Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odlots podcast.
Speaker 3: I'm Jill Wish and I'm Tracy Alloway.
Speaker 2: Tracy, we recently did that episode with Mackenzie Hawkins's talking about,
Speaker 2: you know, some of the geopolitics of AI and chips,
Speaker 2: et cetera. And when it comes to AI chips, it
Speaker 2: basically is in video and nobody else. But there is
Speaker 2: one other company that's clearly like lurking out there in
Speaker 2: the picture.
Speaker 4: Yes, right, So that.
Speaker 2: Was one of the things that came up, which is that, yes,
Speaker 2: Vidia has this huge dominance with it in AI, but
Speaker 2: you know, there is this Chinese company, as we said, Huawei,
Speaker 2: that is making a lot of progress. If there's one
Speaker 2: area of concern or if there's one possibility that another
Speaker 2: company's tech could really sort of like formed the backbone
Speaker 2: of AI, this is is probably them.
Speaker 3: I find Huawei really fascinating as a company. So it's
Speaker 3: sort of this national champion, right And even the name
Speaker 3: I think means something like China has achievements or China
Speaker 3: is able to achieve or something like that. And yet
Speaker 3: it has these like really weird European headquarters European style headquarters. Yeah,
Speaker 3: they look like French castles and things like that. And
Speaker 3: you hear all these stories about how aggressive some of
Speaker 3: the Huawei sales tactics are. There was the arrest of
Speaker 3: the founder, ridden junk Fay's daughter a few years ago.
Speaker 3: So there's just all this stuff going on and like
Speaker 3: kind of weird tensions, and I want to learn more
Speaker 3: about what this company actually is and what it does.
Speaker 2: Totally a lot of mystery, a lot of perhaps paranoia,
Speaker 2: a lot of concern about what it does and who
Speaker 2: it is and it's connection to the Chinese government, the CCP,
Speaker 2: et cetera.
Speaker 4: Okay, we have to learn more if this is going to.
Speaker 2: Be the one company they could at some point in
Speaker 2: the future threatened in video. And we really do have
Speaker 2: the perfect guest to talk about it. We are going
Speaker 2: to be speaking with Evado.
Speaker 4: She is the.
Speaker 2: Author of the fairly new book came out earlier this year,
Speaker 2: House of Huawei, The Secret History of China's most powerful Company.
Speaker 4: It's really an extraordinary book.
Speaker 2: I actually think someone asked me the other day there
Speaker 2: are a few books you would read about China these days,
Speaker 2: and this is now I think sort of an instant classic.
Speaker 2: So Eva, thank you so much for coming on odd
Speaker 2: lots kind of perfect timing.
Speaker 5: Thank you so much for having me here.
Speaker 2: Actually is really perfect timing because just today the founder
Speaker 2: of the company, Renjong Fei, gave a interview with People's Daily,
Speaker 2: and as clear in your reporting, he does not do
Speaker 2: like a ton of media etc. Certainly not like Jensen
Speaker 2: Wang always talking to the press. What do you take
Speaker 2: away from that that suddenly there's a just to I
Speaker 2: think literally just today or maybe yesterday, that there's a
Speaker 2: Ren Jong fey interview with People's Daily.
Speaker 5: Yeah, so this is very very rare for them to
Speaker 5: publish a full interview transcript with a private enterprise entrepreneur
Speaker 5: on the front page of the People's Daily, which is
Speaker 5: the party's mouthpiece and usually is chronicling what the nation's
Speaker 5: leader Sdingping and other senior officials are doing. And I
Speaker 5: think it really speaks to Huawei's sort of central role
Speaker 5: now in China's tech industry, and not only that in
Speaker 5: diplomatic relations. This is a message to the United States
Speaker 5: and the world for them to put his words on
Speaker 5: the front page of People's Daily ahead of time, when
Speaker 5: Huawei is very much in the crosshairs of the Trump administration.
Speaker 3: I want to ask the pressing question on my mind
Speaker 3: and then maybe get into other important stuff. But what
Speaker 3: is the deal with the European castle headquarters for this
Speaker 3: company that has sort of grown in tandem with the
Speaker 3: Chinese economy and is considered a national champion, national symbol
Speaker 3: in many ways. Why do they have French castles and
Speaker 3: like Greek statues as their headquarters.
Speaker 5: Yeah, this is one of the strange and amusing things
Speaker 5: about this company. They have this sort of larger than
Speaker 5: life campus that just mystifies people when they come to visit.
Speaker 6: They have like a replica of Versailles, they have a
Speaker 6: replica of the castle of Heidelberg from Germany, and they
Speaker 6: have their R and D operations in things like European
Speaker 6: style castles.
Speaker 5: And it's very strange to people, and this has never
Speaker 5: been fully explained by the company, but in a way
Speaker 5: it does show the level of their ambition, like they
Speaker 5: are building sort of an empire far more than just
Speaker 5: what many people think of sort of a single tech
Speaker 5: company does, and it's global footprint.
Speaker 2: The weird thing about Lalawaeys, you know, when we talk
Speaker 2: about these big Chinese industrial giant. Typically a lot of
Speaker 2: them are publicly traded or talking about puid or show
Speaker 2: me or so forth, or cattle the battery company. And
Speaker 2: then it's also not a state owned enterprise. You tell
Speaker 2: in the book the story it was founded in Shenzhen,
Speaker 2: and either the late seventies or early eighties, they explicitly
Speaker 2: decided not to go down the Sooe wrote, unlike competitors
Speaker 2: ZT E.
Speaker 4: What is it though? Explain like what is the structure
Speaker 4: of this company?
Speaker 5: This sort of gets to the heart of why I
Speaker 5: was so interested in this company, Huawei Technologies, in that
Speaker 5: if you really if you understand how this company works,
Speaker 5: then you really do understand how China works writ large,
Speaker 5: and so it is this fusion between capitalism and the
Speaker 5: party controlled Chinese economy. That's where Huawei sits. So it
Speaker 5: is registered as a private company and it is privately held.
Speaker 5: They have resisted listing on the stock market for decades,
Speaker 5: which means that they are able to take a longer
Speaker 5: term view. They don't have to deliver quarterly results. They
Speaker 5: aren't under the gun from investors to be profitable every
Speaker 5: single year even though they are, so they sort of
Speaker 5: are able to flow more of their money into long
Speaker 5: term R and D investments, And the other part of
Speaker 5: it is they do have national guidance under the Party
Speaker 5: from Beijing as one of the nation's tech champions, and
Speaker 5: so it's kind of this fusion.
Speaker 3: How does competition with CTE actually work. Huawei is this
Speaker 3: big important privately held company in China, but ZTE is
Speaker 3: part state owned. I guess both of them like have
Speaker 3: some sort of relationship obviously with the CCP, But how
Speaker 3: do they actually compete against each other? And I guess
Speaker 3: how does the Party actually view the purpose of that competition.
Speaker 5: Yeah, so HUAWE and CTE they're crosstown rivals. They're both
Speaker 5: based in Shinjin. They're sort of like siblings. How they've
Speaker 5: grown up in some ways very similar in the types
Speaker 5: of products they offer and their global footprints. And this
Speaker 5: reflects how China has built its economy, which is it
Speaker 5: encourages this kind of competition among domestic companies and they
Speaker 5: have to fight it out amongst themselves, and this pushes
Speaker 5: them to be more efficient, to be better, and Huawei
Speaker 5: largely has been the one who's worn out.
Speaker 2: But there's competition everywhere, right, and there's competition in the
Speaker 2: United states, what is it specifically about the bones of
Speaker 2: this company that makes it unique in how cutthroat and
Speaker 2: competitive it is.
Speaker 5: I think Huawei is infused in this Chinese communist ethos
Speaker 5: of sacrifice towards a larger calls, towards the company's calls
Speaker 5: and the nation's calls in a way that is quite unique.
Speaker 5: And so one example will be so in January nineteen
Speaker 5: ninety six, this seminal moment in Huawei's history, which was
Speaker 5: its first mass resisignation ceremony, and so Jen Jong Fei
Speaker 5: essentially fired his entire sales department and made them reapply
Speaker 5: for their own jobs because he was unhappy with his performance.
Speaker 5: But the way he went about this was just very
Speaker 5: different than what you would see in a Western company.
Speaker 5: So each of the salespeople had to write up a
Speaker 5: resignation letter, and then they held a rally where all
Speaker 5: the employees took turns criticizing themselves. You had salespeople blaming
Speaker 5: themselves and pledging that they were going to sacrifice themselves
Speaker 5: for the company's success. And this gets to this communist
Speaker 5: ethos of self criticism and sort of sacrificing your individual
Speaker 5: interests toward the national goal, which is really a key
Speaker 5: part of Huawei's culture.
Speaker 2: Tracy, would you do a self criticism and sacrifice for
Speaker 2: odd lags and talk go up on stage in front
Speaker 2: of the entire team and talk about ways that you
Speaker 2: fall in.
Speaker 3: Short, Joe, do I do self criticism every day?
Speaker 4: I would?
Speaker 2: It would take part in an odd Locke self criticism
Speaker 2: session in front.
Speaker 5: Of all of you.
Speaker 3: Okay, since we brought up self criticism, which is very
Speaker 3: very much a CCP thing, and everyone remembers like the
Speaker 3: images and writings about self criticism sessions in like the
Speaker 3: nineteen sixties nineteen seventies, What exactly is the connection between
Speaker 3: Ren Jung Fei, the founder of Huawei and the CCP.
Speaker 3: I know he used to be a PLA engineer, I think,
Speaker 3: but other than that, like, what exactly is the connection?
Speaker 5: Yes? So the Party plays an overarching role in China,
Speaker 5: including over the private tech sector, and so it is
Speaker 5: always always there. So Huawei since its early days has
Speaker 5: had a Communist Party committee within the company, which is
Speaker 5: a normal thing and required in China, even for owned
Speaker 5: companies like Walmart or Disney that are operating in China.
Speaker 5: And so this throughout its history has played a role
Speaker 5: in aligning the company's operations with national goals, and in
Speaker 5: some ways Doubles is an HR department, and that they
Speaker 5: have a role an authority to fire people, to recommend
Speaker 5: people for promotion or vice versa.
Speaker 4: Yeah, this is really interesting.
Speaker 2: They also sort of police the behavior of at least
Speaker 2: the party members who work for the company. I think,
Speaker 2: like you talk in your book about, like you know,
Speaker 2: they make sure that they're engaging in good moral behavior
Speaker 2: like not gambling and stuff like that.
Speaker 5: Yeah, certainly, And so the party members are It's not
Speaker 5: the majority of Huawei's employees, but a sizeable proportion of
Speaker 5: the staff are party members, and the Party Committee specifically
Speaker 5: is in charge of overseeing the moral guidance of these
Speaker 5: employees who are supposed to be leaders within the company.
Speaker 5: And every few years there is the crackdown on immoral
Speaker 5: behavior within a company that aligns with nationwide crackdown.
Speaker 3: Can I ask a very very basic question which probably
Speaker 3: should have been my first question instead of asking about
Speaker 3: the castles? But what does Huawei actually do and what
Speaker 3: did they start out making versus what they make and
Speaker 3: do now?
Speaker 5: So the way to think about Huawei is right now,
Speaker 5: we live in this information economy and data is sort
Speaker 5: of the most valuable commodity in any nation now, and
Speaker 5: so Huawei is the company that builds the pipes that
Speaker 5: carry data both in China and around the world. It's
Speaker 5: emerged as the most proficient company that does this, that
Speaker 5: builds the networks for both internet and phone data around
Speaker 5: the world. And in addition to that, it's also China's
Speaker 5: leading producer of chips, which right now are the heart
Speaker 5: of this AI revolution. And so the US has Nvidia,
Speaker 5: and China's alternative is Huawei. And so they make telecom networks,
Speaker 5: they make the chips, and they also have expanded to
Speaker 5: a wide range of other products, including consumer technologies like smartphones,
Speaker 5: smart watches, and smart cars. The most recent one.
Speaker 4: Oh, I didn't realize.
Speaker 2: It's really amazing with these big Chinese tech giants, they
Speaker 2: really build everything. And I actually do think sort of
Speaker 2: aside here, it's interesting that like ten years ago, there
Speaker 2: was talk about an Apple car, and they spent a
Speaker 2: lot of time looking into getting into cars and it
Speaker 2: just sort of never materialized.
Speaker 4: And yet hear you.
Speaker 2: Of these here's a company that was clearly late to
Speaker 2: the smartphone game relative to the Apple iPhone, which was
Speaker 2: the beginning, and now it's doing cars and watches and
Speaker 2: everything else, and all the five G gear and all
Speaker 2: the things that Apple doesn't do.
Speaker 4: It strikes me is very revealing.
Speaker 2: There's a comment from the founder that was I think
Speaker 2: dates back to the nineties where he said a country
Speaker 2: without its own program controlled switches is like one without
Speaker 2: an army. That strikes me as something that he identified,
Speaker 2: which now almost every country or everyone around the world
Speaker 2: is thinking. It's almost like he was thirty years ahead
Speaker 2: of his time, because if you think about the anxiety
Speaker 2: in the US about various technologies that we don't build here,
Speaker 2: if you think about the anxiety in Europe, et cetera,
Speaker 2: it really seems like that line is now becoming conventional
Speaker 2: wisdom among companies and governments all over the world.
Speaker 5: Yes, it really speaks to the role of technology in
Speaker 5: nations and its relationship to the governments in which there's
Speaker 5: always been this through line from technology to nations sort
Speaker 5: of control and surveillance operations. And so that that is
Speaker 5: why Huawei has been sort of in the crosshairs of
Speaker 5: not only the US governments but governments around the world.
Speaker 5: Is this role out of place?
Speaker 3: So on this note, one thing I'm really curious about
Speaker 3: is how does Huawei actually make big decisions. So you know,
Speaker 3: for instance, if it wants to launch a self driving car,
Speaker 3: what does that discussion actually look like. And I guess,
Speaker 3: like we just did an episode with Ricardo Houseman where
Speaker 3: we were talking about economic complexity and the idea of
Speaker 3: countries sort of jumping from product to a more complicated
Speaker 3: product and then a more complicated product after that. But
Speaker 3: I guess how much interrelation is there between all the
Speaker 3: things that Huawei makes.
Speaker 5: So Huawei's founder in Yung Fei is still the leader
Speaker 5: of the company and people have been anticipating his retirement
Speaker 5: for many years and he's still unclear when he will retire,
Speaker 5: and so no he is making those decisions, and under him,
Speaker 5: there are rotating chairs who take It's kind of a
Speaker 5: strange system. They take turns doing half year stints as
Speaker 5: Huawei's the acting CEO, and so it is a collective
Speaker 5: decision that's being made about the company's broader strategy. And
Speaker 5: this is meant to provide consistency in the company's direction
Speaker 5: going forward, especially as they're looking to a future where
Speaker 5: mister n has retired.
Speaker 2: One of the things that I had forgotten about that
Speaker 2: you talk about in your book is how many big
Speaker 2: networking companies there used to be even ten years ago,
Speaker 2: but certainly like twenty years ago or twenty five years
Speaker 2: ago around the dog Com Boble and there's just all
Speaker 2: these names that I had really I can't remember the
Speaker 2: last time Ericson still exists, but it's clearly just nothing
Speaker 2: like what it used to be. There's three Colm and
Speaker 2: Palm in Nortel, Northern Telecom and Loosened and Marcone, like
Speaker 2: all of these companies that I just hadn't forgot, had
Speaker 2: forgotten about for years, these sort of makers of telephone gear,
Speaker 2: and there's others too, and lund I didn't realize and
Speaker 2: correct me if I'm wrong. It basically seems like the
Speaker 2: reason we don't talk about any of those companies anymore
Speaker 2: is basically due to Huawei, and Huawei specifically really was
Speaker 2: the story of all these different telecom companies ultimately losing
Speaker 2: out Huawei.
Speaker 5: Certainly so there was a period during the two thousands
Speaker 5: when Huawei just sort of mopped the floor with its
Speaker 5: competition around the world and ran a lot of these
Speaker 5: major companies out of business, and so Canada had Nortel,
Speaker 5: the UK had Marconi. These were gear makers who are
Speaker 5: making similar equipment to Huawei, and they all just went
Speaker 5: out of business within a span of a few years.
Speaker 5: And that's partly why officials in the West started ring
Speaker 5: the alarm a few years ago, which was they looked
Speaker 5: around at the global market and it was all Huawei.
Speaker 5: It's just dominating this market. And in a way for
Speaker 5: Western countries it was sort of an own goal. They
Speaker 5: could have fought harder to keep their companies in this market,
Speaker 5: which is critical to technological development and critical to national security.
Speaker 5: But these companies all went wunder and there's only a
Speaker 5: handful of companies and the world left that make this
Speaker 5: kind of equipment.
Speaker 3: So speaking of national security, you make the point towards
Speaker 3: the end of the book that Huawei's goals they go
Speaker 3: beyond just shareholder returns. It's also concerned with China's place
Speaker 3: in the world and helping boost China's competitiveness and all
Speaker 3: of that. And obviously there's that CCP link as well
Speaker 3: that we already discussed. But I guess my question is
Speaker 3: what are the sort of strengths and weaknesses of having
Speaker 3: a corporate mission that goes beyond just pure profit. How
Speaker 3: does that actually affect the performance of the company.
Speaker 5: Well, for the most part, this has been very successful
Speaker 5: for Huawei, and that part of why it's become number
Speaker 5: one in its field around the world and difficult to
Speaker 5: challenge is because it's not playing by these same rules
Speaker 5: where it needs to seek profitability and it needs to
Speaker 5: maximize profitability kind of explicitly, that's not its main mission,
Speaker 5: and it's not publicly traded, and so they can take
Speaker 5: temporary losses and plow all their money into R and
Speaker 5: D in a way that like a publicly listed US
Speaker 5: company might find difficult to convince investors to put up with. Yeah,
Speaker 5: so it has allowed Huawei to become incredibly strong and
Speaker 5: incredibly competitive in a way that's difficult for Western rivals
Speaker 5: to compete with. I guess one major risk of this
Speaker 5: kind of alignment with Beijing is, you know, you become
Speaker 5: at the whim of China's government policy, which often comes
Speaker 5: in swings and often goes overboard. And Huawei is one
Speaker 5: of the few companies that has survived in such a
Speaker 5: strong state from the nineteen eighties to the present day,
Speaker 5: and many companies have gone under in China under sort
Speaker 5: of these political wins.
Speaker 2: It does seem like there's a parallel between the trajectory
Speaker 2: of Huawei and also the current government under a shujan Ping.
Speaker 4: Ren Chung Feng's own.
Speaker 2: Father was sort of cast out of the Communist Party
Speaker 2: or criticized or something like that. He was a persona
Speaker 2: non grata in some manner or another, much like she's
Speaker 2: own father. And yet Ren has obviously committed himself to China.
Speaker 2: Obviously she is, he's the president of the country. It
Speaker 2: does feel like there has been this sort of clear
Speaker 2: co evolution. One of the things that you write about
Speaker 2: in your book that I thought was interesting is he
Speaker 2: was talking about like people who got sort of kicked
Speaker 2: out of the party, and he says, you know, if
Speaker 2: you get cast into the fire and you survive, then
Speaker 2: you become the phoenix.
Speaker 4: It really does seem like a.
Speaker 2: Story here about sticking with the party and sticking with
Speaker 2: the country even when you suffer personal misfortune because of it.
Speaker 5: Certainly, and Huawei's story and specific is China's story. More broadly,
Speaker 5: the company was founded at the dawn of China's grand
Speaker 5: experiment with capitalism, when it was starting to open up
Speaker 5: from purely socialist economy, and it's been in step with
Speaker 5: China's development ever since, and so its fate is intertwined
Speaker 5: with Beijing's, probably more than ever now. And this has
Speaker 5: been something that Jen Jong Fei has tried to resist
Speaker 5: at times, to put some distance between himself and the government.
Speaker 5: But what they make it's so critical for the nation's
Speaker 5: technology industry, so critical for national security, that there's no
Speaker 5: way of really separating it.
Speaker 3: I was just about to ask about tensions between the
Speaker 3: company and the party, but can you give us some
Speaker 3: examples of where disagreement might arise or why RINN would
Speaker 3: want to separate Huawei a little bit from the CCP.
Speaker 5: Yes. So, in the nineteen nineties, Huawei went through this
Speaker 5: period where it was setting up a lot of joint
Speaker 5: ventures with state owned enterprises across the country. That was
Speaker 5: its first big step to take over the China's domestic
Speaker 5: market was through these tie ins with local governments. And
Speaker 5: so during that period there definitely was tension. There was
Speaker 5: definitely culture clash. So then Huawei had to be taking
Speaker 5: on all these new employees who were used to the
Speaker 5: slow pace of work in state owned enterprises, you know,
Speaker 5: leisurely lunch afternoon nap, and it was quite a shock
Speaker 5: for them coming to work at Huawei, which was a
Speaker 5: company where employees literally worked themselves to death in some cases,
Speaker 5: and that kind of martyrdom was sort of idealized.
Speaker 4: Can we talk a little bit about alcohol.
Speaker 2: Tracy posted a story from what was actually in the
Speaker 2: Wall Street Journal yesterday that there is another, yet another
Speaker 2: attempt by the Xjinpin government to crack down on certain excesses.
Speaker 2: And there are some like local government officials, and they
Speaker 2: consumed a bunch of bottles about you, and then one
Speaker 2: of them died that day. You also talk about this
Speaker 2: in your book, which is that, like the sales culture
Speaker 2: was so intense, and there was this expectation that the
Speaker 2: salespeople had to get more drunk than the colleagues or
Speaker 2: than the clients, so that the clients never felt embarrassed
Speaker 2: by how drunk they're getting. Talk to us about alcohol
Speaker 2: and like all this drinking and partying that goes on.
Speaker 5: Certainly so Huawei through most of its history in China
Speaker 5: has had this reputation of a very bro culture, which
Speaker 5: in China meant a lot of heavy drinking of heart
Speaker 5: to liquor by jo which is this incredibly strong liquor
Speaker 5: and China.
Speaker 3: You're not missing anything. I hate it.
Speaker 4: I got to try some keep going.
Speaker 5: So part of Chinese corporate culture of entertaining your clients
Speaker 5: is taking them out and getting just rip roaring drunk.
Speaker 5: And as the salesperson, you're supposed to get more drunk
Speaker 5: than your client to show respect to them, and so
Speaker 5: and so you have the salespeople who really are had
Speaker 5: were suffering pretty severe health consequences of this heavy drinking.
Speaker 5: And at some point, the officials within Huawei they were
Speaker 5: sending up like these stomach bombs to employees who had
Speaker 5: suffered stomach damage from from getting so drunk doing their jobs,
Speaker 5: and this was sort of seen as part of the
Speaker 5: personal office you do to further Huawei's goals to make
Speaker 5: the company succeed. Wow.
Speaker 2: I love how like a lot of people would think
Speaker 2: like partying as a salesperson just like one of the
Speaker 2: perks of the job. But I love the idea of
Speaker 2: like partying so hard and getting so drunk that it
Speaker 2: ceases to be a perk anymore, and it actually represents
Speaker 2: your sacrifice to the health company, because like you're blowing
Speaker 2: out your stomach and your liver in doing so to
Speaker 2: the point where the company needs to send you send
Speaker 2: medicine out to the salesforce.
Speaker 5: Yes, certainly. And you have these stories of salespeople They're
Speaker 5: getting so drunk they have to go and take a
Speaker 5: vomit break in the middle, and then they come back
Speaker 5: and keep drinking whatever it takes to get the job done.
Speaker 4: That's how you win all those note. That's how you
Speaker 4: win all those times. Sorry, Tracy could go.
Speaker 3: As someone who spent a lot of time in Japan,
Speaker 3: I find the idea of people partying so hard it
Speaker 3: ends up being a sacrifice in something they don't want
Speaker 3: to do very very relatable. Can we talk a little
Speaker 3: bit about tariffs and trade restrictions? So obviously, you know,
Speaker 3: since twenty eighteen, the first Trump administration, the US has
Speaker 3: tried to put limits on exports to China and tried
Speaker 3: to I guess, block some of China's technological development in
Speaker 3: various ways. A lot of those restrictions were carried through
Speaker 3: by the Biden administration. Some people would even say that
Speaker 3: the Biden administration was harder on Huawei than Trump. Fast
Speaker 3: forward to today, and obviously we've had Liberation Day and
Speaker 3: all this back and forth on trade restrictions yet again,
Speaker 3: and still it seems like Huawei has been doing a
Speaker 3: pretty good job. I know, they managed to produce a
Speaker 3: five G processor and things like that. Have the tariffs
Speaker 3: or trade restrictions had any effect on Huawei's development specifically,
Speaker 3: and how has it responded?
Speaker 5: Certainly so, during Trump's first term, the target was Huawei's
Speaker 5: telecom networks, especially their wireless networks. Five G was being
Speaker 5: rolled out around the world at that point, and the
Speaker 5: first Trump administration had worked very hard to stop Huawei's
Speaker 5: progress in five gen networks. And so fast forward to
Speaker 5: the second Trump term. Now the focus is AI chips
Speaker 5: and if they chips versus Huawei's and their role in
Speaker 5: building sort of these super smart computers that can power
Speaker 5: things like chat GPT. And the fact that we're still
Speaker 5: talking about Huawei speaks to the scope of their technology
Speaker 5: and just their central role in China's tech industry that
Speaker 5: it is still this company that is both doing the
Speaker 5: telecom networks and doing the AI chips. And so what
Speaker 5: we've seen during the early months of the second Trump
Speaker 5: term is Trump's administration has warned countries around the world
Speaker 5: that they view using Huawei's chips Ai Quawei's AI chips
Speaker 5: anywhere in the world as a violation of US export controls,
Speaker 5: which means, you know, they're threatening countries around the world
Speaker 5: that they might suffer consequences from the United States from
Speaker 5: buying and using Huawei AI chips. And yeah, this certainly
Speaker 5: has had a big impact on Huawei's trajectory, but it
Speaker 5: hasn't stopped them. In many ways, has pushed them to
Speaker 5: redouble their efforts to build technology domestically.
Speaker 2: Setting aside geopolitics, etc. I understand why Western governments are
Speaker 2: anxious after watching what happened to all of those telecom
Speaker 2: giants that virtually disappeared since the late nineties or early
Speaker 2: two thousand and twe they certainly don't want to see
Speaker 2: that repeated again. It's interesting, though, going back to this
Speaker 2: New Global Times interview that came out today, there's a
Speaker 2: lot in there about AI and one of the things
Speaker 2: that Wren says it's a may be the last technological
Speaker 2: revolution in human society, though maybe also nuclear fusion. That's interesting.
Speaker 2: But he's one thing that's clear is that a big
Speaker 2: part of this interview is to like, you know, he
Speaker 2: talks about how far behind they are still by the way,
Speaker 2: we're recording this on June eleventh, so people can go
Speaker 2: look for the Global Times article. He talks about how
Speaker 2: far behind they are still, like they're clearly trying to
Speaker 2: make the point in this interview that yes, AI is
Speaker 2: the future, could even be the last important tech that
Speaker 2: ever exists. But at the same time, you know, don't
Speaker 2: be too threatened by us. We're still at least a
Speaker 2: generation behind in video and so forth.
Speaker 5: Yeah, certainly. So. Ren has always downplayed always strength publicly,
Speaker 5: and part of that has been he's until recent years
Speaker 5: done very few interviews at all. Part of Huawei's culture
Speaker 5: is they are quiet, they are humble, and they sort
Speaker 5: of downplay their achievements, and that's allowed them partly helped
Speaker 5: in making these technological leap frogs before people really recognize
Speaker 5: that's what they have done. So the last couple years,
Speaker 5: AI has become this global frenzy where with chat, GPT,
Speaker 5: everyone's talking about AI revolution. So actually, for companies like Huawei,
Speaker 5: like US tech giants like Google and Microsoft, they saw
Speaker 5: this coming years ago and they've been working on AI
Speaker 5: for well over a decade, and their executives since years
Speaker 5: ago have been saying that AI is going to be
Speaker 5: the next revolution and they have to catch this wave.
Speaker 3: You mentioned succession earlier, and obviously Rin Jung Fei has
Speaker 3: been such an iconic figure in China and within Huawei.
Speaker 3: What happens next, who are the front runners, and what
Speaker 3: exactly is the process for doing this, because I'm kind
Speaker 3: of imagining someone needs to do a Chinese conglomerate version
Speaker 3: of succession. I would watch that one hundred percent. What
Speaker 3: is the process?
Speaker 5: I would watch it too. Well. In many ways, he's irreplaceable,
Speaker 5: so rendering plays has this unique position in China's tech
Speaker 5: industry of sort of this hermit sage speaks in riddles
Speaker 5: and he makes these predictions that sound fantastical in the
Speaker 5: moment but turn out to be true years later. And
Speaker 5: he's this larger than life figure who's like no one
Speaker 5: else in China's tech industry and no one else really
Speaker 5: around the world. So it's difficult to see how he
Speaker 5: can be replaced, really, But he's been working on setting
Speaker 5: up a succession plan since the nineteen nineties, and the
Speaker 5: way that it looks now is the team, a team
Speaker 5: of rotating executives who together can kind of steer the
Speaker 5: company and so well We'll have to see when he
Speaker 5: retires how this works. And so that this team of
Speaker 5: top top executives, it includes several company veterans who have
Speaker 5: been with Walwei since the nineteen nineties or earlier. And
Speaker 5: then it also includes gender Fay's daughter, moment Joe, who
Speaker 5: had been the CFO detained in Canada during the first
Speaker 5: Trump administration and who has since returned and has been
Speaker 5: elevated to this national hero status for being under house
Speaker 5: arrest in Canada.
Speaker 2: Actually, I have just one more question, which is it
Speaker 2: sounded like in your book that at least for the
Speaker 2: in the beginning years, the daughter wasn't seen, none of
Speaker 2: the family members were actually seen as likely replacements or
Speaker 2: leaders of the company.
Speaker 4: But it always seems like in.
Speaker 2: Revolutionary environments, communist revolutions, serving some time in prison or
Speaker 2: in Siberia or something like is really good for your cred,
Speaker 2: that ultimately doing some sort of stint of suffering is
Speaker 2: actually helpful and establishing like, okay, you actually belonged to
Speaker 2: be at the top. Did those years where she was
Speaker 2: facing possible prison time in the US help her in
Speaker 2: terms of okay, she might actually be a credible leader
Speaker 2: At some point in the future.
Speaker 5: Certainly, it was this unexpected thing that happened her arrest
Speaker 5: in Canada that gave her sort of the street cred
Speaker 5: back home to be elevated. Which Huawet is a company
Speaker 5: where they care about results, and so for years they
Speaker 5: had believed that only engineers who really understand the technology
Speaker 5: can lead this company and be able to make the
Speaker 5: right decisions and have that authority to lead the engineers.
Speaker 5: And this was not Muwan Joe's background. So she had
Speaker 5: studied finance and was working in the finance department and
Speaker 5: had worked her way up to CFO. But many people
Speaker 5: thought that was maybe the ceiling for her, and then
Speaker 5: that that changed after her detention. After her house arrest,
Speaker 5: she came back and soon after was promoted to one
Speaker 5: of the rotating chair people at Huawei rotating chairwoman, which
Speaker 5: is one of the top positions right under Jinjo himself.
Speaker 3: So, speaking of unexpected developments in researching your book, I'm
Speaker 3: really curious if there's one thing that stuck out for
Speaker 3: you in terms of being surprising. What was the most
Speaker 3: surprising thing you heard or saw or learned about in
Speaker 3: writing this book.
Speaker 5: I think the role of crises around the world in
Speaker 5: Huawei's expansion was something that kind of was interesting and
Speaker 5: unexpected to me in researching this book, which you know,
Speaker 5: part of why they were able to make their early
Speaker 5: sales advances in other countries was they pushed their salespeople
Speaker 5: to the limit in extreme situations such as wars, natural disasters,
Speaker 5: pandemic in Hong Kong, for instance, the Hong Kong market,
Speaker 5: they landed one of their first big sales during the
Speaker 5: SARS pandemic, and that was when most of their rivals
Speaker 5: were staying at home and sheltering in place during the pandemic,
Speaker 5: and they did the opposite. They basically, in their own words,
Speaker 5: ignored that a pandemic was going on and sort of
Speaker 5: met with their client as much as possible and won
Speaker 5: them over during that period and soon after SARS were
Speaker 5: able to win kind of the key order in the
Speaker 5: company's history. I think of first stepping stones.
Speaker 2: You're also talking the book about, like Rain, I think
Speaker 2: it was during the Arab Spring and various other or
Speaker 2: in Afghanistan too, like various times when everyone else was
Speaker 2: fleeing some sort of political turmoil, the salespeople just carried
Speaker 2: on business as usual and refused to flee.
Speaker 5: Yeah, yeah. I think Wren told his staff at one
Speaker 5: point that the business therein it's not like selling donuts.
Speaker 5: They can't just leave whenever they want, and so much
Speaker 5: of their business is in parts of the world that
Speaker 5: have seen wars, seen instability, and part of their promise
Speaker 5: to their customers why they win these orders is they're
Speaker 5: making the promise they're going to be there, and so
Speaker 5: you see sort of like wartime pay for Huawei employees
Speaker 5: who are working in war zones. You see people who
Speaker 5: are having to take these personal risks, and that's part
Speaker 5: of Huawei's business model of how it's been able to
Speaker 5: become the world's number one maker of telecommunications equipment.
Speaker 2: EVA though it's really an extraordinary book about an extraordinary
Speaker 2: company that explains much about the world.
Speaker 4: Thank you so much for coming on Oline so much.
Speaker 4: I do think that last point Trace is really interesting.
Speaker 2: This idea of like you know, lots of companies is like.
Speaker 4: Oh, we're a family, make a big commitment.
Speaker 2: Of blah blah blah, but they sort of like prove it,
Speaker 2: like and all the different examples of like literally, oh,
Speaker 2: we're just going to ignore SARS. We're just going to
Speaker 2: ignore the fact that there is some sort of civil
Speaker 2: war crisis happening. Because we're going to focus on the sale.
Speaker 2: It really does seem like to establish that among your salesforce,
Speaker 2: you actually really do have to sort of truly mission
Speaker 2: driven in a way that's beyond just cliche.
Speaker 3: Well, this is where I think the uniqueness of the
Speaker 3: mission is a really big competitive advantage, right, because, as
Speaker 3: EVA was pointing out, it's a privately held company. It
Speaker 3: stated repeatedly that it's mission includes profits, but also goes
Speaker 3: beyond just that, And so when there's a crisis, it's
Speaker 3: not under pressure to cut back on costs or slow
Speaker 3: down expansion or pull out a specific market and things
Speaker 3: like that. It can keep going. That seems to be
Speaker 3: a pretty big competitive advantage.
Speaker 4: Yeah, that's right.
Speaker 2: You know, like you still like, oh, we have to
Speaker 2: get the ideology first, right, we have to do the
Speaker 2: ideological stuff first.
Speaker 4: And I didn't really get it, but maybe this is
Speaker 4: maybe this is a.
Speaker 2: Way of understanding it, which is that if we're going
Speaker 2: to talk about like having a good competitive sales culture,
Speaker 2: et cetera, it means nothing if you don't just like
Speaker 2: fully get people to like believe deeply, like in their bones,
Speaker 2: Like what this mission is and it really is striking,
Speaker 2: like they just mopped the floor within everyone in like
Speaker 2: the first twenty years of the century, and I'd really
Speaker 2: forgotten how varied and diverse that industry was up until
Speaker 2: like fifteen years ago.
Speaker 3: Basically, I guess drinking loads of buye you obviously pays off.
Speaker 5: So I gave you back.
Speaker 3: I gave you bad advice.
Speaker 4: We should do that.
Speaker 3: No, No, although you're bringing back all these memories of
Speaker 3: insane times in Japan, but there are all these tricks
Speaker 3: to avoid drinking in a group setting.
Speaker 4: Oh I need to I don't really like drinking. Can
Speaker 4: you tell me one?
Speaker 3: Well, like hard licker, you can discreetely pour out in
Speaker 3: a plotted plant, which is something that I've done before.
Speaker 3: You could strike a secret agreement with the bartender to
Speaker 3: serve you water instead of shots. Things like that.
Speaker 4: I'm not going to do that.
Speaker 5: I do want to.
Speaker 4: I do want to try some eventually.
Speaker 3: Okay, shall we leave it there.
Speaker 4: Let's leave it there.
Speaker 3: This has been another episode of the aud Loots podcast.
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 2: I'm joll Wisenthal. You can follow me at The Stalwart
Speaker 2: Follow our guest Eva Doe. She's at Eva Doe and
Speaker 2: check out her book House of Huawei. Follow our producers
Speaker 2: Carmen Rodriguez at Carmen armand dash Ol Bennett at Dashbot and.
Speaker 4: Keil Brooks at Kilbrooks.
Speaker 2: For more Oddlots content, go to Bloomberg dot com slash
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