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Huawei’s problem of being too ‘Chinese’

China’s biggest telecom company can attribute much of its success — and most of its setbacks — to how stubbornly “Chinese” it remains, even in the face of rising demands for it to conform to Western standards.

 

Throughout its three-plus decade history, Huawei has proven to be a lightning rod, both for observers in China and abroad. It was notorious even before the detention of its CFO, Mèng Wǎnzhōu 孟晚舟, in Vancouver last month put the company in headlines around the world.

This is because the issue is about far more than a telecommunications firm. This is about the way in which the People’s Republic of China, its companies and its people, engage with the rest of the world. It is about culture and identity, the norms of doing business, and the way in which concepts of trust and success are defined. More often than not, those characteristics of Huawei which inspire pride, fear, admiration, confusion, or frustration to its employees, customers, and the world also map neatly onto the factors which inspire those emotions toward China itself.

In 2017, I wrote an article contrasting the vastly different corporate cultures and strategies of Huawei and Lenovo, China’s two most globally-recognized brands. There was “friendly and inclusive” Lenovo, which grew through acquisition of U.S. brands such as IBM’s PC and server divisions, as well as Motorola Mobility. Lenovo is publicly listed, has a wide variety of nationalities represented among both key executives and its board of directors. It defines itself not as a “Chinese” company, but a “global company with Chinese roots,” and emphasizes localization of staff, management, and decision-making in the countries and regions where it does business. The 2014 book The Lenovo Way, co-authored by two of the company’s senior executives (one Chinese, one American), reads like a how-to book for managing a cross-cultural workplace, emphasizing the “soft skills” of communication and trust-building.

Huawei, on the other hand, is known for a military-like “wolf culture,” consisting of long hours, extreme loyalty, and intense internal competition. Highly centralized out of its Shenzhen headquarters, Huawei relies heavily on teams of Chinese expats sent overseas. It is not publicly listed. It is notoriously secretive, and known to keep both the media, and even its own employees, in the dark when it comes to the company’s inner-workings. In contrast to Lenovo’s “global” identity, Huawei’s is unmistakably that of the People’s Republic of China. When discussing the firm, it is common to hear a statement along the lines of “Huawei is not a global company. It’s a Chinese company that does business globally.”

Many of Huawei’s problems were the result of its approach, I argued, particularly in managing overseas staff, media, and governments.

While first published in English on SupChina, a translated version on the Chinese-language business news site Huxiu reached over 100,000 WeChat views within a few hours, and became a frequent topic for discussion both on online forums and for me personally with Chinese colleagues and friends.

The commentary was remarkably divided. Many expressed a shared frustration with Huawei’s culture, criticizing what they perceived as an approach unsuitable for a company of such reach and prominence in this day and age. Yet there was an equally vocal cohort that claimed such a culture was the company’s key to success. From a sizeable number of people, the comments were defensive, nasty even. To criticize Huawei was to criticize China, their culture, a component of their identity.

The discussion around a few companies’ corporate cultures quickly brought to the surface underlying conflicts regarding China, what it means to be Chinese, and how a nation and civilization that is growing in prominence and reach should integrate and engage with the rest of the world.

Indeed, as scrutiny of Huawei has increased as of late, the discourse around the company is making this abundantly clear: The challenges Huawei is facing are nothing less than those facing China, its culture, and its system.

Opacity and transparency

Unlike the vast majority of technology firms with its size and reach, Huawei is not a publicly-held company. Rather, as it claims, it is fully owned by its 180,000-plus employees. Its private ownership means that Huawei is not obligated to disclose the same degree of information that publicly-held companies are, so details regarding its financial health, decision-making, and internal power structure are kept under wrap. Many observers credit this, at least in part, for the firm’s success, as the company is able to make short-term sacrifices to bring success in the long term.

Huawei’s opacity also has its downsides, as it erodes trust both inside and outside of the company. The trust deficit is a common complaint among employees, especially those who are not Chinese, or Chinese staff who join the company mid-career. It is also undoubtedly a factor in the company’s struggles to manage its public image abroad. The company’s elusive founder, Ren Zhengfei 任正非, made only his third-ever public appearance last week, saying Huawei has “never received any request from any government to provide improper information.” Needless to say, a lot of people were unconvinced.

 

“Huawei is not a global company. It’s a Chinese company that does business globally.”

 

These themes of trust and transparency — or lack thereof — are familiar to anyone who has followed the inner and outer workings of China. The PRC’s authoritarian system can seem shadowy and mysterious to even the savviest of observers, where power struggles and deliberative processes happen behind closed doors. The authenticity of government statistics is frequently questioned, with limited means to validate them.

Transparency issues have also plagued how China has interacted with the world at large. The projects of its massive Belt and Road Initiative are frequently criticized for lack of public information regarding loan terms, environmental protection, and corruption. The activities of the Communist Party’s United Front Work Department have frequently been under scrutiny, blamed as agents for Chinese Communist Party (CCP) “influence operations” overseas.

Both Huawei and the Chinese government have recognized their need to manage public perception. Huawei is a major client of many of the world’s largest and most prominent public relations firms, and invests heavily in managing its public image. Meanwhile, the CCP has splurged more than $6 billion to fund a state-backed media empire devoted to “telling China’s story” around the world. Yet both have found desired results hard to come by. Their heavily manicured images come across as inauthentic. A case can be made that their tone-deaf efforts to change the public narrative have, on more than one occasion, done more harm than good.

We don’t know the decision-making process in Huawei’s inner circle, or the motives and disputes inside Zhongnanhai meeting rooms. We don’t know because in both cases, their systems are designed to prevent outsiders from knowing.

Diversity and inclusion

According to the company’s 2017 annual report, Huawei took in more than 600 billion RMB ($88 billion) of revenue that year, with just over half of that coming from its overseas business. It has a presence in more than 170 countries and regions across the world.

But even as its clientele and employees have diversified, its leadership has remained monolithic. Of the 17 who make up the company’s board of directors, all are Chinese, all have been with the company for at least 20 years, and none have degrees from overseas universities listed in their profiles. This is also the case for the 10 men who make up the firm’s supervisory board.

Non-Chinese individuals have been hired for more junior-level executive positions, but they generally lack input in company decision-making. After leaving Huawei following a lengthy run as the firm’s U.S. communications head, William Plummer published Huidu: Inside Huawei, in which he described his frustration with company leaders’ apparent unwillingness to incorporate the input of non-Chinese experts. Plummer has since fingered this tendency as one of the core reasons for Huawei’s recent overseas troubles, alongside the U.S. government’s more aggressive stance toward the company in recent years.

Another foreign-born former Huawei executive expressed a similar sentiment, telling me, “With any international business, cultural differences are like a bridge. While it can certainly be debated how much each side should walk across the bridge in each situation, they must meet somewhere on the bridge…I don’t think (Huawei’s leaders) really care much about that at all.”

Similar observations are often made by more junior-level staff, even for Chinese staff who join mid-career. “If you haven’t been raised within the Huawei system, it is extremely difficult to succeed,” one Chinese human resources professional who spent time at Huawei explained to me. “You’ll be seen as an outsider, like someone moving to a small town from elsewhere. Even for Chinese people, they can still feel like foreigners there.”

 

I don’t think Huawei seems to be very interested in making work ‘fun’ or ‘enjoyable.'”

 

When operating overseas, it is easy to see how such norms of behavior can be problematic. Huawei is known to rely heavily on Chinese expatriates to complete projects overseas, usually for only a few years at a time, with heavy pressure to achieve results. In this case, Huawei leaders, when assembling their teams, understandably choose individuals they know, trust, and have worked with before. More often than not, these individuals are Chinese, and have come up from within the system. After all, when the pressure is on, why gamble on building rapport with staff whose culture you do not understand, when there are team members from your own culture who you know are reliable?

While this logic does make sense in some ways, it can end up creating an unhealthy work environment in which local staff feel as though they are foreign in their own country, or in a struggle with Chinese expats who are often in greater positions of power. One former Chinese Huawei employee who was sent by the company overseas shared, “When we’d work overseas, the Chinese staff would discuss an issue privately, and then agree on how we would communicate that issue to the local staff. Often the message we would give the local staff was very different from the reality of the situation.”

This dynamic can lead to disgruntlement among Huawei’s overseas staff, as its Glassdoor reviews indicate. “I have been working three years in the company,” one employee in Munich posted on April 15, 2017. “Some of the strongest problems I can see (are) the lack of transparency, the chaotic management and exploitation culture. Only the Chinese colleagues enjoy the trust of the upper management and are given opportunities. The rest are not seen as part of the company.” Among the most frequent complaints include issues of diversity, cultural sensitivity, ethics, and discrimination, particularly in developed markets.

Despite such issues, many current and former Huawei employees dismiss such concerns. One Chinese manager who worked on a number of overseas projects explained that Huawei’s success despite its seeming indifference to issues of diversity proved that the importance of diverse work teams was “nothing more than a Western myth.”

These issues of diversity and inclusion within Huawei certainly echo those of the People’s Republic of China as a whole. In addition to a complex language and culture difficult for any outsider to understand, much less master, its population is explicitly defined as consisting of 56 distinct ethnic groups, creating an inherent identity crisis for any aspiring immigrants of different ethnic backgrounds seeking to “become Chinese.”

The state has often struggled to incorporate China’s 55 ethnic minorities into a more pluralistic society, as currently seen in attempts to “Sinicize” Islam, which has included brutal persecution and mass detention of its Muslim minorities, most notably Uyghurs. Among the dominant Han majority, participation in influential areas of society is often limited to members of the Communist Party. Although the CCP’s role in society has fluctuated throughout its 70-year history, recent years have seen it expand its reach, taking greater control in areas such as media, technology, civil society, and religion. The Party’s case for legitimacy appears to be increasingly reliant on nationalist principles, as Xi Jinping has attempted to rally the Chinese people around a vision of national rejuvenation.

While this may be appealing for those within China and the CCP, this poses a number of fundamental dilemmas for China when dealing with foreign countries and individuals. After all, nationalism, at least in China’s case, is inherently an exclusionary worldview. At best, those who are not Chinese have little to gain from the “Chinese Dream” promoted by Xi Jinping. For other nations and individuals, particularly of those at territorial, economic, or ideological odds with China, Chinese nationalism can be downright threatening.

Both Huawei and the PRC are growing in influence. But even as they expand globally, they remain closed internally, perhaps even increasingly so. As they ask the world to open up to them, they seem intent to remain closed to the world. As we are currently seeing, this contradiction can lead to conflict.

“Wolf culture” and success by any means necessary

For many of Huawei’s new recruits, becoming acquainted with the company involves a famously intense “boot camp,” after which it is said that many are encouraged to sign a “striver pledge,” in which they voluntarily forego their rights to annual leave or overtime pay for their first few years with the company.

For Huawei newcomers, this is an introduction to what is referred to as “wolf culture,” defined by a battlefield-like mentality, intensity, and obsessive focus on results at any cost.

In “wolf culture,” no one is able to survive if they get too comfortable.

“In Huawei, ‘wolf culture’ means you kill or be killed,” explained one former Huawei employee. “I think the idea is that if you have everyone in the company competing fiercely with one another, the company will be better at fighting and competing with external threats. I don’t think Huawei seems to be very interested in making work ‘fun’ or ‘enjoyable.’”

The intensity of Huawei’s culture may well have set a precedent for the rest of China’s tech community, where “9-9-6” working hours (9 am to 9 pm, 6 days per week) are commonplace.

This approach can often lead to a bending (or breaking) of ethics or rules in order to achieve goals, crossing what is referred to as a “yellow line.” It also means an expectation that an employee will put the wellbeing of the company ahead of their other priorities in life. In a story familiar to many within China’s tech and business community, Huawei founder Ren Zhengfei once ordered an executive to divorce his wife.

Huawei has been known to intentionally place their employees in separate locations from their families in order to minimize distractions, and they are expected to work extremely long hours. The intense internal competition can also lead to a toxic work environment. “The most interesting point of working for Huawei is the culture of distrust. Employees will steal your work and get credit for it, which is very strange!” explained one engineer who worked for Huawei in Europe for five-plus years. “Seems that managers at Huawei will only trust those who they have the power to fire or coerce, as there is little accountability between departments, but fierce competition between teams.”

Put in this context, it makes sense that Huawei has been accused on a number of occasions of labor law violations, IP theft, and even “violating the human rights” of their workers. It seems as though these are natural, perhaps inevitable side effects of “wolf culture.”

Both China and Huawei have succeeded because they have been willing to go to lengths, and make sacrifices, that others have not. But as each has grown to become leaders in the Asia-Pacific region, the methods that got them there have been called into question, and they find themselves facing pushback. Many of Huawei’s goals are admirable, but are its means to achieving them acceptable? All countries seek economic growth, but how much environmental damage is acceptable? Companies want to be competitive, but is it worth the cost of employee health and company reputation in the global business community? Few disagree about opposing terrorism, but does that justify the unlawful detention of hundreds of thousands of Muslim minorities?

When much of the world looks at both Huawei and China, they see entities willing to go to great lengths to achieve their goals. What causes concern and fear is that few seem to know how far is too far.

A “frog in boiling water”

In the days that followed the publication of my 2017 article, I discussed it with a Chinese internet company executive.

“My cousin worked for Huawei, and it was a very difficult time for him,” she said. “We Chinese love Huawei, but I think more and more people in China see that it is having a culture crisis. Huawei is great at solving urgent problems, but their culture issues are not so urgent, so they are like a frog in boiling water. By the time they feel that it is too hot, it is already too late.”

For both Huawei and China, the water is getting warmer. The question is how close we are to boiling, and what could push it over the edge.

Elliott Zaagman

Elliott Zaagman is a corporate trainer, executive coach, and writer who splits his time between Bangkok and Beijing. He focuses on Chinese companies and how they relate to their employees, customers, and the public. Connect with him on LinkedIn, Twitter, Weibo, or on WeChat at ezaagman.

3 Comments

    1. Ed Head Reply

      Osvaldo,
      Read your article, and not much in it bears on what Huawei’s problem has turned out to be, which is indeed being too Chinese, but the worst parts of that.
      You say no American rotating CEO until America lets Huawei in? Absurd.

  1. ed head Reply

    If one were to describe THE telecom machinery of a GIANT ORWELLIAN SURVEILLANCE STATE, which would naturally have a HUGE SECRET to be kept from outsiders at all costs, a secret that would spell instant collapse of the machinery once exposed, it would easily sound just like this.

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