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The rise of Huawei to the top was not pretty



The company began selling cheap telephone exchanges in rural China in the 1980s. The story of its growth, with annual sales exceeding $ 100 billion, is a result of naked ambitions, government support and questionable business tactics.

Huawei is now fighting a US campaign to shut down Chinese company's equipment, the next generation of wireless networks known as 5G. Ultra-fast 5G networks are used to connect everything from mobile phones to self-driving cars.

When the story is over, Huawei will fight hard to protect his business around the world.

Hungry as the Wolf

Ren Zhengfei, a former Chinese Army engineer, was founded Huawei in 1987 and has been its CEO since 1

988. His military background has greatly influenced the leadership style of the company, leading to a Ren

known as "Wolf Culture" by Huawei. Ren wants his employees to stay hungry. He told CNN in an interview this month that the US campaign against Huawei will be good for employees who, after decades of success, have become "lazy, corrupt and weak".

The CEO often talks about "wolf spirit" and has been in the past. In the past, colleagues were told they were "shameless" to secure their business, such as "The Huawei Story," a book about the company co-authored by Tian Tao , Tao is a member of the Huawei International Advisory Council, an organization affiliated with the company, and works at Zhejiang University in East China.

It is expected that Huawei's staff will work the bloodthirsty character of wolves, fearlessness, resilience to harsh conditions, and the ability to mimic a team.

Huawei began selling products from other companies, but eventually decided to develop its own technology and put a lot of money and people into the effort.

According to "The Huawei Story," the company has equipped a large industrial building with work spaces and a kitchen. Beds were set up on the walls and mattresses placed on the floors. The employees worked for hours, slept and ate locally.

  Huawei employees often work long hours due to generous financial incentives to grow the business.

The tireless work paid off. Within a year, Huawei had built its own telephone switching system.

Huawei's early products were cheap and often collapsed. With attentive customer service, the company has made a name for itself and quickly put the equipment back into operation.

In the following decades, Huawei continued to improve its products and introduce new ones, such as smartphones. The company expanded internationally and sent executives to developing markets in Africa, South America and Asia.

Employees were given generous financial incentives – those who exceeded or surpassed their goals were well compensated for their efforts, including some who had previously worked for the company.

A former project director, working in several emerging markets in the late 2000s and mid-2010s, told CNN Business that his bonuses and annual company dividends far exceeded his base salary. This is an effective way to attract top talent, because China's other technology companies would not have that much incentive, he said. Huawei recruited him from another Chinese telecommunications company, trained him briefly in Shenzhen, and sent him abroad.

"Money motivation is the only thing that works," he said. We are called wolves, we need meat, we need money. "He asked to remain anonymous for fear of retaliation by Huawei.

Employees were expected to hold their cell phones 24 hours a day. When customers called problems at midnight, engineers were immediately deployed, according to the former project manager.

He said the relentless schedule could burn people. After nearly a decade at the company, he left because he was exhausted and seldom saw his family.

Huawei said that employees were known to work long hours because when they grow, they are rewarded enormously.

Support from Beijing

The name Huawei means something like "China can".

China's telecommunications infrastructure did not do much in the late 1970s. The country lagged far behind other nations. According to the World Bank, less than 0.5% of households had a telephone.
The poor infrastructure was an obstacle to development. In the 1980s, Beijing opened the market for foreign companies such as Japan's Fujitsu ( FJTSF ) Sweden's Ericsson ( ERIC ). France's Alcatel, America's Motorola MSI ) and Finland's Nokia ( NOK ) .
  Huawei founder says the fight with America might be good for the company

[19659025] It has also cared for domestic players. Two finally emerged as leaders in China and around the world : ZTE ( ZTCOF ) and Huawei.

ZTE is state. controlled and publicly traded, while Huawei is a private company owned by its employees. However, critics say that Huawei has wrongly benefited from the government's generous support, said Philippe Le Corre, senior associate at Harvard Kennedy School and co-author of "China's Offensive in Europe."

"There is only one reason why Huawei is so powerful because they received loans without interest from [Chinese state banks] and that helped them to penetrate the European markets," he said.

Asked about Le Corres claims, Huawei spokesman Glenn Schloss said the company had "made financing transparent".

"There were some misunderstandings about funding from state financial institutions, which led to inflation in the role that Huawei played for growth," he said.

"This funding will normally be provided to governments or network operators who engage in procurement or other activities to secure suppliers, including Huawei," he added.

In fact, other global companies are benefiting from government investment or export-import financing on favorable terms. However, experts say that China is simply much more generous.

"While export credit programs are available in many countries, including the United States, Sweden and Japan, the sheer size of Chinese similar loans programs is a dwarf in other countries," according to a case study by the Center for Strategic and International Studies [19659007] Between 2005 and 2011, the China Development Bank agreed to provide up to $ 40 billion to potential Huawei customers, Schloss said.

Huawei said 35 global projects had opened up the available credit lines between 2005 and 2011, with about $ 3 billion actually expanding.

"Huawei's worldwide sales during this period totaled more than $ 145 billion. Lines were not significant," said Schloss.

Osvaldo Coelho, a telecommunications veteran who previously worked for Huawei as a project manager in Mauritius and South Africa says Beijing's support is key to the company's success.

  Huawei's first product was a telephone switching system, but the company has since expanded to other products such as smartphones.

"If you have a large market and have the support of a powerful government that is mighty like the Chinese Communist Party, you will naturally grow," he said. "This is not a startup in any garage."

In 2012, the European Commission should initiate a commercial case against Huawei and ZTE claiming that the Chinese state illegally subsidized the companies. The case came to a standstill because rivals at that time reportedly refused to cooperate because they feared reprisals from Beijing. China's Foreign Ministry said at the time that Huawei and ZTE comply with international trade regulations.

Corporate Growth Violations

Like other global tech companies, Huawei has taken an aggressive approach to winning international business, even if this sometimes meant breaking the rules.

2003 sued Cisco ( CSCO ) Huawei for copying software and infringing patents. Later, Huawei admitted to US courts that some router software was accidentally copied by Cisco. The American rival has dropped the lawsuit after Huawei had promised to modify its products.
Huawei's worldwide success is haunted by "allegations of bribery, corruption, and the pursuit of foreign policy," according to a report by the RWR Advisory Group in February 2018, a Washington-based consulting firm covering the global operations of China and Russia tracked.

In 2012, an Algerian court found that Huawei and ZTE executives were convicted of bribery and sentenced them to ten years in prison.

In 2014, Huawei launched its own anti-graft campaign, and more than 4,000 employees admitted that they had violated various company policies, from small offenses to bribery and corruption. Employees responded to Huawei's promised leniency, Ren said at the 2015 World Economic Forum.

"Huawei is committed to strict compliance with all laws and regulations and to the highest standards of business ethics, and this commitment is integrated into our Code of Conduct, which sets out the policies and practices our employees must adhere to. We have no tolerance for violations, "the company said in a statement.

The US Department of Justice denies this claim.

  The United States is conducting a worldwide campaign against Huawei.

In January, the Department brought two cases against Huawei, and US prosecutors accuse the company of acquiring US Intellectual Property from T-Mobile 19659026] TMUS ) and violate US sanctions against Iran Court documents in the case of IP theft describe an alleged system whereby employees are to be paid to steal business secrets.

Huawei said at the time it was "disappointed" by the US lawsuit to bring suit. "The company denies that it or its subsidiary or subsidiary one of the allegations of US law alleged in individual indictments, "states a statement limited to Huawei.

Global competitors such as Alcatel, Ericsson, Samsung and Siemens face bribery and corruption scandals.

But Coelho says that Huawei is ready to do anything important to secure the business.

"When you're hungry, you can do a lot of things, you can get really dirty," he said. "They do in the extreme what [others] did in their hay times."

Huawei has employees in "very fast-growing markets that do business with the rest of the world, we have 180,000 employees, we have strict compliance guidelines, but things happen," said Schloss.

"And if so, we discipline or punish employees and work with local authorities," he added.


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