Weekend Long Read: Ren Zhengfei on How Huawei Navigates Challenging Waters

[para. 1] Caixin commemorates its 15th anniversary by re-publishing interviews with impactful figures in China, revisiting their insights on major issues such as climate change, green transition, and the China-U.S. tech rivalry, which remain critical today.

[para. 2] Ren Zhengfei, the founder and CEO of Huawei Technologies Co. Ltd., is celebrating his 80th birthday, marking a new phase for him and the company after enduring significant challenges.

[para. 3] Huawei faced five years of increasing U.S. imposed restrictions beginning in December 2018 when Ren’s daughter, Meng Wanzhou, was detained in Canada due to U.S. fraud charges. The U.S. further restricted Huawei in May 2019 by adding it to the "Entity List," which led to sanctions severely impacting its operations, such as halting 5G smartphone production.

[para. 4] These sanctions led to a 28.6% drop in revenue in 2021, marking Huawei’s first revenue decline in two decades. Recovery began in 2022, with a slight rise in revenue, and by 2023, a 9.64% sales increase and a 144.5% net profit surge indicated solid recovery despite continued sanctions.

[para. 5] Ren’s interview with Caixin took place shortly after Huawei was added to the Entity List in May 2019. His comments were closely analyzed as they provided insights into how Huawei might navigate the unprecedented situation.

[para. 6] During a global press conference at Huawei's headquarters, Ren emphasized confidence as Huawei's core strategy, assuring stakeholders of the company's readiness to face challenges.

[para. 7] To stabilize its business, Huawei strategically downsized by selling parts of its business, such as the submarine cable unit in June 2019 and the Honor smartphone brand in November 2020, while increasing focus on growth areas like cloud services and the automotive market.

[para. 8] Ren anticipated and acknowledged that the U.S. sanctions would be an ongoing struggle, a prediction that has proved accurate over five years as Huawei has adapted to survive in a restrictive environment.

[para. 9] Huawei developed a durable technological "moat" to ensure resilience, particularly through HiSilicon Technologies Co., founded in 2004. This allowed Huawei to replace many components restricted by sanctions, highlighted by the release of the Mate 60 series.

[para. 10] Huawei also invested in software, developing proprietary platforms like HarmonyOS, set to become independent from Android and recognized as a third major operating system by the end of the current year.

[para. 11] Ren’s strategy primarily focused on research and development, education investment, learning from the U.S., and global collaboration to effectively counter threats and prepare Huawei for future challenges.

[para. 12] The interview, captured in a June 2019 issue of Caixin Weekly, provides insight into Huawei's resilience and adaptive strategies in response to U.S. sanctions.

Subsequent questions and answers reveal Ren’s confidence in managing the ban, his approach to business re-structuring without layoffs, their past strategic planning for U.S. competition, and the areas where Huawei surpassed competitors, particularly in 5G technology. Ren asserts the importance of continuous learning from the U.S., especially in advanced technology and education, while maintaining cooperation with U.S. companies. He also emphasizes the need for China to invest in education and innovation, and reflects on China's progress and economic adjustments. Ren candidly shares his personal sacrifices and the company’s evolving relationship with the Chinese government, highlighting a shift towards a more market-oriented and legally governed economic landscape. This comprehensive account by Ren provides a thorough understanding of Huawei's challenges and achievements in this complex geopolitical environment.