. Among it were typographical errors from Cisco's technical manuals that had reappeared, intact, in Huawei's.
Ren looked at the evidence and said one word: "Coincidence."
Cisco filed a seventy-page complaint in federal court in Marshall, Texas, in early 2003, alleging patent infringement and the illegal copying of the source code in its routers and switches. A neutral expert found that Cisco's code had been used in Huawei's products. Huawei's American subsidiary withdrew its Quidway routers, and by July 2004 the company had removed the contested code, manuals, and command-line interfaces; the case was settled out of court, and as part of the settlement Huawei admitted to copying some of Cisco's router software. Both sides declared victory. When a Huawei representative in the United States later claimed vindication in public, Cisco published portions of the expert report, and Chandler wrote that the case had involved "direct, verbatim copying of our source code, to say nothing of our command line interface, our help screens, our copyrighted manuals." By then the story had long been folklore among routing engineers.
It was not the only such story. At the SuperComm trade show in Chicago in June 2004, a Huawei employee was caught after hours photographing the inside of a piece of Fujitsu networking equipment, with hand-drawn diagrams in his possession; the company said he had acted without authorization. In 2012 and 2013, according to a T-Mobile lawsuit, Huawei employees entered a T-Mobile lab in Bellevue, Washington, and took parts of a smartphone-testing robot named Tappy. A Huawei spokesman acknowledged some truth to the complaint and said two employees had been fired. In May 2017 a jury found that Huawei had misappropriated T-Mobile's trade secrets and awarded $4.8 million, but only for breach of a supplier contract. In February 2020 the Justice Department charged Huawei with racketeering and conspiring to steal trade secrets from six American firms; Huawei responded that the allegations, some nearly twenty years old, had never been the basis of any significant monetary judgment. In June 2025 a federal judge in New York declined to dismiss most of the case.
Here is the uncomfortable symmetry. In 2014, the year of the Tappy theft, Huawei became the world's largest applicant for international patents, with 3,442 filings. It has held that position in most years since. The company that copied Cisco's typos now sues others to protect its inventions; in 2011 it went to court in Germany, France, and Hungary against its domestic rival ZTE. And when Ren is asked where Huawei's most famous technical lead came from, he points not to a theft but to a paper. Around 2008 a Turkish mathematician named Erdal Arıkan published an article on what are now called polar codes. "Our scientists spotted it and spent 10 years turning his theories into the 5G standards of today," Ren said. "So the standards the US finds so compelling are actually all built on a single mathematics article."
There is another man in this section, and his story rhymes with Ren's own. Li Yinan joined Huawei young and rose fast through its Central Research Department, a prodigy in an organization that prized engineers above all. In 1998, amid contention between Li and two other powerful figures, Zheng Baoyong and Ren's own son, Ren Ping, Ren moved Li out of research and put him in charge of products and then marketing. Li left. Ren sent a vice president to talk him out of it many times, failed, and gave him a generous sendoff. Li's subsequent venture, Harbor Network, began taking market share and hiring away Huawei people. In 2002 Ren withdrew Harbor's license to resell Huawei products and set up what was known internally as the "hit Hong Kong Office," a unit with one mission. In 2005 Huawei acquired Harbor's Shenzhen voice teams for a reported one million. On May 10, 2006, Ren and Li met at the headquarters of Huawei-3Com in Hangzhou.
Ren had once been the clever subordinate who could not stand the bureaucrats at Southern Oil and asked to be given a company of his own. He had been refused. Li was not refused; Li simply left, and Ren hunted the company he built. Neither the sendoff nor the hunt seems to have been insincere.
Huawei was registered in 1987 as a collectively owned enterprise, an intermediate category between state-owned and private that existed because China did not begin issuing licenses for genuinely private businesses until 1992. The company kept calling itself a collective for decades. Richard McGregor, the author of The Party, argued that this was a definitional distinction "essential to the company's receipt of state support at crucial points in its development," and that its status as a genuine collective was doubtful. In 2019, under American attack, Huawei's chief legal officer Song Liuping described the company, for what appears to be the first time in that register, as "a private company."
What Huawei is, legally, is a firm held by a holding company, Huawei Investment & Holding, of which Ren Zhengfei owns about one percent. In 2010 his stake was reported at 1.42 percent, worth about $450 million. The remainder is held by a trade union committee that is registered with, and pays dues to, the Shenzhen federation of the All-China Federation of Trade Unions, which the Communist Party controls. About half of Huawei's employees participate, foreigners excluded, through what the company calls virtual restricted shares: non-tradable, allocated as a performance reward, reverting to the company when an employee departs. The holders receive dividends. They vote for members of a 115-person Representatives' Commission from a preselected list of candidates; the commission selects the board. Ren holds a veto over any decision that board makes.
In 2019 Donald Clarke of George Washington University and Christopher Balding of Fulbright University Vietnam published a paper arguing that the virtual shares were "purely a profit-sharing incentive scheme" with "nothing to do with financing or control," that they were a contract right rather than a property right, and that if the union committee functioned as Chinese trade unions generally function, "Huawei may be deemed effectively state-owned." Other scholars, among them Toshio Goto in Japan and Marquis and Qiao, came to the opposite conclusion: that Huawei is a private firm collectively owned by its employees and neither owned nor directly controlled by the government. When some employees went to court in China over their 2003 shares, both the Shenzhen Intermediate People's Court and the Guangdong High People's Court ruled that their stock ownership was "for reference only."
The paperwork does not settle the question because the question is not really about paperwork. Huawei's largest customer is the Chinese government. The Wall Street Journal estimated in 2019 that the company had received some $46 billion in loans and other support and $25 billion in tax cuts over the years. Its chief ethics and compliance officer is also secretary of its Communist Party committee. Its longtime chairwoman, Sun Yafang, who stepped down in 2018, had worked earlier in her career in the communications department of the Ministry of State Security, according to an Open Source Enterprise report drawing on Chinese press; an essay published under her name in 2017 said the same. Ren's younger brother, Ren Shulu, born in 1956 and known in English as Steven Ren, has worked at Huawei since 1992 and sits on its supervisory board, running logistics.
And there is what Ren himself has said, in different rooms, to different audiences. To Chinese interlocutors he has described Huawei's corporate culture as the same as the culture of the Party: "to serve the people wholeheartedly means to be customer-centric and responsible to society." He has said that in any conflict between the company's interests and the Party's, he would choose the Party, "whose interest is to serve the people and all human beings." In 2012 he said that "without government protection, Huawei would no longer be alive." To CNBC in 2019 he said that the company's relationship with the government came down to two things, obeying Chinese law and paying Chinese taxes, and that KPMG's audits showed "we have become what we are today with our own strength."
None of these statements is necessarily false. They are addressed to different listeners, and they are all, in their way, about survival.
The Americans were listening anyway. Beginning in 2009, according to documents disclosed by Edward Snowden and reported by Der Spiegel and the New York Times in 2014, the National Security Agency penetrated Huawei's internal networks in Shenzhen, obtained its customer lists and training documents, and accessed the central email archive, including messages from Ren Zhengfei and Sun Yafang. One internal NSA document complained that so much material had been collected that "we don't know what to do with it." The agency was looking for proof of a link to the People's Liberation Army. It was also looking for ways to exploit Huawei's equipment against the targets who used it. In 2023 the Chinese government officially acknowledged the intrusion.
Ren has always said the same thing about backdoors, and his most persuasive argument is not ideological but financial. "If a single backdoor was found in even one of the countries where we operate, our sales would shrink in all of them," he told Kharpal. "Then a large number of our employees would resign, but I cannot leave. I would have to repay tens of billions of dollars in debts. If I could not pay, I would be hounded by creditors every day. How can I live a life like that?" It is a debtor's argument, and coming from a man who once borrowed at usurious rates to make payroll, it has the ring of genuine dread.
A British evaluation center, run under GCHQ oversight and funded by Huawei, spent eight years examining the company's equipment. It did not find a backdoor. It found, instead, "serious and systematic defects" in Huawei's software engineering, outdated components, and an "unmanageable number" of OpenSSL revisions in use at a Shanghai development center. In 2020 the United Kingdom ordered Huawei equipment out of its 5G network by 2027.
A Little Rabbit or Mouse
On December 1, 2018, Meng Wanzhou, Huawei's chief financial officer and deputy chairwoman, landed at Vancouver International Airport. Canadian border officers held her for three hours of questioning. The Royal Canadian Mounted Police then arrested her on a provisional American extradition request. The United States alleged that she had misled HSBC about Huawei's control of Skycom, a company doing business in Iran, so that the bank would clear transactions that violated American sanctions. Within days China detained two Canadians, the former diplomat Michael Kovrig and the consultant Michael Spavor, in what was almost universally described as hostage diplomacy. On January 28, 2019, federal prosecutors unsealed a thirteen-count indictment against Meng and Huawei.
Meng had been at Huawei since 1993, since the year of the gold medals. She was forty-six. Ren had another daughter, Annabel Yao, from his second marriage to Yao Ling, who was twenty-five years younger than her half-sister. That same year, 2018, Annabel was a ballet dancer studying computer science at Harvard and had made a much-photographed debut at Le Bal des Débutantes in Paris. One daughter on the society pages, one under house arrest in a seven-bedroom house in Vancouver with an ankle monitor: the two halves of the Huawei story had produced two daughters to match.
When Kharpal asked how he had felt as a father, Ren answered like a drill instructor.
"I think my children have grown up without experiencing much hardship. Struggling a bit can be good for them. Cuts and bruises toughen her up, and even since ancient times, heroes were born of hardship." They spoke often by phone, he said, but only about family. "We know that our communication is being monitored. What else can we talk about? Nothing but life." He had believed it was an internet rumor, he said, that she had wanted to leave the company before her arrest; then he was told she had written him a letter saying so. She had changed her mind. During the Second World War, he said, there was a Soviet attack plane, the Il-2, that kept flying after being riddled with bullets from fighters and antiaircraft fire. "Meng is now in a similar situation. She will be a hero if she makes it back to us." He added, unprompted, that Meng Wanzhou would definitely not be his successor.
Asked whether she was a hostage, he said: "Maybe." Asked whether he had reached out to President Trump, whom he went on to call "a great president" for cutting taxes, he said: "I don't have his phone number."
On May 15, 2019, the Department of Commerce added Huawei and some seventy affiliates to its Entity List. On May 19, Google suspended Huawei's license to ship new devices with Google Mobile Services: no Play Store, no Gmail, no Maps. Intel, Qualcomm, Xilinx, Broadcom, and Microsoft froze business. On May 22, Arm suspended all active contracts. Japanese and Taiwanese carriers paused sales of new Huawei phones. The SD Association and the Wi-Fi Alliance dropped Huawei's membership; the IEEE briefly barred its employees from peer-reviewing papers. FedEx diverted Huawei packages to the United States, then apologized for having "misrouted" them. Huawei briefly halted some smartphone production lines and told analysts to expect a $30 billion revenue hit.
Ren spoke to Chinese media in the middle of it, and for once dropped the deflection.
— Ren Zhengfei, to Chinese media, May 2019We have sacrificed ourselves and our families for our ideal, to stand on top of the world. To reach this ideal, sooner or later there will be conflict with the US.
Sacrificed ourselves and our families. His family was, at that moment, quite literally the sacrifice.
He found, in the attack, a kind of flattery. "Over the past century, which countries and companies have made the US scared?" he asked Kharpal. "These great people are going to great lengths to find fault with a little rabbit or mouse like us. This shows that the little rabbit or mouse must have something great to offer." Some countries with deep pockets and rich oil reserves, he said, were now telling Huawei they would skip the testing and simply buy. In November 2019 the company paid its staff two billion yuan in bonuses, about $286 million, and doubled their October salaries as a reward for keeping the supply chain alive. In December Ren said Huawei would move its research center from Santa Clara to Canada.
When the end came for Meng, it came quietly. On September 24, 2021, she entered a deferred prosecution agreement in which she acknowledged making untrue statements to HSBC, without pleading guilty to the main charges and without paying a fine. She left Canada that day. Within hours, Kovrig and Spavor were released from detention in China and flown home. On December 2, 2022, a federal judge in Brooklyn dismissed the charges. She returned to Huawei as deputy chairwoman and chief financial officer. In 2023 she became one of the company's rotating chairs.
The plane, riddled with bullets, had made it back.
Fuel for the Winter
Huawei had begun stockpiling in 2018, the year of the Vancouver arrest. In 2019 it spent $23.45 billion on chips and other inventory, up seventy-three percent from the year before. For its most crucial businesses, the telecom network equipment and the servers, it accumulated an estimated year and a half to two years of components. These were the logs stacked beside the stove.
The Americans kept narrowing the chimney. On May 15, 2020, Commerce extended its rules to bar foundries anywhere in the world from making chips for Huawei with American technology or software. TSMC, which had fabricated Huawei's Kirin processors, stopped shipping on September 14. A blanket ban on semiconductor sales took effect the next day; Samsung and LG Display were barred from supplying screens. In November 2020 Huawei sold its Honor phone brand to a state-owned enterprise of the Shenzhen government, in its own words to "ensure its survival." Revenue fell from 891 billion yuan in 2020 to 636 billion in 2021. In the third quarter of 2021 it was down thirty-two percent. Linghao Bao, an analyst at Trivium China, said the company had gone from the second-largest smartphone maker in the world "to essentially dead."
The obituary was premature, and the reason it was premature had been visible for years to anyone who read the fine print. Huawei had been working on an operating system of its own since at least 2012, codenamed HongMeng. In March 2019, two months before the Entity List, the consumer chief Richard Yu told Die Welt that it existed as a "plan B." Huawei unveiled it as HarmonyOS on August 9, 2019, in Dongguan. In June 2021 it began shipping on Chinese phones; within two years it had a tenth of the Chinese smartphone market; on June 21, 2024, the company said it was running on more than 900 million devices. In late 2024 Huawei released HarmonyOS NEXT, built entirely in-house and no longer able to run Android apps at all. When American restrictions cut Huawei off from its American enterprise software, it spent three years building its own resource-planning system, MetaERP, and switched its global operations onto it at midnight on May 14, 2023.
Then the chip. On August 29, 2023, Huawei began selling the Mate 60 Pro, with satellite calling over China's Tiantong network. Teardown analysts at TechInsights found inside it a Kirin 9000S processor fabricated by SMIC on a seven-nanometer process, a node China was supposed to be unable to reach without extreme ultraviolet lithography machines it was forbidden to buy. Dan Hutcheson, who led the teardown, called it evidence of "impressive technical progress." The Commerce Department opened an investigation. In the first quarter of 2024 Huawei's profit rose nearly six-fold from a year earlier. On November 25, 2025, it announced the Mate 80 series, built around a Kirin 9030 that analysts identified as SMIC's first five-nanometer-class smartphone chip.
It is fashionable to describe this as a comeback. It is better described as a continuation. The company that the Americans set out to strangle had, at every stage of its life, been preparing for a winter it assumed would come, because the man who ran it had never lived through a season in which winter did not come. The 2025 annual report showed 880.9 billion yuan in revenue, 68 billion in net profit, roughly 213,000 employees, more than 165,000 active patents. More than half the workforce was in research. HarmonyOS phones were selling in China; Huawei-designed driving systems were going into mass-market cars; a Huawei research campus near Shanghai had opened in July 2024 with room for nearly 35,000 people. In May 2026 the European Commission recommended that every EU member state exclude Huawei equipment from its telecom infrastructure. The fire, by then, was large enough to heat the whole house.
For anyone trying to understand the man rather than the company, two books are worth the time: Eva Dou's House of Huawei, the most thoroughly reported account in English, and the more admiring Ren Zhengfei & Huawei: A Business and Life Biography. Neither resolves him. That is not a failing of the books.
He is in his eighties now. He told Kharpal in 2019 that he would retire eventually, since he would not live forever, though he allowed that Google might someday invent a medicine for that. Huawei's succession system, he said, is written down in the company's articles of governance, and it is not up to him to designate an heir. "Don't worry that Huawei would end up having no successor," he said. "In fact, we have too many."
There is one more story he tells about the bad years, and it belongs before all the others. In Chongqing, during the Cultural Revolution, when the university had stopped functioning and his father had been dismissed and denounced, the young engineering student began collecting political leaflets off the streets and mailing them home to his mother, to encourage his father, who was in trouble. On one of the sheets was a passage attributed to Zhou Enlai: cadres should seek truth from facts; if something is not true, do not admit to it at random; things will always be figured out.
Cheng Yuanzhao read it and passed it to her husband. He held the paper in his hands. He did not kill himself.
Part IIThe Playbook
What follows is an attempt to extract the operating principles beneath four decades of Ren Zhengfei's decisions. Some are admirable. Some are double-edged. At least one is a warning disguised as a principle. They are grounded in the record above, and they apply, with appropriate translation, to anyone building a company that expects to be attacked.
The principles
- 1.Enter before you know the barriers, then remove the exit.
- 2.Concentrate like a needle.
- 3.Begin where the incumbents will not walk.
- 4.Import your rival's operating system wholesale.
- 5.Write the constitution before the crisis.
- 6.Share the harvest, keep the steering wheel.
- 7.Invest in proportion to distance.
- 8.Do not win so cheaply that you starve the market.
- 9.Build Plan B while Plan A is still working.
- 10.Know the price of your most powerful patron.
- 11.Read your enemy's fear as a signal.
- 12.Be the glue, not the genius.
Principle 1
Enter before you know the barriers, then remove the exit
Ren's answer to Ericsson's chief executive is usually quoted as a charming confession of naivety. It is better understood as a two-part method. The first part is the ignorance: he did not know how high the barriers to telecom equipment were, and so he did not price them into his decision. The second part is the commitment: once in, he arranged things so that he could not get out. By the time the business license arrived, the money was gone. There was "no chance for us to step back and start another business."
The combination matters. Ignorance alone produces dilettantes who quit when they discover the difficulty. Commitment alone produces founders who never begin, because the full map of obstacles is too intimidating. Ren benefited from a narrow window in which he knew enough to start and not enough to stop, and then he spent his last yuan closing the window behind him.
This is not a recommendation to be reckless. Ren's earlier venture had cost him two million yuan and his marriage. It is an observation that some markets are only enterable by people who underestimate them, and that the survivors are the ones who make retreat more expensive than persistence.
Tactic: Once you have committed to a hard market, eliminate the fallback options that would tempt you to leave in the first bad year.
Principle 2
Concentrate like a needle
"Tanks can cross a swamp, but needles can pierce hard things through." The Van Fleet Load, Huawei's term for overwhelming concentration on a single point, is the most consistent strategic idea in Ren's career. Hundreds of engineers on one problem, then thousands, then tens of thousands, never diverted as the budget grew. In 2019 he put the annual spend at more than $20 billion. In 2025 research consumed $27.5 billion, 21.8 percent of revenue.
The counterintuitive element is that focus did not loosen as Huawei got richer. Most companies use new capital to diversify. Ren used it to deepen the same hole, and he cited American firms, Microsoft, Intel, as the model, against what he saw as the Chinese habit of opening many businesses and succeeding at none. Even when Huawei did expand into phones, cars, and solar inverters, the expansions shared a single spine: connectivity, chips, and the software that runs on them. He told Kharpal that Huawei had abandoned supercomputing entirely to focus on edge computing.
Tactic: When capital increases, resist the urge to add new fronts; first ask whether the existing front could absorb ten times the investment.
Principle 3
Begin where the incumbents will not walk
Alcatel, Lucent, and Nortel owned China's cities in 1992. Huawei's sales force went village to village. The 40-line switch served hotels and county telecom bureaus too small for the multinationals to bother with. The international expansion followed the same logic on a larger map: Hong Kong, then Russia and South America, then Africa and the Middle East, and only last the rich capitals. In 1997 Ren was in Ufa signing a joint venture in a country wrecked by economic crisis. By 2020 Huawei had built about seventy percent of Africa's 4G.
The peripheral markets offered more than room. They offered tolerance for an imperfect product, customers who valued service over brand, and a training ground where mistakes cost less. By the time Huawei reached the cities, it had been tested in places the incumbents had never been.
H
The Four-Stage March
Ren's international sequence mirrored the domestic strategy of moving from periphery to center.
| Stage | Target | Rationale |
|---|---|---|
| 1 | Hong Kong | Adjacent, familiar, a proving ground with Hutchison |
| 2 | Russia and South America | Large markets with weak incumbents and economic distress |
| 3 | Southeast Asia, Middle East, Africa | Underserved networks, state financing as a weapon |
| 4 | Developed countries | Enter last, with scale, references, and a proven product |
Tactic: Map the customers your strongest competitors consider beneath them, and make those customers your laboratory.
Principle 4
Import your rival's operating system wholesale
Beginning in 1996, the national champion hired IBM and other American and British firms to rebuild its research process, supply chain, finance, human resources, and quality control. This was not a consulting engagement at the margins; it was a transplant. Ren, who has little patience for management books, had enormous patience for management systems that worked, and he credited the Western approaches with keeping Huawei's costs low enough to beat the West.
The principle is that ideological identity and operational method are separable. Ren could speak of Maoism, admire Shang Yang, and run his salespeople like a political campaign, while installing the processes of an American multinational underneath. The slogans motivated; the systems executed. Each did the job the other could not.
Tactic: Identify the single most effective operational system among your competitors and adopt it faithfully before attempting to improve it.
Principle 5
Write the constitution before the crisis
In March 1996, when Huawei was a domestic switch maker with a few thousand people, Ren convened professors to draft the Huawei Basic Law. It was finished in 1998. Two decades later, when asked about succession, Ren could point to a document: the articles of governance define the "iterative succession system," and "it's not up to me to designate a successor."
Writing the rules early does two things. It forces the founder to articulate principles while they can still be shaped, and it creates an authority outside the founder that the organization can appeal to after him. Ren's taste for Shang Yang, the Legalist who made Qin strong by codifying and enforcing law without exception, is not incidental. A constitution is how a founder's judgment becomes an institution's habit.
Tactic: Before your organization needs it, write down how decisions are made, how value is distributed, and how leaders are chosen, and make the document binding on yourself.
The employee shareholding scheme began as a cash-flow fix: half of wages paid, half recorded, the recorded half converted into shares. Ren later said he had designed it "based on my past life setbacks," without understanding options. It became the most powerful retention device in Chinese business, binding roughly half of a workforce of more than 200,000 to the company's results.
It did not dilute his control. Ren holds about one percent and a veto. Employee shareholders receive dividends and elect a commission from a preselected list; the shares are non-tradable and revert when employees leave. Critics argue, persuasively, that this is profit-sharing rather than ownership. Ren would likely not dispute the distinction. The design goal was alignment of incentive without fragmentation of command, and it achieved exactly that. The cost is opacity, and opacity, in Huawei's case, became a geopolitical liability.
Tactic: Distribute economic upside broadly to the people who create it, but decide explicitly, and transparently, where final authority sits.
Principle 7
Invest in proportion to distance
Ren's framework for research allocation is the most quotable thing he has said. A technology two billion light-years away gets a sesame seed. Twenty thousand kilometers away, an apple. A few thousand kilometers, a watermelon. Five kilometers, the Van Fleet Load. The polar codes paper of 2008 sat at the sesame-seed end for years; Huawei's scientists spent a decade walking it toward the five-kilometer mark, where it became part of the 5G standard.
R
The Sesame-to-Watermelon Ladder
Ren's rule for sizing bets by how far a technology is from the market.
| Distance from market | Investment | Posture |
|---|---|---|
| Two billion light-years | A sesame seed | Scan |
| 20,000 kilometers | An apple | Try |
| Several thousand kilometers | A watermelon | Try |
| Five kilometers | The Van Fleet Load | Scale |
The discipline is in the proportion. Many companies either refuse to fund distant research or fund it at the scale of near-term product work and go broke. Ren's ladder allows a company to watch everything and commit heavily only where the distance is short, while keeping the seeds alive long enough to see which ones sprout.
Tactic: Classify every research bet by its distance from market and fund it at the corresponding scale, reviewing each year whether any bet has moved closer.
Principle 8
Do not win so cheaply that you starve the market
This is Ren's own correction, and it is unusual for a founder to offer it. Huawei priced its telecom equipment on its own low costs, and the prices were so low that Western rivals could not compete. "We have reflected on this a lot," he said. Apple, by contrast, sold at high prices under an "umbrella" that let many other companies survive and expanded the market for everyone. Huawei raised its prices.
Underneath the reflection is a strategic insight: a market emptied of competitors is not necessarily a better market. It invites regulators, provokes governments, and removes the ecosystem that keeps demand growing. Huawei's ruthless underbidding, backed by state credit and documented by European trade officials, bought share and also bought enemies. Some of the bans that followed were about security. Some were about industries that remembered being undercut.
Tactic: Price high enough that a healthy ecosystem of partners and competitors can survive beside you, and reinvest the margin in research rather than distributing it.
Principle 9
Build Plan B while Plan A is still working
HongMeng work dates to at least 2012, seven years before Google pulled Huawei's license. Stockpiling began in 2018, before the Entity List. When the blow came, Huawei had one and a half to two years of critical components in inventory, an operating system it could unveil within three months, and a roadmap toward its own ERP and its own chips. The company that was "essentially dead" in 2021 was reporting six-fold profit growth by early 2024.
The difficult part of this principle is political, not technical. Building a replacement for a supplier you depend on, while you still depend on them, signals distrust and costs money that shows no return until disaster arrives. Richard Yu said in 2019 he would "prefer to work with the ecosystems of Google and Microsoft." That preference did not stop the work. The stove in Liaoyang was fed every night, not only on the coldest ones.
T
Decision Timeline: Preparing for Winter
Key moves from founding to the post-sanctions rebuild.
1987
Huawei registered in Shenzhen with ¥21,000; reselling Hong Kong PBX switches.
1993
C&C08 digital switch launched; 100 gold medals awarded in Shekou.
1996
IBM hired to rebuild processes; Basic Law drafting begins.
2004
$10 billion China Development Bank credit line for foreign customers.
2012
Huawei passes Ericsson; in-house OS work under way.
2018
Meng Wanzhou detained in Vancouver; massive stockpiling begins.
2019
Entity List; Google and Arm suspend business; HarmonyOS unveiled in August.
2020
Blanket chip ban takes effect; Honor sold to a Shenzhen state enterprise.
2023
MetaERP goes live; Mate 60 Pro ships with SMIC 7nm Kirin 9000S.
2025
Mate 80 with 5nm-class Kirin 9030; revenue reaches ¥880.9 billion.
Tactic: For every supplier whose loss would end your business, fund a quiet internal alternative now, and measure its readiness every year.
Principle 10
Know the price of your most powerful patron
This principle is a warning. Huawei's alignment with the Chinese state was, for decades, an enormous asset: a key military contract that was "large in terms of our relationships," a 1996 policy that restricted foreign rivals, a $30 billion credit line that underwrote foreign sales, tax relief that the Wall Street Journal estimated at $25 billion. Ren said in 2012 that without government protection Huawei would not be alive. He has said he would choose the Party over the company.
The same alignment became the company's defining vulnerability. The 2017 National Intelligence Law, an opaque ownership structure tied to a Party-controlled union federation, a former chairwoman with a Ministry of State Security past, and the spectacle of Chinese diplomats threatening retaliation on Huawei's behalf in Denmark, Germany, and Britain gave Western governments every reason to treat its equipment as an extension of the state. No denial from Shenzhen could overcome that. Ren's "little rabbit" posture was sincere in its way and unpersuasive in Washington, because a rabbit does not have an ambassador.
S
The Patron's Ledger
What state alignment gave Huawei, and what it cost.
| Benefit | Corresponding cost |
|---|---|
| Domestic protection after 1996 | Labeled a national champion abroad, and treated as one |
| Cheap state credit for foreign customers | Anti-dumping findings in the EU and India |
| Diplomatic defense during crises | Undermined claims of independence from Beijing |
| Opaque union-held ownership | Unresolvable suspicion of state control |
Tactic: Before accepting support from a powerful patron, calculate how that support will be read by the customers and governments you will need in ten years.
Principle 11
Read your enemy's fear as a signal
Ren's most mischievous claim in 2019 was that the American government was advertising for Huawei. "If they aren't scared of us, why are they advertising for us everywhere they go?" Some customers, he said, now skipped testing and bought directly, reasoning that whatever frightened Washington must be good. Within China, the effect was clearer still: public sentiment turned buying Huawei into a patriotic act, and city governments followed.
There is spin in this, but there is also a real strategic reading. An adversary's escalation reveals what it fears most. The 2020 chip ban told Huawei, and Beijing, exactly where the chokepoint lay, and the response, the Mate 60's seven-nanometer chip and the five-nanometer Kirin 9030 two years later, was aimed precisely there. Ren paid his employees two billion yuan in bonuses for holding the supply chain together. Attack converted into motivation, and into a map.
Tactic: When a rival or regulator escalates against you, treat the target of the escalation as the clearest available statement of your most valuable asset, and defend it first.
Principle 12
Be the glue, not the genius
"I don't know about technology, management, or finance. I am just taking as a bucket of glue." It is easy to dismiss this as false modesty from a man with a veto over everything. It is also, structurally, how Huawei runs: rotating chairs instead of a single anointed executive, an iterative succession process written into the articles, a founder who says the company has too many successors rather than too few and who rules out his own daughter in public. He credits 180,000 employees with Huawei's achievements and says state honors made him feel ashamed.
The glue principle has a hard edge. Glue holds things together under stress, and Huawei's people have been under a great deal of it; roughly half of everyone who ever joined has left. But the alternative, a company that depends on the brilliance of one person, would not have survived Meng's arrest, the Entity List, and the chip ban. Ren built an institution that could keep the stove lit whether or not any particular person was awake.
Tactic: Measure your value as a founder not by the decisions you make but by how well the organization holds together and decides when you are absent.
Free playbook
Get The Business Model Playbook
58 business models, one visual page each: how the money flows, the metrics that matter, and who runs it. Free when you join the Faster Than Normal email.
Free. No spam. Unsubscribe anytime.
Part IIIQuotes and Maxims
In their words
— Ren Zhengfei, CNBC interview, April 2019When I was young, I had no ideals. Wearing nice clothes or seeking further education was not what I wanted. I only wanted to keep my belly full. That's my only ideal.
— Ren Zhengfei, 'A Spring River Flows Eastward,' December 2011When I founded the company, I designed the Employee stock Ownership System to unite employees through benefit sharing. At that time, I did not understand the option system, still less did I know that the West was very developed in this area. Only based on my past life setbacks, I realized that I should share the responsibilities and benefits with the employees.
— Ren Zhengfei, on his reading habitsFiction tells imaginary stories, and they are too far removed from reality. As for management books, they are written by professors sitting behind closed doors in their offices, which stifles their creativity. It is impossible to reduce dynamic corporate management to a fixed set of dogmas.
— Ren Zhengfei, on the company's nameWe will not change the name of our brand and will teach foreigners how to pronounce it. We have to make sure they do not pronounce it like 'Hawaii'.
— Ren Zhengfei, CNBC interview, April 2019Huawei's future iterative succession system is clearly defined in our Articles of Governance. Iterative succession must take place in an orderly fashion. It's not up to me to designate a successor. Don't worry that Huawei would end up having no successor. In fact, we have too many.
Maxims
- Feed the stove every night. Survival is a routine, not an emergency response; the company that prepares only for the coldest night freezes on an ordinary one.
- Ignorance can be an entry ticket. Not knowing how high the barriers are may be the only way to begin; making retreat impossible is the only way to continue.
- Be a needle, not a tank. Concentrated force on a single point beats broad strength spread across a swamp.
- Start in the villages. The customers your rivals ignore will forgive your early product and teach you how to build the next one.
- Borrow the method, keep the mission. Adopt your competitor's operating system without adopting its identity.
- Write the rules before you need them. A constitution drafted in calm becomes the authority that survives a crisis and its founder.
- Share the harvest, hold the wheel. Broad economic participation and clear final authority can coexist, but only if both are designed deliberately.
- Size the bet to the distance. Sesame seeds for the far horizon, watermelons for the near one, and everything you have for the last five kilometers.
- Don't empty the market. Pricing rivals out of existence wins share and manufactures enemies.
- Every patron sends a bill. The protection that makes you strong at home can make you untouchable abroad.
