It is now already poked down the Swedish crown jewel Ericsson from the telecom world faith. But China’s mobile giant is not content with it. Computer Sweden’s reporter Sophia Nilsson visited Huawei in place in China.
“Extremely hard work have made us beautiful.”
We are in a conference room at the headquarters belonging to the world’s largest supplier of telecommunications equipment. Was on a two square kilometer area where Huawei is housed in the south Chinese city of Shenzhen. The company’s Nordic Manager Kenneth Fredriksen shows a picture of a balettdansares feet. One of tåspetssko, the second-wounded and scarred.
But the dancer’s careers are shorter than many others and the profession can leave traces that they have to live with for life. When I point out the lack of their metaphor, he and his colleagues are somewhat significant.
- Yes, we must ensure that we take care of our employees. Our founder has highlighted that we should be a humble leader, our customers are the key to our success. So hopefully we can extend the ‘dancer’ career, says Kenneth Fredriksen.
It was not long ago Ericsson sat unchallenged on the throne as the first supplier of telecommunications technology. Huawei until one day in 2012 suddenly went over and tricks first place. Go back ten years in time and nobody outside the industry really knew what this Chinese company was. Much has happened in a short time.
Now, the brand is one of the 100 most valuable in the world. According to consulting company Interbrand’s latest ranking ports Huawei in place 88 and took the first Chinese companies on the list last year. Huawei has over 150,000 employees worldwide and is currently available in more than 170 countries. Last year the company had sales of SEK 384 billion.
The analogy with balettdansörens feet can be interpreted in more ways than hard work leads to success. But let’s not get ahead. Let us instead begin in the heart of Huawei’s operations – on the factory floor.
Dressed in gowns, booties and peaked cap, we start the tour of the factory at the Songshan Lake just outside the industrial city of Dongguan. The city is located, as its headquarters in Shenzhen, Guangdong Province, and in 2010 8.2 million inhabitants. Houses and controlled parts into their base stations.
– This plant has been around since 2009 and this building is 50 000 square meters. We are building a new area, the C area which when complete will include 700,000 square meters. Today, we can supply products for 40 billion dollars each year, when the C segment is completed, there will be 70 billion, says Xue Yongbo, factory manager in charge of the production chain.
The size, amount and all kinds of measurable units seem to be important for the plant manager. But once inside the assembly hall and the production line is not the surface and the machines that catch my interest. Here and there are whiteboards deployed with small portraits of everyone working at each station. Beside each photo is a picture of a bunch of grapes and a smiley figure.
- Employees can view their mood here, if you are happy or sad. Or normal, which is about as usual. If an employee is not happy, the manager can ask why and see if they can find another job to encourage the person, he says.
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– The grapes are coloring the boss every day on the basis of what the worker performed, green, purple or black. Black is not good, purple is very good. Black should be as a reminder, if not handled their information, says Xue Yongbo.
Huawei has been around for 28 years, about as long as most employees within the company have survived. The average age is about 30 years and they recruit often directly from universities and polytechnics. Younger generations in China are much more educated than their parents, which is one of the explanations. Even deep in the stages of production, some form of higher education, such as an engineering or professional degree
For a long time it attractive to hire engineers in China, despite high education was low pay. Today the picture is different, for the more advanced positions, wage levels similar to European ones. But the precise salaries is not the company enters.
- The salaries of the employees of the plant is three times the minimum wage in Dongguan, but exactly what a worker earns I do not know. We follow the laws and rules that exist in the region and in China, says the plant manager.
In China there is no national minimum wage law firm but is instead based on cost of living and price levels in the provinces and their cities. In Dongguan, the level of 1,510 yuan a month, which is equivalent to nearly 2 000. A salary that can barely live on when rents an apartment of 40 square is around 1000 yuan. Many are therefore forced to share housing, if they do not have family or work many hours of overtime.
- About Huawei pays three times the minimum wage, it would be very unusual, I would not trust their word. It may be that they mean that it includes overtime, for example, says Kevin Slater, program coordinator at the organization China Labor Watch.
If the guided tour of the factory in Dongguan gives a fair picture of the working conditions of its employees can not really say. Some individual conversations with workers along the production line will be out of the question. Nor any visits to suppliers, where previously reported including child labor.
Last year audited China Labour Watch a factory that supplied among others, Huawei and Samsung with screens to phones. A co-worker took employment with the subcontractor and found that children as young as twelve years working in the factory. The review was done in collaboration with the French TV channel France 2, which is also confronted with Huawei data.
The company’s French manager apologized and announced that the suspended cooperation with the mill concerned. Child labor was not authorized and Huawei promised to review their cooperation.
Read also: Not only mobile network – Huawei adds billions to challenge Apple and Samsung
When asked questions about working for the company and subcontractors’ employees are brought on the tour refers factory manager just to the open procedures and transparency in the work they offer their customers.
The same transparency that the company offers as they come to the security of their products.
- Our customers, such as Vodafone have been here, and then asked the more than 80 different issues. We have put together three different white papers about our security strategies. Most recently, 100 key questions asked by our customers, says Xue Yongbo.
One way to ensure that no third party tampers with the chip, or otherwise trying to manipulate the products is a barcode that follow the various parts throughout the production chain. This way you can see who downloaded such as circuit board from the store, who fastened a certain part, and who finally mounted on the base. The code comes with the subcontractor to the end customer. There are also samples of each batch produced.
Chips mounted on circuit boards, many cases from producers in other countries, 30 percent of US and 28 percent from Japan. However, Xue Yongbo just remind yourself of a case where they actually found the virus in any of the parts.
- Following an inspection, it turned out that it was the provider’s servers hit by an attack, it was a Chinese supplier. After it was thrown the entire batch, he says.
The time is approaching lunch and the previously relatively deserted factory area is filled with people. Deserted streets and parks that suddenly full of people on their way to the dining room and cafeteria.
The employees at the factories, research facilities and offices are not just employees. Many of them are shareholders. Huawei is not listed but is still a type of limited company in which the shares are owned by employees.
Approximately 60 percent of the employees own shares. But there are different rules depending on where you come from. Chinese employees can buy shares, while, for example, Swedish and Hungarian get them assigned in a sort of bonus system based on both individual and collective achievements of the Working Group.
The founder Ren Zhenfei reported to have a stake of around 1.3 percent. What the rest of the Board sits on the shares, the company wants not share.
In the mid-80s did the rulers of China modernize its telephone infrastructure. One who saw the chance to get in on the new market was the former army engineer Ren Zhenfei. In 1987 he founded Huawei with the goal of providing China with telecom equipment produced domestically. Equipment where only imported from outside. Today, one of China’s largest private company.
But despite the roots looks Huawei is not a Chinese company.
- We became a global company in 1996. While we have our headquarters in China and so we are a Chinese company. But about 60 percent of all our business is done abroad. We are an international company, says Norden manager Kenneth Fredriksen.
By making significant investments right time, and developed our own technology, we have been able to grow.
The days when Huawei was a small, domestic, manufacturers of telephone exchanges for the Chinese market are long gone. Today they say themselves that they reach a third of the world population with its products. With everything from the traditional base stations and routers to now also consumer products such as smart phones and watches.
But they are not alone, many Chinese companies have emerged on the international market, both hardware manufactured by Lenovo, and Internet giants such as Alibaba.
In the late 70′s and 80′s started the People’s Republic of China to open itself to the West and the foundation was laid for their own version of the market economy. The government implemented reforms and in 1979 founded, among other things, the city of Shenzhen as an economic free zone. The city where Huawei eight years later started.
For a long time, China’s focus on attracting foreign investors. But the past ten years there has been a shift. The trend for Chinese enterprises to invest abroad instead has become stronger says China scholar Frederic Cho, who see Huawei as one of many examples. In step with the economic development, companies in China have grown and begun to look beyond China’s borders.
- Where was the Huawei early, and opened its first R & D center outside China in Kista in 2000. Last year, China’s outbound investment to the level of the constituent investments. And it is my belief that China will be a net capital exporter. The trend will continue and will be marked around the world, there will be more Chinese owners and the long term, Chinese enterprises will be the world’s largest employers, he says.
Investing in research and development keeps Huawei Kenneth Fredriksen as the key to business success. And it is a deliberate strategy. But part of the success story is, as so often, also timing. Huawei was founded at a time when the telecommunications industry began to grow strongly and was under extensive change.
- It is difficult for large incumbent companies to change at the same pace as the market and the outside world does. By making significant investments right time, and developed our own technology, we have been able to grow. And by early investing abroad, we have been able to grow even in the domestic market and reach the position we have today, says Kenneth Fredriksen.
The business model is now based on being an end-to-end manufacturers. Huawei makes everything in the entire chain, from technology that carries signals to the phones that capture them. A width that many other companies have abandoned in favor of a more streamlined approach.
- For us it is one of our competitive advantages but also necessary in order not to be dependent on others to drive innovation. In order not to stretch our resources in many areas we have divided the company into three business groups to build businesses that are sustainable, as well as versatile and flexible enough to be competitive every man for himself.
Business groups are both telecommunications equipment and related services, business solutions and consumer part with phones and watches. Telecom equipment still belongs to the base of operations, accounting for 67 percent of sales. Company- and consumer groups 7 and 26 percent. And the ambitions and plans for the European markets are slightly different.
- When it comes to networking equipment that is our primary focus is no longer growth, although we still see opportunities. It is a question of market maturity. But we see that we which focuses more on providing the best customer experience. More focus on quality rather than quantity. As for consumer and enterprise solutions, we have clear growth goals, and that they have great potential, says Kenneth Fredriksen.
On the corporate side, Huawei opportunities to cooperate with both the training as medical technology. Products phones, the company has worked with for a long time, but it is only in recent years that they began to be marketed under the brand Huawei. All this is part of the pipeline strategy, the company has developed.
No business relationships in China are but a measure of the policy. And no political relationships without an ounce of business. The other week visiting Chinese President Xi Jinping UK. Official visit by the royal mansion mixed with talks with political leaders. And a visit to Huawei’s R & D facility so clear.
China and the US has strained relations is no exaggeration. 2012 decided a committee in the US House of Representatives to discourage American companies from buying services and products from Huawei and ZTE.
The decision was an eleven-month long investigation that led to the conclusion companies could pose a threat to the United States: national security. The Committee’s view was that it could not trust that companies were free from interference by the Chinese government.
Read also: Sweden a “key market” for Huawei – Swedish expertise attracts
The short answer from Huawei, the question of the allegations is that nothing is proved and that the company’s focus on customer relationships. But it is a sensitive issue noticed in conversation with Michel Fang, public relations manager at the department that manages the contacts with the authorities.
He would not like to comment on the relationship between China and the US, but says that the allegations made Huawei tightened their security strategies and built them into the business model. And that it is not enough own evaluations but it must also be examined externally to the trust will not be damaged further.
- Over time, I believe that relations between our countries will be better, and that the US understands our company’s intentions. But it will probably take 10, 15 years before we are there. We encourage bilateral talks with other countries. Perhaps the consumer market as a way to soften the relations, but the network equipment is much more difficult than the phones, says Michel Fang.
If the Chinese authorities heed the private company advice and wishes remains to be seen, he says. The company makes suggestions regarding new legislation and system, but no official approach has not come from the government.
But it is not only possible links to the government that is being challenged. As Chinese companies, operating on a domestic market, have the advantages that foreign companies are not allowed to take part.
Development and Chinese companies’ expansion in the US and Europe are in line with the Government’s ambitions, says China expert on Frédéric Cho. The regime wants to help businesses to invest and grow. As the Chinese market is saturated in some areas, companies need to compete internationally. A market that Huawei compared to other Chinese companies have long experience.
- Those who have not done business abroad, they will not understand until they made the deal. You can not learn through manuals. And a majority of Chinese companies have not done business with Western countries. But it’s the same with American companies, he says.
Huawei and ZTE chose early on to invest internationally is not only reasons that can be found in their business ideas.
- They were ousted by Ericsson in the Chinese market in the 1990s. The Chinese companies were young, lacked credibility and technical knowledge. Instead, it was Nokia, Alcatel and Ericsson who stood for it, says Frédéric Cho.
Huawei is today the telecom prima ballerina. Whether his career will be short or not, only the future will tell. The technology is developing fast and there is a changing industry. Hard work does not always lead to beautiful results.
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