1 00:00:02,480 --> 00:00:14,000 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,120 --> 00:00:21,680 Speaker 2: Hello and welcome to another episode of the Odlots podcast. 3 00:00:21,760 --> 00:00:24,160 Speaker 3: I'm Jill Wish and I'm Tracy Alloway. 4 00:00:24,320 --> 00:00:28,120 Speaker 2: Tracy, we recently did that episode with Mackenzie Hawkins's talking about, 5 00:00:28,240 --> 00:00:31,440 Speaker 2: you know, some of the geopolitics of AI and chips, 6 00:00:31,480 --> 00:00:33,680 Speaker 2: et cetera. And when it comes to AI chips, it 7 00:00:33,760 --> 00:00:36,559 Speaker 2: basically is in video and nobody else. But there is 8 00:00:36,640 --> 00:00:40,040 Speaker 2: one other company that's clearly like lurking out there in 9 00:00:40,080 --> 00:00:40,520 Speaker 2: the picture. 10 00:00:41,360 --> 00:00:42,600 Speaker 4: Yes, right, So that. 11 00:00:42,520 --> 00:00:44,559 Speaker 2: Was one of the things that came up, which is that, yes, 12 00:00:44,800 --> 00:00:48,159 Speaker 2: Vidia has this huge dominance with it in AI, but 13 00:00:48,400 --> 00:00:51,199 Speaker 2: you know, there is this Chinese company, as we said, Huawei, 14 00:00:51,360 --> 00:00:54,480 Speaker 2: that is making a lot of progress. If there's one 15 00:00:54,640 --> 00:00:57,960 Speaker 2: area of concern or if there's one possibility that another 16 00:00:58,040 --> 00:01:01,560 Speaker 2: company's tech could really sort of like formed the backbone 17 00:01:01,600 --> 00:01:04,160 Speaker 2: of AI, this is is probably them. 18 00:01:04,640 --> 00:01:08,400 Speaker 3: I find Huawei really fascinating as a company. So it's 19 00:01:08,440 --> 00:01:11,920 Speaker 3: sort of this national champion, right And even the name 20 00:01:12,040 --> 00:01:15,880 Speaker 3: I think means something like China has achievements or China 21 00:01:15,959 --> 00:01:19,480 Speaker 3: is able to achieve or something like that. And yet 22 00:01:20,120 --> 00:01:25,800 Speaker 3: it has these like really weird European headquarters European style headquarters. Yeah, 23 00:01:25,880 --> 00:01:29,119 Speaker 3: they look like French castles and things like that. And 24 00:01:29,400 --> 00:01:32,360 Speaker 3: you hear all these stories about how aggressive some of 25 00:01:32,400 --> 00:01:36,440 Speaker 3: the Huawei sales tactics are. There was the arrest of 26 00:01:36,480 --> 00:01:41,160 Speaker 3: the founder, ridden junk Fay's daughter a few years ago. 27 00:01:41,680 --> 00:01:44,039 Speaker 3: So there's just all this stuff going on and like 28 00:01:44,120 --> 00:01:46,720 Speaker 3: kind of weird tensions, and I want to learn more 29 00:01:46,760 --> 00:01:49,240 Speaker 3: about what this company actually is and what it does. 30 00:01:49,440 --> 00:01:52,640 Speaker 2: Totally a lot of mystery, a lot of perhaps paranoia, 31 00:01:52,640 --> 00:01:54,960 Speaker 2: a lot of concern about what it does and who 32 00:01:54,960 --> 00:01:58,520 Speaker 2: it is and it's connection to the Chinese government, the CCP, 33 00:01:58,920 --> 00:01:59,360 Speaker 2: et cetera. 34 00:02:00,000 --> 00:02:02,440 Speaker 4: Okay, we have to learn more if this is going to. 35 00:02:02,440 --> 00:02:04,480 Speaker 2: Be the one company they could at some point in 36 00:02:04,520 --> 00:02:07,560 Speaker 2: the future threatened in video. And we really do have 37 00:02:07,720 --> 00:02:09,720 Speaker 2: the perfect guest to talk about it. We are going 38 00:02:09,800 --> 00:02:11,079 Speaker 2: to be speaking with Evado. 39 00:02:11,320 --> 00:02:11,920 Speaker 4: She is the. 40 00:02:11,880 --> 00:02:15,400 Speaker 2: Author of the fairly new book came out earlier this year, 41 00:02:15,600 --> 00:02:19,480 Speaker 2: House of Huawei, The Secret History of China's most powerful Company. 42 00:02:19,760 --> 00:02:21,760 Speaker 4: It's really an extraordinary book. 43 00:02:21,880 --> 00:02:24,840 Speaker 2: I actually think someone asked me the other day there 44 00:02:24,880 --> 00:02:27,200 Speaker 2: are a few books you would read about China these days, 45 00:02:27,560 --> 00:02:29,720 Speaker 2: and this is now I think sort of an instant classic. 46 00:02:29,800 --> 00:02:31,760 Speaker 2: So Eva, thank you so much for coming on odd 47 00:02:31,760 --> 00:02:32,880 Speaker 2: lots kind of perfect timing. 48 00:02:33,320 --> 00:02:34,639 Speaker 5: Thank you so much for having me here. 49 00:02:35,120 --> 00:02:39,200 Speaker 2: Actually is really perfect timing because just today the founder 50 00:02:39,280 --> 00:02:43,560 Speaker 2: of the company, Renjong Fei, gave a interview with People's Daily, 51 00:02:43,720 --> 00:02:45,960 Speaker 2: and as clear in your reporting, he does not do 52 00:02:46,040 --> 00:02:49,320 Speaker 2: like a ton of media etc. Certainly not like Jensen 53 00:02:49,400 --> 00:02:52,359 Speaker 2: Wang always talking to the press. What do you take 54 00:02:52,400 --> 00:02:54,880 Speaker 2: away from that that suddenly there's a just to I 55 00:02:54,919 --> 00:02:57,640 Speaker 2: think literally just today or maybe yesterday, that there's a 56 00:02:57,760 --> 00:03:00,680 Speaker 2: Ren Jong fey interview with People's Daily. 57 00:03:01,200 --> 00:03:04,280 Speaker 5: Yeah, so this is very very rare for them to 58 00:03:04,320 --> 00:03:09,560 Speaker 5: publish a full interview transcript with a private enterprise entrepreneur 59 00:03:09,760 --> 00:03:11,840 Speaker 5: on the front page of the People's Daily, which is 60 00:03:11,840 --> 00:03:17,280 Speaker 5: the party's mouthpiece and usually is chronicling what the nation's 61 00:03:17,360 --> 00:03:20,840 Speaker 5: leader Sdingping and other senior officials are doing. And I 62 00:03:20,880 --> 00:03:24,760 Speaker 5: think it really speaks to Huawei's sort of central role 63 00:03:24,840 --> 00:03:27,360 Speaker 5: now in China's tech industry, and not only that in 64 00:03:27,520 --> 00:03:32,639 Speaker 5: diplomatic relations. This is a message to the United States 65 00:03:32,680 --> 00:03:35,080 Speaker 5: and the world for them to put his words on 66 00:03:35,160 --> 00:03:37,800 Speaker 5: the front page of People's Daily ahead of time, when 67 00:03:37,920 --> 00:03:41,720 Speaker 5: Huawei is very much in the crosshairs of the Trump administration. 68 00:03:43,320 --> 00:03:46,160 Speaker 3: I want to ask the pressing question on my mind 69 00:03:46,280 --> 00:03:49,040 Speaker 3: and then maybe get into other important stuff. But what 70 00:03:49,200 --> 00:03:53,000 Speaker 3: is the deal with the European castle headquarters for this 71 00:03:53,160 --> 00:03:55,880 Speaker 3: company that has sort of grown in tandem with the 72 00:03:55,960 --> 00:04:00,360 Speaker 3: Chinese economy and is considered a national champion, national symbol 73 00:04:00,440 --> 00:04:04,320 Speaker 3: in many ways. Why do they have French castles and 74 00:04:04,400 --> 00:04:06,760 Speaker 3: like Greek statues as their headquarters. 75 00:04:07,600 --> 00:04:11,000 Speaker 5: Yeah, this is one of the strange and amusing things 76 00:04:11,000 --> 00:04:13,560 Speaker 5: about this company. They have this sort of larger than 77 00:04:13,640 --> 00:04:18,080 Speaker 5: life campus that just mystifies people when they come to visit. 78 00:04:18,200 --> 00:04:22,240 Speaker 6: They have like a replica of Versailles, they have a 79 00:04:22,320 --> 00:04:25,800 Speaker 6: replica of the castle of Heidelberg from Germany, and they 80 00:04:25,839 --> 00:04:29,080 Speaker 6: have their R and D operations in things like European 81 00:04:29,120 --> 00:04:30,000 Speaker 6: style castles. 82 00:04:30,040 --> 00:04:33,240 Speaker 5: And it's very strange to people, and this has never 83 00:04:33,320 --> 00:04:36,440 Speaker 5: been fully explained by the company, but in a way 84 00:04:36,520 --> 00:04:39,719 Speaker 5: it does show the level of their ambition, like they 85 00:04:39,720 --> 00:04:43,640 Speaker 5: are building sort of an empire far more than just 86 00:04:43,880 --> 00:04:47,000 Speaker 5: what many people think of sort of a single tech 87 00:04:47,000 --> 00:04:49,840 Speaker 5: company does, and it's global footprint. 88 00:04:50,560 --> 00:04:52,600 Speaker 2: The weird thing about Lalawaeys, you know, when we talk 89 00:04:52,640 --> 00:04:56,159 Speaker 2: about these big Chinese industrial giant. Typically a lot of 90 00:04:56,200 --> 00:05:00,240 Speaker 2: them are publicly traded or talking about puid or show 91 00:05:00,360 --> 00:05:03,359 Speaker 2: me or so forth, or cattle the battery company. And 92 00:05:03,440 --> 00:05:07,240 Speaker 2: then it's also not a state owned enterprise. You tell 93 00:05:07,240 --> 00:05:09,760 Speaker 2: in the book the story it was founded in Shenzhen, 94 00:05:09,960 --> 00:05:13,279 Speaker 2: and either the late seventies or early eighties, they explicitly 95 00:05:13,279 --> 00:05:16,839 Speaker 2: decided not to go down the Sooe wrote, unlike competitors 96 00:05:16,880 --> 00:05:17,400 Speaker 2: ZT E. 97 00:05:17,640 --> 00:05:20,240 Speaker 4: What is it though? Explain like what is the structure 98 00:05:20,240 --> 00:05:20,880 Speaker 4: of this company? 99 00:05:21,240 --> 00:05:23,400 Speaker 5: This sort of gets to the heart of why I 100 00:05:23,480 --> 00:05:27,520 Speaker 5: was so interested in this company, Huawei Technologies, in that 101 00:05:28,000 --> 00:05:30,520 Speaker 5: if you really if you understand how this company works, 102 00:05:30,560 --> 00:05:34,200 Speaker 5: then you really do understand how China works writ large, 103 00:05:34,360 --> 00:05:39,240 Speaker 5: and so it is this fusion between capitalism and the 104 00:05:39,279 --> 00:05:44,000 Speaker 5: party controlled Chinese economy. That's where Huawei sits. So it 105 00:05:44,080 --> 00:05:48,880 Speaker 5: is registered as a private company and it is privately held. 106 00:05:49,080 --> 00:05:53,799 Speaker 5: They have resisted listing on the stock market for decades, 107 00:05:54,240 --> 00:05:57,479 Speaker 5: which means that they are able to take a longer 108 00:05:57,560 --> 00:06:00,680 Speaker 5: term view. They don't have to deliver quarterly results. They 109 00:06:00,720 --> 00:06:05,320 Speaker 5: aren't under the gun from investors to be profitable every 110 00:06:05,360 --> 00:06:09,320 Speaker 5: single year even though they are, so they sort of 111 00:06:09,400 --> 00:06:12,280 Speaker 5: are able to flow more of their money into long 112 00:06:12,360 --> 00:06:15,359 Speaker 5: term R and D investments, And the other part of 113 00:06:15,400 --> 00:06:19,960 Speaker 5: it is they do have national guidance under the Party 114 00:06:20,120 --> 00:06:24,800 Speaker 5: from Beijing as one of the nation's tech champions, and 115 00:06:24,880 --> 00:06:26,359 Speaker 5: so it's kind of this fusion. 116 00:06:27,080 --> 00:06:30,480 Speaker 3: How does competition with CTE actually work. Huawei is this 117 00:06:30,520 --> 00:06:35,080 Speaker 3: big important privately held company in China, but ZTE is 118 00:06:35,120 --> 00:06:38,840 Speaker 3: part state owned. I guess both of them like have 119 00:06:39,040 --> 00:06:43,000 Speaker 3: some sort of relationship obviously with the CCP, But how 120 00:06:43,040 --> 00:06:45,640 Speaker 3: do they actually compete against each other? And I guess 121 00:06:45,720 --> 00:06:49,800 Speaker 3: how does the Party actually view the purpose of that competition. 122 00:06:50,560 --> 00:06:55,359 Speaker 5: Yeah, so HUAWE and CTE they're crosstown rivals. They're both 123 00:06:55,400 --> 00:06:59,080 Speaker 5: based in Shinjin. They're sort of like siblings. How they've 124 00:06:59,120 --> 00:07:02,479 Speaker 5: grown up in some ways very similar in the types 125 00:07:02,520 --> 00:07:06,520 Speaker 5: of products they offer and their global footprints. And this 126 00:07:06,920 --> 00:07:11,600 Speaker 5: reflects how China has built its economy, which is it 127 00:07:11,720 --> 00:07:16,560 Speaker 5: encourages this kind of competition among domestic companies and they 128 00:07:16,560 --> 00:07:20,200 Speaker 5: have to fight it out amongst themselves, and this pushes 129 00:07:20,240 --> 00:07:23,920 Speaker 5: them to be more efficient, to be better, and Huawei 130 00:07:24,000 --> 00:07:26,640 Speaker 5: largely has been the one who's worn out. 131 00:07:26,920 --> 00:07:30,000 Speaker 2: But there's competition everywhere, right, and there's competition in the 132 00:07:30,120 --> 00:07:33,320 Speaker 2: United states, what is it specifically about the bones of 133 00:07:33,360 --> 00:07:37,200 Speaker 2: this company that makes it unique in how cutthroat and 134 00:07:37,200 --> 00:07:38,040 Speaker 2: competitive it is. 135 00:07:38,640 --> 00:07:44,880 Speaker 5: I think Huawei is infused in this Chinese communist ethos 136 00:07:44,960 --> 00:07:49,280 Speaker 5: of sacrifice towards a larger calls, towards the company's calls 137 00:07:49,360 --> 00:07:54,280 Speaker 5: and the nation's calls in a way that is quite unique. 138 00:07:54,640 --> 00:07:58,560 Speaker 5: And so one example will be so in January nineteen 139 00:07:58,640 --> 00:08:02,560 Speaker 5: ninety six, this seminal moment in Huawei's history, which was 140 00:08:02,600 --> 00:08:08,200 Speaker 5: its first mass resisignation ceremony, and so Jen Jong Fei 141 00:08:08,320 --> 00:08:11,720 Speaker 5: essentially fired his entire sales department and made them reapply 142 00:08:11,800 --> 00:08:14,640 Speaker 5: for their own jobs because he was unhappy with his performance. 143 00:08:15,080 --> 00:08:18,000 Speaker 5: But the way he went about this was just very 144 00:08:18,040 --> 00:08:21,240 Speaker 5: different than what you would see in a Western company. 145 00:08:21,400 --> 00:08:23,880 Speaker 5: So each of the salespeople had to write up a 146 00:08:23,920 --> 00:08:27,920 Speaker 5: resignation letter, and then they held a rally where all 147 00:08:27,920 --> 00:08:33,120 Speaker 5: the employees took turns criticizing themselves. You had salespeople blaming 148 00:08:33,160 --> 00:08:36,800 Speaker 5: themselves and pledging that they were going to sacrifice themselves 149 00:08:36,920 --> 00:08:40,800 Speaker 5: for the company's success. And this gets to this communist 150 00:08:41,160 --> 00:08:46,800 Speaker 5: ethos of self criticism and sort of sacrificing your individual 151 00:08:46,840 --> 00:08:51,400 Speaker 5: interests toward the national goal, which is really a key 152 00:08:51,440 --> 00:08:52,960 Speaker 5: part of Huawei's culture. 153 00:08:53,440 --> 00:08:57,240 Speaker 2: Tracy, would you do a self criticism and sacrifice for 154 00:08:57,280 --> 00:08:59,880 Speaker 2: odd lags and talk go up on stage in front 155 00:08:59,880 --> 00:09:01,920 Speaker 2: of the entire team and talk about ways that you 156 00:09:02,000 --> 00:09:02,320 Speaker 2: fall in. 157 00:09:02,360 --> 00:09:05,760 Speaker 3: Short, Joe, do I do self criticism every day? 158 00:09:05,760 --> 00:09:06,120 Speaker 4: I would? 159 00:09:06,400 --> 00:09:08,360 Speaker 2: It would take part in an odd Locke self criticism 160 00:09:08,400 --> 00:09:09,280 Speaker 2: session in front. 161 00:09:09,040 --> 00:09:09,440 Speaker 5: Of all of you. 162 00:09:10,160 --> 00:09:13,320 Speaker 3: Okay, since we brought up self criticism, which is very 163 00:09:13,400 --> 00:09:16,680 Speaker 3: very much a CCP thing, and everyone remembers like the 164 00:09:16,760 --> 00:09:21,559 Speaker 3: images and writings about self criticism sessions in like the 165 00:09:21,640 --> 00:09:27,520 Speaker 3: nineteen sixties nineteen seventies, What exactly is the connection between 166 00:09:27,960 --> 00:09:32,480 Speaker 3: Ren Jung Fei, the founder of Huawei and the CCP. 167 00:09:32,800 --> 00:09:36,040 Speaker 3: I know he used to be a PLA engineer, I think, 168 00:09:36,120 --> 00:09:39,160 Speaker 3: but other than that, like, what exactly is the connection? 169 00:09:39,920 --> 00:09:44,960 Speaker 5: Yes? So the Party plays an overarching role in China, 170 00:09:45,120 --> 00:09:47,880 Speaker 5: including over the private tech sector, and so it is 171 00:09:48,160 --> 00:09:52,559 Speaker 5: always always there. So Huawei since its early days has 172 00:09:52,640 --> 00:09:56,640 Speaker 5: had a Communist Party committee within the company, which is 173 00:09:57,000 --> 00:10:00,240 Speaker 5: a normal thing and required in China, even for owned 174 00:10:00,320 --> 00:10:03,640 Speaker 5: companies like Walmart or Disney that are operating in China. 175 00:10:04,120 --> 00:10:07,280 Speaker 5: And so this throughout its history has played a role 176 00:10:07,360 --> 00:10:13,040 Speaker 5: in aligning the company's operations with national goals, and in 177 00:10:13,040 --> 00:10:15,920 Speaker 5: some ways Doubles is an HR department, and that they 178 00:10:15,960 --> 00:10:20,560 Speaker 5: have a role an authority to fire people, to recommend 179 00:10:20,600 --> 00:10:23,040 Speaker 5: people for promotion or vice versa. 180 00:10:24,320 --> 00:10:25,520 Speaker 4: Yeah, this is really interesting. 181 00:10:25,679 --> 00:10:28,280 Speaker 2: They also sort of police the behavior of at least 182 00:10:28,280 --> 00:10:30,400 Speaker 2: the party members who work for the company. I think, 183 00:10:30,440 --> 00:10:32,200 Speaker 2: like you talk in your book about, like you know, 184 00:10:32,240 --> 00:10:35,720 Speaker 2: they make sure that they're engaging in good moral behavior 185 00:10:35,760 --> 00:10:37,480 Speaker 2: like not gambling and stuff like that. 186 00:10:38,120 --> 00:10:42,400 Speaker 5: Yeah, certainly, And so the party members are It's not 187 00:10:42,520 --> 00:10:46,440 Speaker 5: the majority of Huawei's employees, but a sizeable proportion of 188 00:10:46,480 --> 00:10:49,880 Speaker 5: the staff are party members, and the Party Committee specifically 189 00:10:50,160 --> 00:10:53,640 Speaker 5: is in charge of overseeing the moral guidance of these 190 00:10:53,720 --> 00:10:56,760 Speaker 5: employees who are supposed to be leaders within the company. 191 00:10:56,880 --> 00:11:02,000 Speaker 5: And every few years there is the crackdown on immoral 192 00:11:02,080 --> 00:11:17,640 Speaker 5: behavior within a company that aligns with nationwide crackdown. 193 00:11:22,840 --> 00:11:25,960 Speaker 3: Can I ask a very very basic question which probably 194 00:11:26,000 --> 00:11:28,760 Speaker 3: should have been my first question instead of asking about 195 00:11:28,800 --> 00:11:33,120 Speaker 3: the castles? But what does Huawei actually do and what 196 00:11:33,160 --> 00:11:36,840 Speaker 3: did they start out making versus what they make and 197 00:11:36,920 --> 00:11:37,400 Speaker 3: do now? 198 00:11:38,320 --> 00:11:41,280 Speaker 5: So the way to think about Huawei is right now, 199 00:11:41,320 --> 00:11:44,920 Speaker 5: we live in this information economy and data is sort 200 00:11:44,920 --> 00:11:48,679 Speaker 5: of the most valuable commodity in any nation now, and 201 00:11:48,840 --> 00:11:53,079 Speaker 5: so Huawei is the company that builds the pipes that 202 00:11:53,160 --> 00:11:56,360 Speaker 5: carry data both in China and around the world. It's 203 00:11:56,840 --> 00:12:01,520 Speaker 5: emerged as the most proficient company that does this, that 204 00:12:01,600 --> 00:12:05,480 Speaker 5: builds the networks for both internet and phone data around 205 00:12:05,520 --> 00:12:08,440 Speaker 5: the world. And in addition to that, it's also China's 206 00:12:08,520 --> 00:12:12,480 Speaker 5: leading producer of chips, which right now are the heart 207 00:12:12,600 --> 00:12:16,480 Speaker 5: of this AI revolution. And so the US has Nvidia, 208 00:12:16,600 --> 00:12:22,079 Speaker 5: and China's alternative is Huawei. And so they make telecom networks, 209 00:12:22,280 --> 00:12:25,880 Speaker 5: they make the chips, and they also have expanded to 210 00:12:27,000 --> 00:12:33,160 Speaker 5: a wide range of other products, including consumer technologies like smartphones, 211 00:12:33,559 --> 00:12:37,559 Speaker 5: smart watches, and smart cars. The most recent one. 212 00:12:38,160 --> 00:12:38,960 Speaker 4: Oh, I didn't realize. 213 00:12:39,000 --> 00:12:42,360 Speaker 2: It's really amazing with these big Chinese tech giants, they 214 00:12:42,360 --> 00:12:45,480 Speaker 2: really build everything. And I actually do think sort of 215 00:12:45,520 --> 00:12:47,960 Speaker 2: aside here, it's interesting that like ten years ago, there 216 00:12:48,040 --> 00:12:51,080 Speaker 2: was talk about an Apple car, and they spent a 217 00:12:51,080 --> 00:12:53,640 Speaker 2: lot of time looking into getting into cars and it 218 00:12:53,800 --> 00:12:55,359 Speaker 2: just sort of never materialized. 219 00:12:55,640 --> 00:12:56,480 Speaker 4: And yet hear you. 220 00:12:56,400 --> 00:12:58,680 Speaker 2: Of these here's a company that was clearly late to 221 00:12:58,720 --> 00:13:02,560 Speaker 2: the smartphone game relative to the Apple iPhone, which was 222 00:13:02,600 --> 00:13:05,400 Speaker 2: the beginning, and now it's doing cars and watches and 223 00:13:05,440 --> 00:13:08,000 Speaker 2: everything else, and all the five G gear and all 224 00:13:08,000 --> 00:13:09,400 Speaker 2: the things that Apple doesn't do. 225 00:13:09,920 --> 00:13:12,160 Speaker 4: It strikes me is very revealing. 226 00:13:12,400 --> 00:13:15,200 Speaker 2: There's a comment from the founder that was I think 227 00:13:15,559 --> 00:13:17,520 Speaker 2: dates back to the nineties where he said a country 228 00:13:17,559 --> 00:13:20,560 Speaker 2: without its own program controlled switches is like one without 229 00:13:20,600 --> 00:13:25,880 Speaker 2: an army. That strikes me as something that he identified, 230 00:13:25,920 --> 00:13:28,920 Speaker 2: which now almost every country or everyone around the world 231 00:13:29,000 --> 00:13:31,000 Speaker 2: is thinking. It's almost like he was thirty years ahead 232 00:13:31,000 --> 00:13:33,760 Speaker 2: of his time, because if you think about the anxiety 233 00:13:33,480 --> 00:13:36,800 Speaker 2: in the US about various technologies that we don't build here, 234 00:13:36,840 --> 00:13:39,079 Speaker 2: if you think about the anxiety in Europe, et cetera, 235 00:13:39,480 --> 00:13:43,840 Speaker 2: it really seems like that line is now becoming conventional 236 00:13:43,840 --> 00:13:46,599 Speaker 2: wisdom among companies and governments all over the world. 237 00:13:46,960 --> 00:13:50,240 Speaker 5: Yes, it really speaks to the role of technology in 238 00:13:50,360 --> 00:13:54,000 Speaker 5: nations and its relationship to the governments in which there's 239 00:13:54,080 --> 00:14:00,320 Speaker 5: always been this through line from technology to nations sort 240 00:14:00,320 --> 00:14:04,720 Speaker 5: of control and surveillance operations. And so that that is 241 00:14:04,760 --> 00:14:07,600 Speaker 5: why Huawei has been sort of in the crosshairs of 242 00:14:08,320 --> 00:14:11,160 Speaker 5: not only the US governments but governments around the world. 243 00:14:11,440 --> 00:14:13,280 Speaker 5: Is this role out of place? 244 00:14:13,880 --> 00:14:16,440 Speaker 3: So on this note, one thing I'm really curious about 245 00:14:16,640 --> 00:14:21,200 Speaker 3: is how does Huawei actually make big decisions. So you know, 246 00:14:21,440 --> 00:14:25,320 Speaker 3: for instance, if it wants to launch a self driving car, 247 00:14:25,640 --> 00:14:28,680 Speaker 3: what does that discussion actually look like. And I guess, 248 00:14:28,720 --> 00:14:31,880 Speaker 3: like we just did an episode with Ricardo Houseman where 249 00:14:31,880 --> 00:14:35,520 Speaker 3: we were talking about economic complexity and the idea of 250 00:14:35,760 --> 00:14:39,680 Speaker 3: countries sort of jumping from product to a more complicated 251 00:14:39,720 --> 00:14:42,720 Speaker 3: product and then a more complicated product after that. But 252 00:14:42,800 --> 00:14:46,120 Speaker 3: I guess how much interrelation is there between all the 253 00:14:46,160 --> 00:14:47,440 Speaker 3: things that Huawei makes. 254 00:14:47,960 --> 00:14:51,080 Speaker 5: So Huawei's founder in Yung Fei is still the leader 255 00:14:51,120 --> 00:14:55,280 Speaker 5: of the company and people have been anticipating his retirement 256 00:14:55,400 --> 00:14:58,920 Speaker 5: for many years and he's still unclear when he will retire, 257 00:14:59,080 --> 00:15:03,440 Speaker 5: and so no he is making those decisions, and under him, 258 00:15:03,880 --> 00:15:08,120 Speaker 5: there are rotating chairs who take It's kind of a 259 00:15:08,160 --> 00:15:11,960 Speaker 5: strange system. They take turns doing half year stints as 260 00:15:12,160 --> 00:15:16,160 Speaker 5: Huawei's the acting CEO, and so it is a collective 261 00:15:16,320 --> 00:15:20,200 Speaker 5: decision that's being made about the company's broader strategy. And 262 00:15:20,240 --> 00:15:25,120 Speaker 5: this is meant to provide consistency in the company's direction 263 00:15:26,040 --> 00:15:29,120 Speaker 5: going forward, especially as they're looking to a future where 264 00:15:29,440 --> 00:15:30,960 Speaker 5: mister n has retired. 265 00:15:32,120 --> 00:15:34,480 Speaker 2: One of the things that I had forgotten about that 266 00:15:34,560 --> 00:15:37,120 Speaker 2: you talk about in your book is how many big 267 00:15:37,160 --> 00:15:40,160 Speaker 2: networking companies there used to be even ten years ago, 268 00:15:40,200 --> 00:15:43,320 Speaker 2: but certainly like twenty years ago or twenty five years 269 00:15:43,360 --> 00:15:45,440 Speaker 2: ago around the dog Com Boble and there's just all 270 00:15:45,480 --> 00:15:47,760 Speaker 2: these names that I had really I can't remember the 271 00:15:47,840 --> 00:15:51,360 Speaker 2: last time Ericson still exists, but it's clearly just nothing 272 00:15:51,480 --> 00:15:54,440 Speaker 2: like what it used to be. There's three Colm and 273 00:15:54,600 --> 00:16:00,560 Speaker 2: Palm in Nortel, Northern Telecom and Loosened and Marcone, like 274 00:16:00,760 --> 00:16:03,200 Speaker 2: all of these companies that I just hadn't forgot, had 275 00:16:03,360 --> 00:16:07,080 Speaker 2: forgotten about for years, these sort of makers of telephone gear, 276 00:16:07,120 --> 00:16:10,480 Speaker 2: and there's others too, and lund I didn't realize and 277 00:16:10,960 --> 00:16:13,360 Speaker 2: correct me if I'm wrong. It basically seems like the 278 00:16:13,400 --> 00:16:16,000 Speaker 2: reason we don't talk about any of those companies anymore 279 00:16:16,400 --> 00:16:20,280 Speaker 2: is basically due to Huawei, and Huawei specifically really was 280 00:16:20,280 --> 00:16:24,040 Speaker 2: the story of all these different telecom companies ultimately losing 281 00:16:24,040 --> 00:16:25,280 Speaker 2: out Huawei. 282 00:16:25,280 --> 00:16:29,120 Speaker 5: Certainly so there was a period during the two thousands 283 00:16:29,120 --> 00:16:32,160 Speaker 5: when Huawei just sort of mopped the floor with its 284 00:16:32,200 --> 00:16:35,400 Speaker 5: competition around the world and ran a lot of these 285 00:16:35,880 --> 00:16:40,000 Speaker 5: major companies out of business, and so Canada had Nortel, 286 00:16:40,480 --> 00:16:44,240 Speaker 5: the UK had Marconi. These were gear makers who are 287 00:16:44,240 --> 00:16:47,960 Speaker 5: making similar equipment to Huawei, and they all just went 288 00:16:47,960 --> 00:16:51,080 Speaker 5: out of business within a span of a few years. 289 00:16:51,280 --> 00:16:55,400 Speaker 5: And that's partly why officials in the West started ring 290 00:16:55,440 --> 00:16:58,000 Speaker 5: the alarm a few years ago, which was they looked 291 00:16:58,000 --> 00:17:01,320 Speaker 5: around at the global market and it was all Huawei. 292 00:17:01,760 --> 00:17:05,800 Speaker 5: It's just dominating this market. And in a way for 293 00:17:06,160 --> 00:17:09,560 Speaker 5: Western countries it was sort of an own goal. They 294 00:17:09,560 --> 00:17:13,000 Speaker 5: could have fought harder to keep their companies in this market, 295 00:17:13,080 --> 00:17:18,280 Speaker 5: which is critical to technological development and critical to national security. 296 00:17:18,400 --> 00:17:21,520 Speaker 5: But these companies all went wunder and there's only a 297 00:17:21,520 --> 00:17:24,919 Speaker 5: handful of companies and the world left that make this 298 00:17:25,000 --> 00:17:25,720 Speaker 5: kind of equipment. 299 00:17:26,440 --> 00:17:29,640 Speaker 3: So speaking of national security, you make the point towards 300 00:17:29,720 --> 00:17:32,760 Speaker 3: the end of the book that Huawei's goals they go 301 00:17:32,880 --> 00:17:38,159 Speaker 3: beyond just shareholder returns. It's also concerned with China's place 302 00:17:38,280 --> 00:17:42,520 Speaker 3: in the world and helping boost China's competitiveness and all 303 00:17:42,560 --> 00:17:45,840 Speaker 3: of that. And obviously there's that CCP link as well 304 00:17:45,840 --> 00:17:49,199 Speaker 3: that we already discussed. But I guess my question is 305 00:17:49,240 --> 00:17:52,600 Speaker 3: what are the sort of strengths and weaknesses of having 306 00:17:52,760 --> 00:17:57,520 Speaker 3: a corporate mission that goes beyond just pure profit. How 307 00:17:57,560 --> 00:18:00,200 Speaker 3: does that actually affect the performance of the company. 308 00:18:01,240 --> 00:18:04,560 Speaker 5: Well, for the most part, this has been very successful 309 00:18:04,640 --> 00:18:08,040 Speaker 5: for Huawei, and that part of why it's become number 310 00:18:08,119 --> 00:18:11,080 Speaker 5: one in its field around the world and difficult to 311 00:18:11,160 --> 00:18:15,879 Speaker 5: challenge is because it's not playing by these same rules 312 00:18:15,920 --> 00:18:18,679 Speaker 5: where it needs to seek profitability and it needs to 313 00:18:18,720 --> 00:18:23,639 Speaker 5: maximize profitability kind of explicitly, that's not its main mission, 314 00:18:24,040 --> 00:18:27,000 Speaker 5: and it's not publicly traded, and so they can take 315 00:18:27,200 --> 00:18:31,119 Speaker 5: temporary losses and plow all their money into R and 316 00:18:31,200 --> 00:18:34,520 Speaker 5: D in a way that like a publicly listed US 317 00:18:34,640 --> 00:18:39,359 Speaker 5: company might find difficult to convince investors to put up with. Yeah, 318 00:18:39,440 --> 00:18:44,119 Speaker 5: so it has allowed Huawei to become incredibly strong and 319 00:18:44,160 --> 00:18:48,360 Speaker 5: incredibly competitive in a way that's difficult for Western rivals 320 00:18:48,400 --> 00:18:52,080 Speaker 5: to compete with. I guess one major risk of this 321 00:18:52,200 --> 00:18:56,520 Speaker 5: kind of alignment with Beijing is, you know, you become 322 00:18:56,680 --> 00:19:01,879 Speaker 5: at the whim of China's government policy, which often comes 323 00:19:01,920 --> 00:19:06,560 Speaker 5: in swings and often goes overboard. And Huawei is one 324 00:19:06,600 --> 00:19:09,800 Speaker 5: of the few companies that has survived in such a 325 00:19:09,800 --> 00:19:12,359 Speaker 5: strong state from the nineteen eighties to the present day, 326 00:19:12,440 --> 00:19:17,040 Speaker 5: and many companies have gone under in China under sort 327 00:19:17,080 --> 00:19:18,280 Speaker 5: of these political wins. 328 00:19:18,960 --> 00:19:23,160 Speaker 2: It does seem like there's a parallel between the trajectory 329 00:19:23,320 --> 00:19:26,600 Speaker 2: of Huawei and also the current government under a shujan Ping. 330 00:19:27,160 --> 00:19:28,720 Speaker 4: Ren Chung Feng's own. 331 00:19:28,640 --> 00:19:32,040 Speaker 2: Father was sort of cast out of the Communist Party 332 00:19:32,080 --> 00:19:34,640 Speaker 2: or criticized or something like that. He was a persona 333 00:19:34,720 --> 00:19:38,119 Speaker 2: non grata in some manner or another, much like she's 334 00:19:38,240 --> 00:19:42,320 Speaker 2: own father. And yet Ren has obviously committed himself to China. 335 00:19:42,400 --> 00:19:46,119 Speaker 2: Obviously she is, he's the president of the country. It 336 00:19:46,160 --> 00:19:48,160 Speaker 2: does feel like there has been this sort of clear 337 00:19:48,240 --> 00:19:50,800 Speaker 2: co evolution. One of the things that you write about 338 00:19:50,840 --> 00:19:53,359 Speaker 2: in your book that I thought was interesting is he 339 00:19:53,520 --> 00:19:55,600 Speaker 2: was talking about like people who got sort of kicked 340 00:19:55,600 --> 00:19:57,040 Speaker 2: out of the party, and he says, you know, if 341 00:19:57,080 --> 00:19:59,560 Speaker 2: you get cast into the fire and you survive, then 342 00:19:59,560 --> 00:20:00,680 Speaker 2: you become the phoenix. 343 00:20:01,040 --> 00:20:02,520 Speaker 4: It really does seem like a. 344 00:20:02,440 --> 00:20:07,040 Speaker 2: Story here about sticking with the party and sticking with 345 00:20:07,080 --> 00:20:11,920 Speaker 2: the country even when you suffer personal misfortune because of it. 346 00:20:12,760 --> 00:20:18,880 Speaker 5: Certainly, and Huawei's story and specific is China's story. More broadly, 347 00:20:19,520 --> 00:20:24,159 Speaker 5: the company was founded at the dawn of China's grand 348 00:20:24,240 --> 00:20:27,280 Speaker 5: experiment with capitalism, when it was starting to open up 349 00:20:27,400 --> 00:20:33,320 Speaker 5: from purely socialist economy, and it's been in step with 350 00:20:33,880 --> 00:20:39,280 Speaker 5: China's development ever since, and so its fate is intertwined 351 00:20:39,520 --> 00:20:43,720 Speaker 5: with Beijing's, probably more than ever now. And this has 352 00:20:43,920 --> 00:20:47,080 Speaker 5: been something that Jen Jong Fei has tried to resist 353 00:20:47,080 --> 00:20:50,960 Speaker 5: at times, to put some distance between himself and the government. 354 00:20:51,200 --> 00:20:54,920 Speaker 5: But what they make it's so critical for the nation's 355 00:20:55,000 --> 00:21:00,320 Speaker 5: technology industry, so critical for national security, that there's no 356 00:21:00,359 --> 00:21:01,639 Speaker 5: way of really separating it. 357 00:21:02,359 --> 00:21:05,439 Speaker 3: I was just about to ask about tensions between the 358 00:21:05,480 --> 00:21:07,800 Speaker 3: company and the party, but can you give us some 359 00:21:07,880 --> 00:21:11,560 Speaker 3: examples of where disagreement might arise or why RINN would 360 00:21:11,720 --> 00:21:14,920 Speaker 3: want to separate Huawei a little bit from the CCP. 361 00:21:15,880 --> 00:21:19,600 Speaker 5: Yes. So, in the nineteen nineties, Huawei went through this 362 00:21:19,720 --> 00:21:22,119 Speaker 5: period where it was setting up a lot of joint 363 00:21:22,160 --> 00:21:26,320 Speaker 5: ventures with state owned enterprises across the country. That was 364 00:21:26,680 --> 00:21:31,200 Speaker 5: its first big step to take over the China's domestic 365 00:21:31,320 --> 00:21:35,800 Speaker 5: market was through these tie ins with local governments. And 366 00:21:35,880 --> 00:21:39,800 Speaker 5: so during that period there definitely was tension. There was 367 00:21:39,880 --> 00:21:43,520 Speaker 5: definitely culture clash. So then Huawei had to be taking 368 00:21:43,560 --> 00:21:47,280 Speaker 5: on all these new employees who were used to the 369 00:21:47,359 --> 00:21:51,239 Speaker 5: slow pace of work in state owned enterprises, you know, 370 00:21:51,760 --> 00:21:56,480 Speaker 5: leisurely lunch afternoon nap, and it was quite a shock 371 00:21:56,760 --> 00:22:00,080 Speaker 5: for them coming to work at Huawei, which was a 372 00:22:00,119 --> 00:22:05,560 Speaker 5: company where employees literally worked themselves to death in some cases, 373 00:22:06,080 --> 00:22:08,880 Speaker 5: and that kind of martyrdom was sort of idealized. 374 00:22:09,040 --> 00:22:10,680 Speaker 4: Can we talk a little bit about alcohol. 375 00:22:10,840 --> 00:22:13,720 Speaker 2: Tracy posted a story from what was actually in the 376 00:22:13,760 --> 00:22:17,399 Speaker 2: Wall Street Journal yesterday that there is another, yet another 377 00:22:17,520 --> 00:22:22,520 Speaker 2: attempt by the Xjinpin government to crack down on certain excesses. 378 00:22:22,720 --> 00:22:26,200 Speaker 2: And there are some like local government officials, and they 379 00:22:26,280 --> 00:22:28,840 Speaker 2: consumed a bunch of bottles about you, and then one 380 00:22:28,880 --> 00:22:31,479 Speaker 2: of them died that day. You also talk about this 381 00:22:31,720 --> 00:22:33,879 Speaker 2: in your book, which is that, like the sales culture 382 00:22:33,920 --> 00:22:35,840 Speaker 2: was so intense, and there was this expectation that the 383 00:22:35,840 --> 00:22:38,800 Speaker 2: salespeople had to get more drunk than the colleagues or 384 00:22:38,880 --> 00:22:41,040 Speaker 2: than the clients, so that the clients never felt embarrassed 385 00:22:41,040 --> 00:22:43,840 Speaker 2: by how drunk they're getting. Talk to us about alcohol 386 00:22:44,040 --> 00:22:46,399 Speaker 2: and like all this drinking and partying that goes on. 387 00:22:49,000 --> 00:22:52,119 Speaker 5: Certainly so Huawei through most of its history in China 388 00:22:52,160 --> 00:22:56,320 Speaker 5: has had this reputation of a very bro culture, which 389 00:22:56,640 --> 00:22:59,960 Speaker 5: in China meant a lot of heavy drinking of heart 390 00:23:00,080 --> 00:23:04,359 Speaker 5: to liquor by jo which is this incredibly strong liquor 391 00:23:04,880 --> 00:23:08,320 Speaker 5: and China. 392 00:23:09,400 --> 00:23:11,080 Speaker 3: You're not missing anything. I hate it. 393 00:23:11,640 --> 00:23:13,880 Speaker 4: I got to try some keep going. 394 00:23:15,359 --> 00:23:19,160 Speaker 5: So part of Chinese corporate culture of entertaining your clients 395 00:23:19,240 --> 00:23:22,719 Speaker 5: is taking them out and getting just rip roaring drunk. 396 00:23:22,920 --> 00:23:26,280 Speaker 5: And as the salesperson, you're supposed to get more drunk 397 00:23:26,400 --> 00:23:30,439 Speaker 5: than your client to show respect to them, and so 398 00:23:31,720 --> 00:23:36,760 Speaker 5: and so you have the salespeople who really are had 399 00:23:37,080 --> 00:23:42,000 Speaker 5: were suffering pretty severe health consequences of this heavy drinking. 400 00:23:42,119 --> 00:23:46,400 Speaker 5: And at some point, the officials within Huawei they were 401 00:23:46,480 --> 00:23:51,960 Speaker 5: sending up like these stomach bombs to employees who had 402 00:23:52,320 --> 00:23:57,440 Speaker 5: suffered stomach damage from from getting so drunk doing their jobs, 403 00:23:57,520 --> 00:23:59,439 Speaker 5: and this was sort of seen as part of the 404 00:23:59,440 --> 00:24:03,640 Speaker 5: personal office you do to further Huawei's goals to make 405 00:24:03,680 --> 00:24:05,480 Speaker 5: the company succeed. Wow. 406 00:24:05,560 --> 00:24:07,480 Speaker 2: I love how like a lot of people would think 407 00:24:07,480 --> 00:24:09,760 Speaker 2: like partying as a salesperson just like one of the 408 00:24:09,800 --> 00:24:11,479 Speaker 2: perks of the job. But I love the idea of 409 00:24:11,520 --> 00:24:14,800 Speaker 2: like partying so hard and getting so drunk that it 410 00:24:14,880 --> 00:24:17,920 Speaker 2: ceases to be a perk anymore, and it actually represents 411 00:24:18,200 --> 00:24:21,480 Speaker 2: your sacrifice to the health company, because like you're blowing 412 00:24:21,480 --> 00:24:23,919 Speaker 2: out your stomach and your liver in doing so to 413 00:24:23,960 --> 00:24:26,280 Speaker 2: the point where the company needs to send you send 414 00:24:26,359 --> 00:24:27,840 Speaker 2: medicine out to the salesforce. 415 00:24:28,640 --> 00:24:32,320 Speaker 5: Yes, certainly. And you have these stories of salespeople They're 416 00:24:32,359 --> 00:24:34,520 Speaker 5: getting so drunk they have to go and take a 417 00:24:34,600 --> 00:24:36,920 Speaker 5: vomit break in the middle, and then they come back 418 00:24:36,960 --> 00:24:39,960 Speaker 5: and keep drinking whatever it takes to get the job done. 419 00:24:40,040 --> 00:24:41,639 Speaker 4: That's how you win all those note. That's how you 420 00:24:41,680 --> 00:24:43,600 Speaker 4: win all those times. Sorry, Tracy could go. 421 00:24:43,880 --> 00:24:46,000 Speaker 3: As someone who spent a lot of time in Japan, 422 00:24:46,359 --> 00:24:49,639 Speaker 3: I find the idea of people partying so hard it 423 00:24:49,720 --> 00:24:51,760 Speaker 3: ends up being a sacrifice in something they don't want 424 00:24:51,800 --> 00:24:54,840 Speaker 3: to do very very relatable. Can we talk a little 425 00:24:54,840 --> 00:24:59,000 Speaker 3: bit about tariffs and trade restrictions? So obviously, you know, 426 00:24:59,119 --> 00:25:03,080 Speaker 3: since twenty eighteen, the first Trump administration, the US has 427 00:25:03,119 --> 00:25:07,320 Speaker 3: tried to put limits on exports to China and tried 428 00:25:07,359 --> 00:25:11,240 Speaker 3: to I guess, block some of China's technological development in 429 00:25:11,320 --> 00:25:14,440 Speaker 3: various ways. A lot of those restrictions were carried through 430 00:25:14,760 --> 00:25:17,280 Speaker 3: by the Biden administration. Some people would even say that 431 00:25:17,560 --> 00:25:21,720 Speaker 3: the Biden administration was harder on Huawei than Trump. Fast 432 00:25:21,760 --> 00:25:24,879 Speaker 3: forward to today, and obviously we've had Liberation Day and 433 00:25:24,920 --> 00:25:28,320 Speaker 3: all this back and forth on trade restrictions yet again, 434 00:25:29,200 --> 00:25:33,080 Speaker 3: and still it seems like Huawei has been doing a 435 00:25:33,119 --> 00:25:35,639 Speaker 3: pretty good job. I know, they managed to produce a 436 00:25:35,680 --> 00:25:40,080 Speaker 3: five G processor and things like that. Have the tariffs 437 00:25:40,119 --> 00:25:44,960 Speaker 3: or trade restrictions had any effect on Huawei's development specifically, 438 00:25:44,960 --> 00:25:46,400 Speaker 3: and how has it responded? 439 00:25:46,960 --> 00:25:51,000 Speaker 5: Certainly so, during Trump's first term, the target was Huawei's 440 00:25:51,160 --> 00:25:55,600 Speaker 5: telecom networks, especially their wireless networks. Five G was being 441 00:25:55,720 --> 00:25:58,840 Speaker 5: rolled out around the world at that point, and the 442 00:25:58,840 --> 00:26:03,200 Speaker 5: first Trump administration had worked very hard to stop Huawei's 443 00:26:03,240 --> 00:26:07,000 Speaker 5: progress in five gen networks. And so fast forward to 444 00:26:07,040 --> 00:26:10,760 Speaker 5: the second Trump term. Now the focus is AI chips 445 00:26:10,880 --> 00:26:15,199 Speaker 5: and if they chips versus Huawei's and their role in 446 00:26:15,440 --> 00:26:20,359 Speaker 5: building sort of these super smart computers that can power 447 00:26:20,400 --> 00:26:23,520 Speaker 5: things like chat GPT. And the fact that we're still 448 00:26:23,560 --> 00:26:28,200 Speaker 5: talking about Huawei speaks to the scope of their technology 449 00:26:28,320 --> 00:26:31,760 Speaker 5: and just their central role in China's tech industry that 450 00:26:31,920 --> 00:26:35,520 Speaker 5: it is still this company that is both doing the 451 00:26:35,560 --> 00:26:39,239 Speaker 5: telecom networks and doing the AI chips. And so what 452 00:26:39,320 --> 00:26:42,639 Speaker 5: we've seen during the early months of the second Trump 453 00:26:42,760 --> 00:26:47,200 Speaker 5: term is Trump's administration has warned countries around the world 454 00:26:47,240 --> 00:26:52,800 Speaker 5: that they view using Huawei's chips Ai Quawei's AI chips 455 00:26:52,840 --> 00:26:56,480 Speaker 5: anywhere in the world as a violation of US export controls, 456 00:26:56,480 --> 00:27:00,000 Speaker 5: which means, you know, they're threatening countries around the world 457 00:27:00,080 --> 00:27:03,639 Speaker 5: that they might suffer consequences from the United States from 458 00:27:04,119 --> 00:27:08,760 Speaker 5: buying and using Huawei AI chips. And yeah, this certainly 459 00:27:08,920 --> 00:27:13,760 Speaker 5: has had a big impact on Huawei's trajectory, but it 460 00:27:13,800 --> 00:27:17,239 Speaker 5: hasn't stopped them. In many ways, has pushed them to 461 00:27:17,359 --> 00:27:21,719 Speaker 5: redouble their efforts to build technology domestically. 462 00:27:37,400 --> 00:27:43,359 Speaker 2: Setting aside geopolitics, etc. I understand why Western governments are 463 00:27:43,400 --> 00:27:47,560 Speaker 2: anxious after watching what happened to all of those telecom 464 00:27:47,600 --> 00:27:51,800 Speaker 2: giants that virtually disappeared since the late nineties or early 465 00:27:51,840 --> 00:27:53,960 Speaker 2: two thousand and twe they certainly don't want to see 466 00:27:53,960 --> 00:27:56,679 Speaker 2: that repeated again. It's interesting, though, going back to this 467 00:27:57,080 --> 00:28:00,879 Speaker 2: New Global Times interview that came out today, there's a 468 00:28:00,880 --> 00:28:03,760 Speaker 2: lot in there about AI and one of the things 469 00:28:03,880 --> 00:28:06,920 Speaker 2: that Wren says it's a may be the last technological 470 00:28:06,960 --> 00:28:11,400 Speaker 2: revolution in human society, though maybe also nuclear fusion. That's interesting. 471 00:28:11,560 --> 00:28:13,760 Speaker 2: But he's one thing that's clear is that a big 472 00:28:13,800 --> 00:28:16,000 Speaker 2: part of this interview is to like, you know, he 473 00:28:16,080 --> 00:28:19,000 Speaker 2: talks about how far behind they are still by the way, 474 00:28:19,000 --> 00:28:21,760 Speaker 2: we're recording this on June eleventh, so people can go 475 00:28:21,800 --> 00:28:24,440 Speaker 2: look for the Global Times article. He talks about how 476 00:28:24,440 --> 00:28:27,439 Speaker 2: far behind they are still, like they're clearly trying to 477 00:28:27,480 --> 00:28:30,280 Speaker 2: make the point in this interview that yes, AI is 478 00:28:30,320 --> 00:28:32,639 Speaker 2: the future, could even be the last important tech that 479 00:28:32,720 --> 00:28:35,440 Speaker 2: ever exists. But at the same time, you know, don't 480 00:28:35,440 --> 00:28:37,159 Speaker 2: be too threatened by us. We're still at least a 481 00:28:37,200 --> 00:28:39,120 Speaker 2: generation behind in video and so forth. 482 00:28:39,720 --> 00:28:45,200 Speaker 5: Yeah, certainly. So. Ren has always downplayed always strength publicly, 483 00:28:45,480 --> 00:28:49,760 Speaker 5: and part of that has been he's until recent years 484 00:28:49,800 --> 00:28:53,360 Speaker 5: done very few interviews at all. Part of Huawei's culture 485 00:28:53,520 --> 00:28:57,720 Speaker 5: is they are quiet, they are humble, and they sort 486 00:28:57,720 --> 00:29:03,520 Speaker 5: of downplay their achievements, and that's allowed them partly helped 487 00:29:04,320 --> 00:29:10,280 Speaker 5: in making these technological leap frogs before people really recognize 488 00:29:10,360 --> 00:29:14,760 Speaker 5: that's what they have done. So the last couple years, 489 00:29:14,840 --> 00:29:18,240 Speaker 5: AI has become this global frenzy where with chat, GPT, 490 00:29:18,480 --> 00:29:24,360 Speaker 5: everyone's talking about AI revolution. So actually, for companies like Huawei, 491 00:29:24,600 --> 00:29:28,920 Speaker 5: like US tech giants like Google and Microsoft, they saw 492 00:29:28,920 --> 00:29:33,320 Speaker 5: this coming years ago and they've been working on AI 493 00:29:33,440 --> 00:29:39,040 Speaker 5: for well over a decade, and their executives since years 494 00:29:39,040 --> 00:29:41,040 Speaker 5: ago have been saying that AI is going to be 495 00:29:41,080 --> 00:29:44,120 Speaker 5: the next revolution and they have to catch this wave. 496 00:29:45,000 --> 00:29:49,240 Speaker 3: You mentioned succession earlier, and obviously Rin Jung Fei has 497 00:29:49,240 --> 00:29:53,320 Speaker 3: been such an iconic figure in China and within Huawei. 498 00:29:54,320 --> 00:29:57,080 Speaker 3: What happens next, who are the front runners, and what 499 00:29:57,200 --> 00:30:00,760 Speaker 3: exactly is the process for doing this, because I'm kind 500 00:30:00,760 --> 00:30:05,320 Speaker 3: of imagining someone needs to do a Chinese conglomerate version 501 00:30:05,360 --> 00:30:08,520 Speaker 3: of succession. I would watch that one hundred percent. What 502 00:30:08,680 --> 00:30:09,320 Speaker 3: is the process? 503 00:30:09,360 --> 00:30:14,120 Speaker 5: I would watch it too. Well. In many ways, he's irreplaceable, 504 00:30:14,360 --> 00:30:19,480 Speaker 5: so rendering plays has this unique position in China's tech 505 00:30:19,600 --> 00:30:24,160 Speaker 5: industry of sort of this hermit sage speaks in riddles 506 00:30:24,200 --> 00:30:27,680 Speaker 5: and he makes these predictions that sound fantastical in the 507 00:30:27,720 --> 00:30:30,360 Speaker 5: moment but turn out to be true years later. And 508 00:30:30,400 --> 00:30:34,000 Speaker 5: he's this larger than life figure who's like no one 509 00:30:34,000 --> 00:30:37,320 Speaker 5: else in China's tech industry and no one else really 510 00:30:37,480 --> 00:30:41,000 Speaker 5: around the world. So it's difficult to see how he 511 00:30:41,080 --> 00:30:44,560 Speaker 5: can be replaced, really, But he's been working on setting 512 00:30:44,640 --> 00:30:48,480 Speaker 5: up a succession plan since the nineteen nineties, and the 513 00:30:48,520 --> 00:30:51,880 Speaker 5: way that it looks now is the team, a team 514 00:30:52,000 --> 00:30:56,240 Speaker 5: of rotating executives who together can kind of steer the 515 00:30:56,280 --> 00:30:58,920 Speaker 5: company and so well We'll have to see when he 516 00:30:59,000 --> 00:31:02,880 Speaker 5: retires how this works. And so that this team of 517 00:31:02,960 --> 00:31:07,080 Speaker 5: top top executives, it includes several company veterans who have 518 00:31:07,760 --> 00:31:11,560 Speaker 5: been with Walwei since the nineteen nineties or earlier. And 519 00:31:11,600 --> 00:31:15,160 Speaker 5: then it also includes gender Fay's daughter, moment Joe, who 520 00:31:15,200 --> 00:31:19,360 Speaker 5: had been the CFO detained in Canada during the first 521 00:31:19,400 --> 00:31:23,360 Speaker 5: Trump administration and who has since returned and has been 522 00:31:23,400 --> 00:31:27,680 Speaker 5: elevated to this national hero status for being under house 523 00:31:27,760 --> 00:31:28,960 Speaker 5: arrest in Canada. 524 00:31:29,080 --> 00:31:31,680 Speaker 2: Actually, I have just one more question, which is it 525 00:31:31,840 --> 00:31:34,320 Speaker 2: sounded like in your book that at least for the 526 00:31:34,400 --> 00:31:38,200 Speaker 2: in the beginning years, the daughter wasn't seen, none of 527 00:31:38,240 --> 00:31:41,920 Speaker 2: the family members were actually seen as likely replacements or 528 00:31:41,960 --> 00:31:43,040 Speaker 2: leaders of the company. 529 00:31:43,400 --> 00:31:45,000 Speaker 4: But it always seems like in. 530 00:31:45,280 --> 00:31:51,520 Speaker 2: Revolutionary environments, communist revolutions, serving some time in prison or 531 00:31:51,520 --> 00:31:54,640 Speaker 2: in Siberia or something like is really good for your cred, 532 00:31:54,680 --> 00:31:57,920 Speaker 2: that ultimately doing some sort of stint of suffering is 533 00:31:57,960 --> 00:32:00,800 Speaker 2: actually helpful and establishing like, okay, you actually belonged to 534 00:32:00,840 --> 00:32:03,960 Speaker 2: be at the top. Did those years where she was 535 00:32:04,560 --> 00:32:08,400 Speaker 2: facing possible prison time in the US help her in 536 00:32:08,480 --> 00:32:11,720 Speaker 2: terms of okay, she might actually be a credible leader 537 00:32:11,720 --> 00:32:12,720 Speaker 2: At some point in the future. 538 00:32:13,280 --> 00:32:18,560 Speaker 5: Certainly, it was this unexpected thing that happened her arrest 539 00:32:18,640 --> 00:32:21,800 Speaker 5: in Canada that gave her sort of the street cred 540 00:32:21,960 --> 00:32:27,160 Speaker 5: back home to be elevated. Which Huawet is a company 541 00:32:27,320 --> 00:32:32,640 Speaker 5: where they care about results, and so for years they 542 00:32:32,760 --> 00:32:36,719 Speaker 5: had believed that only engineers who really understand the technology 543 00:32:36,760 --> 00:32:38,760 Speaker 5: can lead this company and be able to make the 544 00:32:38,840 --> 00:32:43,400 Speaker 5: right decisions and have that authority to lead the engineers. 545 00:32:43,520 --> 00:32:46,840 Speaker 5: And this was not Muwan Joe's background. So she had 546 00:32:46,880 --> 00:32:50,360 Speaker 5: studied finance and was working in the finance department and 547 00:32:50,400 --> 00:32:53,960 Speaker 5: had worked her way up to CFO. But many people 548 00:32:54,040 --> 00:32:57,440 Speaker 5: thought that was maybe the ceiling for her, and then 549 00:32:57,520 --> 00:33:01,600 Speaker 5: that that changed after her detention. After her house arrest, 550 00:33:01,840 --> 00:33:05,480 Speaker 5: she came back and soon after was promoted to one 551 00:33:05,520 --> 00:33:11,000 Speaker 5: of the rotating chair people at Huawei rotating chairwoman, which 552 00:33:11,040 --> 00:33:15,480 Speaker 5: is one of the top positions right under Jinjo himself. 553 00:33:16,440 --> 00:33:20,200 Speaker 3: So, speaking of unexpected developments in researching your book, I'm 554 00:33:20,200 --> 00:33:23,960 Speaker 3: really curious if there's one thing that stuck out for 555 00:33:24,040 --> 00:33:26,320 Speaker 3: you in terms of being surprising. What was the most 556 00:33:26,360 --> 00:33:31,000 Speaker 3: surprising thing you heard or saw or learned about in 557 00:33:31,040 --> 00:33:32,000 Speaker 3: writing this book. 558 00:33:34,120 --> 00:33:38,000 Speaker 5: I think the role of crises around the world in 559 00:33:38,160 --> 00:33:43,160 Speaker 5: Huawei's expansion was something that kind of was interesting and 560 00:33:43,240 --> 00:33:46,680 Speaker 5: unexpected to me in researching this book, which you know, 561 00:33:46,880 --> 00:33:49,080 Speaker 5: part of why they were able to make their early 562 00:33:49,160 --> 00:33:53,960 Speaker 5: sales advances in other countries was they pushed their salespeople 563 00:33:54,120 --> 00:33:59,200 Speaker 5: to the limit in extreme situations such as wars, natural disasters, 564 00:33:59,520 --> 00:34:02,880 Speaker 5: pandemic in Hong Kong, for instance, the Hong Kong market, 565 00:34:03,320 --> 00:34:05,960 Speaker 5: they landed one of their first big sales during the 566 00:34:06,000 --> 00:34:09,520 Speaker 5: SARS pandemic, and that was when most of their rivals 567 00:34:09,680 --> 00:34:13,120 Speaker 5: were staying at home and sheltering in place during the pandemic, 568 00:34:13,160 --> 00:34:16,720 Speaker 5: and they did the opposite. They basically, in their own words, 569 00:34:16,840 --> 00:34:20,000 Speaker 5: ignored that a pandemic was going on and sort of 570 00:34:20,040 --> 00:34:23,879 Speaker 5: met with their client as much as possible and won 571 00:34:23,920 --> 00:34:27,440 Speaker 5: them over during that period and soon after SARS were 572 00:34:27,480 --> 00:34:31,120 Speaker 5: able to win kind of the key order in the 573 00:34:31,160 --> 00:34:35,720 Speaker 5: company's history. I think of first stepping stones. 574 00:34:35,600 --> 00:34:38,000 Speaker 2: You're also talking the book about, like Rain, I think 575 00:34:38,000 --> 00:34:40,560 Speaker 2: it was during the Arab Spring and various other or 576 00:34:40,640 --> 00:34:43,840 Speaker 2: in Afghanistan too, like various times when everyone else was 577 00:34:43,880 --> 00:34:48,200 Speaker 2: fleeing some sort of political turmoil, the salespeople just carried 578 00:34:48,239 --> 00:34:50,520 Speaker 2: on business as usual and refused to flee. 579 00:34:51,239 --> 00:34:54,759 Speaker 5: Yeah, yeah. I think Wren told his staff at one 580 00:34:54,760 --> 00:34:58,640 Speaker 5: point that the business therein it's not like selling donuts. 581 00:34:58,680 --> 00:35:02,239 Speaker 5: They can't just leave whenever they want, and so much 582 00:35:02,280 --> 00:35:05,759 Speaker 5: of their business is in parts of the world that 583 00:35:05,840 --> 00:35:11,320 Speaker 5: have seen wars, seen instability, and part of their promise 584 00:35:11,400 --> 00:35:14,160 Speaker 5: to their customers why they win these orders is they're 585 00:35:14,160 --> 00:35:16,880 Speaker 5: making the promise they're going to be there, and so 586 00:35:17,480 --> 00:35:22,120 Speaker 5: you see sort of like wartime pay for Huawei employees 587 00:35:22,160 --> 00:35:26,040 Speaker 5: who are working in war zones. You see people who 588 00:35:26,080 --> 00:35:29,000 Speaker 5: are having to take these personal risks, and that's part 589 00:35:29,000 --> 00:35:32,360 Speaker 5: of Huawei's business model of how it's been able to 590 00:35:32,400 --> 00:35:36,920 Speaker 5: become the world's number one maker of telecommunications equipment. 591 00:35:37,760 --> 00:35:40,600 Speaker 2: EVA though it's really an extraordinary book about an extraordinary 592 00:35:40,600 --> 00:35:42,439 Speaker 2: company that explains much about the world. 593 00:35:42,520 --> 00:35:45,200 Speaker 4: Thank you so much for coming on Oline so much. 594 00:35:58,320 --> 00:36:01,880 Speaker 4: I do think that last point Trace is really interesting. 595 00:36:02,040 --> 00:36:04,400 Speaker 2: This idea of like you know, lots of companies is like. 596 00:36:04,400 --> 00:36:06,800 Speaker 4: Oh, we're a family, make a big commitment. 597 00:36:06,480 --> 00:36:09,040 Speaker 2: Of blah blah blah, but they sort of like prove it, 598 00:36:09,120 --> 00:36:11,360 Speaker 2: like and all the different examples of like literally, oh, 599 00:36:11,400 --> 00:36:13,480 Speaker 2: we're just going to ignore SARS. We're just going to 600 00:36:13,560 --> 00:36:16,040 Speaker 2: ignore the fact that there is some sort of civil 601 00:36:16,040 --> 00:36:18,839 Speaker 2: war crisis happening. Because we're going to focus on the sale. 602 00:36:19,000 --> 00:36:22,040 Speaker 2: It really does seem like to establish that among your salesforce, 603 00:36:22,120 --> 00:36:25,320 Speaker 2: you actually really do have to sort of truly mission 604 00:36:25,440 --> 00:36:27,680 Speaker 2: driven in a way that's beyond just cliche. 605 00:36:27,719 --> 00:36:30,759 Speaker 3: Well, this is where I think the uniqueness of the 606 00:36:30,800 --> 00:36:34,680 Speaker 3: mission is a really big competitive advantage, right, because, as 607 00:36:34,719 --> 00:36:38,400 Speaker 3: EVA was pointing out, it's a privately held company. It 608 00:36:38,600 --> 00:36:43,400 Speaker 3: stated repeatedly that it's mission includes profits, but also goes 609 00:36:43,640 --> 00:36:47,279 Speaker 3: beyond just that, And so when there's a crisis, it's 610 00:36:47,320 --> 00:36:50,560 Speaker 3: not under pressure to cut back on costs or slow 611 00:36:50,600 --> 00:36:53,560 Speaker 3: down expansion or pull out a specific market and things 612 00:36:53,600 --> 00:36:55,680 Speaker 3: like that. It can keep going. That seems to be 613 00:36:56,040 --> 00:36:58,399 Speaker 3: a pretty big competitive advantage. 614 00:36:58,680 --> 00:36:59,359 Speaker 4: Yeah, that's right. 615 00:36:59,400 --> 00:37:01,160 Speaker 2: You know, like you still like, oh, we have to 616 00:37:01,239 --> 00:37:03,440 Speaker 2: get the ideology first, right, we have to do the 617 00:37:03,480 --> 00:37:04,919 Speaker 2: ideological stuff first. 618 00:37:04,920 --> 00:37:06,640 Speaker 4: And I didn't really get it, but maybe this is 619 00:37:06,880 --> 00:37:07,600 Speaker 4: maybe this is a. 620 00:37:07,520 --> 00:37:09,920 Speaker 2: Way of understanding it, which is that if we're going 621 00:37:10,000 --> 00:37:12,320 Speaker 2: to talk about like having a good competitive sales culture, 622 00:37:12,360 --> 00:37:14,920 Speaker 2: et cetera, it means nothing if you don't just like 623 00:37:15,080 --> 00:37:19,720 Speaker 2: fully get people to like believe deeply, like in their bones, 624 00:37:19,760 --> 00:37:22,200 Speaker 2: Like what this mission is and it really is striking, 625 00:37:22,280 --> 00:37:25,040 Speaker 2: like they just mopped the floor within everyone in like 626 00:37:25,120 --> 00:37:28,439 Speaker 2: the first twenty years of the century, and I'd really 627 00:37:28,480 --> 00:37:32,880 Speaker 2: forgotten how varied and diverse that industry was up until 628 00:37:32,960 --> 00:37:33,920 Speaker 2: like fifteen years ago. 629 00:37:34,000 --> 00:37:37,560 Speaker 3: Basically, I guess drinking loads of buye you obviously pays off. 630 00:37:37,719 --> 00:37:38,640 Speaker 5: So I gave you back. 631 00:37:38,800 --> 00:37:39,720 Speaker 3: I gave you bad advice. 632 00:37:39,840 --> 00:37:40,480 Speaker 4: We should do that. 633 00:37:40,800 --> 00:37:44,640 Speaker 3: No, No, although you're bringing back all these memories of 634 00:37:45,280 --> 00:37:48,080 Speaker 3: insane times in Japan, but there are all these tricks 635 00:37:48,120 --> 00:37:50,400 Speaker 3: to avoid drinking in a group setting. 636 00:37:50,719 --> 00:37:52,359 Speaker 4: Oh I need to I don't really like drinking. Can 637 00:37:52,400 --> 00:37:53,040 Speaker 4: you tell me one? 638 00:37:53,120 --> 00:37:57,080 Speaker 3: Well, like hard licker, you can discreetely pour out in 639 00:37:57,160 --> 00:37:59,880 Speaker 3: a plotted plant, which is something that I've done before. 640 00:38:00,040 --> 00:38:03,200 Speaker 3: You could strike a secret agreement with the bartender to 641 00:38:03,280 --> 00:38:05,719 Speaker 3: serve you water instead of shots. Things like that. 642 00:38:07,200 --> 00:38:08,000 Speaker 4: I'm not going to do that. 643 00:38:08,080 --> 00:38:08,560 Speaker 5: I do want to. 644 00:38:08,600 --> 00:38:10,520 Speaker 4: I do want to try some eventually. 645 00:38:11,400 --> 00:38:12,640 Speaker 3: Okay, shall we leave it there. 646 00:38:12,680 --> 00:38:13,399 Speaker 4: Let's leave it there. 647 00:38:13,640 --> 00:38:16,040 Speaker 3: This has been another episode of the aud Loots podcast. 648 00:38:16,120 --> 00:38:19,440 Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway and. 649 00:38:19,400 --> 00:38:21,920 Speaker 2: I'm joll Wisenthal. You can follow me at The Stalwart 650 00:38:22,239 --> 00:38:24,839 Speaker 2: Follow our guest Eva Doe. She's at Eva Doe and 651 00:38:24,960 --> 00:38:27,960 Speaker 2: check out her book House of Huawei. Follow our producers 652 00:38:28,000 --> 00:38:31,440 Speaker 2: Carmen Rodriguez at Carmen armand dash Ol Bennett at Dashbot and. 653 00:38:31,520 --> 00:38:32,920 Speaker 4: Keil Brooks at Kilbrooks. 654 00:38:33,040 --> 00:38:35,640 Speaker 2: For more Oddlots content, go to Bloomberg dot com slash 655 00:38:35,640 --> 00:38:38,200 Speaker 2: odd Lots. We have a daily newsletter and all of 656 00:38:38,200 --> 00:38:40,279 Speaker 2: our episodes, and you can chat about all of these 657 00:38:40,320 --> 00:38:43,520 Speaker 2: topics twenty four to seven in our discord Discord dot 658 00:38:43,560 --> 00:38:44,800 Speaker 2: gg slash Oddlins. 659 00:38:45,160 --> 00:38:47,799 Speaker 3: And if you enjoy Oddlots, if you want me and 660 00:38:47,920 --> 00:38:50,640 Speaker 3: Joe to go out drinking buyju, then please leave do 661 00:38:50,640 --> 00:38:53,719 Speaker 3: your self criticism and do self criticism that please leave 662 00:38:53,800 --> 00:38:56,200 Speaker 3: us a positive review on your well maybe even a 663 00:38:56,239 --> 00:39:00,319 Speaker 3: critical review on your favorite podcast platform. And remember, if 664 00:39:00,360 --> 00:39:03,120 Speaker 3: you are a Bloomberg subscriber, you can listen to all 665 00:39:03,160 --> 00:39:06,319 Speaker 3: of our episodes absolutely ad free. All you need to 666 00:39:06,360 --> 00:39:09,120 Speaker 3: do is find the Bloomberg channel on Apple Podcasts and 667 00:39:09,200 --> 00:39:11,760 Speaker 3: follow the instructions there. Thanks for listening.