Deconstruction Huawei - Enterprise Competitiveness Series report of two
Business environment】 【Competitiveness Series report of two
High investment by foreign forces
● reporter Valley, Guangzhou, Shenzhen Hui reported
After the entrants as Huawei, to his position at the technical level is the pragmatism
of the road, which has been stressed for the market, R &amp; D, develop new
technologies, complemented by low prices and good service, grab global market
Technical inputs up to
Huawei eyes, there are three departments of the company&#39;s largest
contribution to: market research, development and human resources. Although the
company&#39;s president Ren Zhengfei now focus only on the determination of
grand strategy, but the company three large sectors of the R &amp; D still
Huawei introduced an insider from the company&#39;s inception, Ren Zhengfei
have invested in technology companies have requested. Huawei was founded early,
Ren Zhengfei would require companies to sales agents of foreign products the profits
are invested in the technology development on a small switch. With the expansion of
profit margins. Profits to invest in the company again upgraded product research and
development, the cycle, gradually expanding.
According to data provided by Huawei brand center, Huawei R &amp; D costs
per year not less than 10% of sales, and insisted on 10% of R &amp; D for the
pre-research, new technology, new areas of continuous research and tracking.
This statistical data with third parties the same. In the recently announced near 23rd
list of top hundred electronic enterprises, Huawei R &amp; D investment in
China, the amount of ranking first. 2008 Love for the R &amp; D reached 10
billion yuan, the proportion of its revenue more than 8%. Thus, for 6 years, Huawei
has won the number of patent applications, the first Chinese companies, account for 3
consecutive years, the number of China&#39;s invention patent applications first.
While rival Huawei ZTE R &amp; D investment revenue as high as 9.8%, but
still lower than the total amount of Huawei.
Huawei attaches great importance to IPR protection technical innovation. According
to Huawei official data, as of the end of 2008, Huawei has accumulated 35,773
patents, including patent applications, 26,005 Chinese, 5,446 international patent
applications, foreign patent applications for 4322. In the LTE in the field, Huawei
fundamental core patents accounted for 10% of the total, ranking third.
1 Shenzhen communications manufacturers believe that Huawei&#39;s generous
early R &amp; D investment is rising out of Zhengfei their inherent requirement
of the company. Since then, the Cisco IP Huawei Ren Zhengfei more convinced the
prosecution to put on the need for technology research and development.
43% of Huawei staff adhere to research and development investment. Huawei has
been for several years at an annual rate of recruitment of 34 thousand graduates of
famous universities, are still thousands of people each year rate of recruitment of
excellent technical personnel at home and abroad. Huawei R &amp; D personnel
in recent years to reach 4 million.
Compared with other communications giant, Huawei is not a long-term technology
accumulation. But Huawei is found in the technical research and development for its
Huawei has chosen to do non-core ASIC development and board-level development
of two applied technology development. Huawei&#39;s R &amp; D is done
based ASIC development. ASIC technical difficulty of small and large quantities.
ASIC technology development useful role in the company reduce costs. The main
development model is designed by Huawei own several chips, and then look for
China Taiwan, Hong Kong, China or the United States chip maker professional
processing. After processing, the chip can be used instead to buy ready-made chips,
saving a lot of cost. In 2004, Huawei&#39;s ASIC design department,
independent from Huawei, set up the &quot;Hisilicon&quot; the new
company. Hisilicon is a professional design company, to include outside companies,
including Huawei Technologies to provide chip design. Huawei&#39;s R
&amp; D in the board-level development idea is to use cheap labor of domestic
R &amp; D, spend a lot of manpower to reduce the cost of entire board. For
example, Huawei has spent more than a dozen individuals to study the lower the cost
of the switch the user board.
Huawei is technically not the same one with domestic enterprises where technology
development is to do with external forces. The early stage of development in Huawei
Ren Zhengfei once that independent development is the only R &amp; D should
take the path. The transformation process after the introduction of IBM,
IBM&#39;s consultants have found a problem, Huawei R &amp; D to do
everything on their own, this result is inefficient companies, Huawei is therefore
proposed to shorten their product time to market.
Ren Zhengfei competitors in summing up the experience, so that Huawei
Technologies R &amp; D to go down this road: The core technology is their own
development, but a number of relevant and forward-looking technology to do
domestic universities or laboratories. This is to ensure the master core technologies of
Huawei, but also to protect its R &amp; D efficiency. Huawei Technologies and
Tsinghua University Department of Radio Engineering, China University of
Technology, University of Electronic Science and Technology, Southeast University
and other universities have established long-term technology partnership. This
large-scale cooperation with domestic universities, not only solved the front-end
technology of Huawei in the problems, but also trained a large number of high-end
Huawei technical personnel.
In overseas, Huawei has also established a cross-border integration of employees
through the establishment of the laboratory.
Overseas research is of great significance to Huawei, Huawei&#39;s overseas
operations not only to provide support and services but also means that Huawei can
with other international IT giants, like 24 hours to establish a global research system.
Huawei, one third of the world I
● reporter Kevin Guangzhou and Shenzhen reported in paragraph
&quot;Every economic crisis will have a great company, hope that this time
Huawei will seize the opportunities.&quot; In 2008 coincided with the global
financial crisis, an information within Huawei says.
It is also in 2008, Huawei beyond the Alcatel-Lucent, the world&#39;s
third-largest telecommunications equipment suppliers. &quot;In 2008, Ericsson
sharp drop in performance, Motorola, Nokia Siemens loss, Huawei 40 percent of the
growth can be said to stand out. Current operator equipment market, has become
Ericsson, Nokia Siemens, Huawei tripod pattern.&quot; One of the
telecommunications industry of Guangzhou researchers reviewed the case.
Stand out 2008
In 1997, Huawei CEO Ren Zhengfei visit, when Lucent Technologies said that the
first sentence is: &quot;I worship a young age is Bell Labs, feelings of
admiration than love.&quot;
At the same time, Ren Zhengfei release rhetoric in other occasions: &quot;In the
future one-third of the world telecommunications market, there must be a seat of
In 2008, the global financial crisis led to decline in profitability of almost all
enterprises, Huawei completed annual sales income of 23.3 billion U.S. dollars
contract, in accordance with domestic accounting standards, operating income of
18,330,000,000 U.S. dollars, net profit of 1.15 billion. Operating profit margin
increased 10% in 2007 to 13% by 2008, sales revenue growth than cost growth by 3.4
percentage points higher than the cost rate of 28.47% from 2007 down to 26.7%.
That same year, the world&#39;s largest telecommunications equipment supplier
Ericsson net income decreased 46.3%, loss of 301 million euros of Nokia Siemens,
Motorola loss of 4.163 billion U.S. dollars, sales fell 36%.
Huawei&#39;s 2008 Annual Report showed that 75% of its revenue has come
from international markets, sales of terminal operations to reach 4 billion U.S. dollars,
up more than 80%. Terminal business for more than 80% of revenues from
international markets. Including Europe and the Middle East, and Africa&#39;s
emerging markets, Huawei is still the main source of foreign income, while the
Asia-Pacific (excluding China), Latin America and North America also improved
This year, rival Alcatel-Lucent Ren Zhengfei worship are not doing well, the 6th
consecutive quarter of losses makes the Alcatel-Lucent lost the throne of the third
global communications equipment, Huawei is replaced.
Informa advisory body known in the recent &quot;Global Mobile&quot;
feature article published, said the global mobile device market is increasingly
becoming Ericsson, Nokia Siemens, Huawei-strong battle, the three companies to
further consolidate the market leadership. With the gradual recovery of Nokia
Siemens, Huawei in the global market continue to win major contract carriers,
declining North American manufacturers are expected to share the three major
vendors will eventually be more than 70% market position is unassailable.
Another well-known consulting firm Ovum is released by Huawei as the research
object of special study, said that Huawei has grown from a &quot;Chinese
Vendor&quot; (Chinese supplier) growth for the &quot;Global
Giant&quot; (global giants).
The next opponents
Huawei&#39;s continuous challenge in the outside world 40% of the time the
sustainability of high growth, Huawei to produce a first half of 2009 year over 2008
respondents, with 17% market share ranked third, while Huawei&#39;s market
share than almost doubled over the same period in 2008 doubled compared to the first
quarter of 2009, also high by 2 percentage points, the highest growth for the industry.
The most important areas of wireless communications, first half of 2009 Huawei
UMTS market in shipping more than 400,000 carrier frequencies, and the year 2008
shipments to 300,000 of its carrier frequencies; in 2009 in the first half, Huawei
CDMA shipments close to 280 000 carrier frequency, the 2008 full year shipments of
its carrier frequency to 220 000.
U.S. market research firm Dell Oro latest data show that, after the first quarter of 2009,
ranked third in the world after the second quarter of Huawei in the global mobile
network equipment market continue to third, with 32% of Ericsson&#39;s
market share continued to rank first Nokia Siemens with 20% market share in second
place, down 1 percentage point to 17% of Huawei&#39;s market share ranked
third, while Huawei&#39;s market share more than doubled over the same
period in 2008 almost doubled compared to the first quarter of 2009 also higher by 2
percentage points, the highest growth for the industry.
&quot;Huawei&#39;s the truth,&quot; the author, Dong-Sheng Cheng,
senior media people think that before 2005, Huawei Africa copying the experience of
the Chinese market, and these practices in Europe are mature markets such as the lack
of core competitiveness. In 1998, &quot;Huawei Basic Law&quot;, IPD
(integrated product development), ISC (integrated supply chain) for three events at the
same time began to be stationed in Europe, said the three major events over the role of
a low-cost advantages, Huawei has become a real sense of the international company.
In 2005, Hanover, Germany, Deutsche Telekom Huawei awarded the exclusive
operator QSC&#39;s NGN project, covering Germany and QSC to build more
than 200 cities throughout the NGN network. This is a Huawei successfully entered
the European market standards. August 15, 2006, Huawei has won Leap Wireless in
the United States, Idaho Boise, Reno, Nevada and Washington SPOKANE the 3G
network contract. Huawei officially entered the North American market.
&quot;The next rival is the Nokia Siemens, and will soon surpass, Huawei 2008
annual growth rate of 43%, first half of 2009 to complete the equivalent of 2008 full
year sales contracts, and the latest data show that more than just Nokia, Siemens,
Huawei 3% less market share. According to the current growth rate, the end of 2009,
Huawei will replace the Nokia Siemens as the world&#39;s second-largest
telecommunications equipment supplier. &quot;telecommunications industry of
Guangzhou, a researcher said.
On &quot;indigenous Wolf&quot; school afterwards
&quot;We do get a lot of big overseas orders, but I was not clear whether the
money list.&quot; 2007, Ren Zhengfei at an internal meeting said.
As in 2000, once again into a &quot;ceiling&quot; phenomenon Huawei
again coach IBM. This time, the &quot;coyotes&quot; Huawei to learn is
&quot;to reckon his own account.&quot;
IBM where he studied under the second
How effective financial management and reduce costs? It can be said that Huawei was
founded 20 years the second bottleneck. This IBM 1993 is almost exactly the same
problems: not into the high revenues with consistent profit.
1993 Gerstner took over IBM, immediately start the integration, including financial
management, including a number of reforms in 1997, IBM re-emergence, it is also at
this time, Ren Zhengfei IBM first came to visit.
In 2007, Huawei Ren Zhengfei has been aware of the
&quot;coyote-style&quot; assault to be coming to the extreme, human sea
tactics alone more and more difficult to capture market share in Europe and the
United States and other mature expansion of overseas markets have to rely on more
detailed management Among these, the most important financial cost control.
In early 2007, Ren Zhengfei personally wrote a letter to IBM CEO, Sam Palmisano,
IBM hopes to emulate the financial management make the transformation. Huawei
needs is not the general financial advisory consultants, IBM&#39;s own
financial officers must personally involved. The reason finds IBM, because IBM
helped Huawei to implement early IPD and other projects, bringing Huawei
&quot;brand new type of change.&quot;
July 2007, IBM invited Huawei nearly 10 finance-related personnel to the U.S.
headquarters of a three-day visit to understand the situation of financial systems. Soon,
Huawei formally launched the IFS (integrated financial restructuring) project. At the
same time, IBM officially upgraded to a Division Huawei customers - in dozens of
division of its global customers, Huawei is the only Chinese enterprise. This division
of the customer, IBM will not only set up a global team from the backbone, will
provide a full range of customized services. The team structure that will report
directly to U.S. headquarters.
Few people know that this investment geometry Huawei, Huawei, IBM is willing to
upgrade to business unit customers, the importance of this transformation is evident. It
can be concluded that the cost of this project is certainly big enough order of
magnitude. Moreover, this can also participate in financial restructuring as evidenced
by the level of IBM staff - most of them in all areas of the CFO-level people.
John F Bould is one of them, it is Huawei IFS (Integrated Financial System)
project&#39;s main person in charge, he and his team stationed in
Huawei&#39;s sole purpose is to enhance the capacity of Huawei&#39;s
According to Huawei Technologies Annual Report 2008: the global financial crisis,
almost all declining profitability in 2008, Huawei completed annual sales income of
23.3 billion U.S. dollars contract, according to domestic accounting standards,
operating income of 18.33 billion U.S. dollars, net profit of 1.15 billion. Operating
profit margin of 10% in 2007 to 13% in 2008, and revenue growth than cost growth
by 3.4 percentage points higher than the cost rate of 28.47% from 2007 down to
Meanwhile, beginning in 2007 and achieved initial results IFS projects, application of
international financial management standards, strict control of financial risks, make it
grow faster than sales growth in accounts receivable-trade, to ensure the good
condition of payment,. Huawei&#39;s 2008 annual report: 2008 Huawei-trade
receivables growth rate of 35.7%, with sales growth of 42.7% compared to 7
percentage points lower;-trade receivables to total assets ratio fell 5.6 percentage
points. As of the end of December 2008, Huawei&#39;s cash flow has reached
3.08 billion U.S. dollars.
With the gradual integration of the business processes of financial,
Huawei&#39;s management style, &quot;hit single&quot; mode and
the training of personnel and so began to follow the new process. Now, the Huawei
effective increase in stress, improve per capita benefits, &quot;profit&quot;
and &quot;cash flow&quot; as the &quot;income&quot; is also
important markers. Huawei company encourages employees to go forward, but do not
encourage style regardless of the costs to occupy the market, but more emphasis on
profitability, and this reflected in the assessment indicators. For example,
Huawei&#39;s number one on all levels in order to achieve effective growth,
profits, cash flow, increase per capita effective stringent assessment as a starting point:
who can not achieve an improvement in efficiency improvement of average per capita
above, the need for accountability. Huawei after the financial restructuring the
financial sector in the entire business process system, the examination of these
financial targets easier to achieve.
In the new system of financial management processes under the protection of Huawei
in early 2009 on the organizational structure was a major adjustment. Prior to the
organizational structure is similar to IBM&#39;s business integration across all
sales model, is highly centralized organizational structure. It emphasizes the sharing
of resources - all the products on behalf of a client manager faced with a client, the
advantage of a unified customer interface. However, Huawei&#39;s products
span too complex internal communication, which for internal collaboration and
collaboration with partners a challenge. According to Huawei line pre-sales service
personnel revealed that a number of business support services on the line not in place,
the responsibility is not clear, often the phenomenon of internal wrangling with each
Not long before, Ren Zhengfei, entitled &quot;Let the line direct call for
fire&quot; internal speech, the militarization of language with the usual Huawei
ongoing organizational restructuring of the reasons were clearly stated:
&quot;Our situation now is that the front combat units, less than 1 / 3 of the time
is spent looking for objective, look for opportunities and the opportunities into results,
while a lot of time is frequently used in communication with the coordination between
the rear platform. and back problems to be solved to coordinate to the front, dragging
the hind legs fighting forces ... ... &quot;
Huawei has been practiced from the establishment of a highly centralized
management, however, With the growing size of the rapid expansion, this centralized
management framework of our inefficiencies Jigou bloated become increasingly
prominent. Thus, Huawei ensure the new financial system, the determination to
achieve some decentralization. &quot;If there is no complete financial
management system support, Huawei is not easily give up their powers.&quot;
Huawei said a financial consultant.
Abandoned extensive demand intensive
Like other domestic firms, Huawei has also gone through a period of extensive
growth, at present, although more and more standardized management of Huawei, but
there are still many areas to waste. It is a work in Huawei&#39;s North Institute
of test engineer, Huawei&#39;s R &amp; D areas in the test is not strict
because of other reasons, a lot of waste generated, he thinks most of these waste is
avoided. In fact, in recent years, as the business rapidly, Huawei&#39;s margins
have been declining. Annual Report 2007, according to Huawei, Huawei operating
margin from 19% in 2003 fell to 7% in 2007, net profit margin dropped from 14% to
Although since 2000, Huawei&#39;s financial sector has been involved in cost
accounting, but the company is still a lack of forward-looking budget management -
the vast majority of business very difficult to do, but it is good for multinational
corporations. For example, each product pricing and cost accounting, etc., have a
complete system and operation of the process to ensure that each one can have a clear
out of bidding to calculate costs and profits.
Previously, Chinese companies Huawei and, like most of the financial sector has not
participated in every product pricing and cost accounting, primarily still stay in the
traditional accounting roles. When small, the company can control the risk. However,
the Huawei, when the increasing scale of the company, business has globalized,
increasingly long supply chains, customer differentiation, when more and more,
without a global financial management, financial risk will be difficult to control.
Despite the strong pace of expansion of Huawei, but how to maintain a high growth,
further improve profitability, as Huawei must be addressed. Zhengfei is aware of this
problem, so in early 2007 to personally write to the IBM &quot;help.&quot;
Implantation of the standard financial processes to Huawei the operational processes,
to achieve the balanced development of revenue and profits, bid farewell to all costs
of &quot;coyote-style&quot; assault, to support more effective global
operations and growth.
Huawei: the success of a balanced development model
Recently, Huawei has once again aroused the concern of the industry in China,
many enterprises have Huawei as a benchmark study, and some even proposed to be
certain areas of Huawei. Cause the background of this phenomenon is that the
financial crisis, Huawei not only has maintained a good momentum of growth, and its
pace of internationalization has been a firm go far, in 2008 international revenues
account for 75% of its sales revenue; and the current international patent The number
of applications beyond Toyota and Philips, the world&#39;s top business first; in
the &quot;Business Week&quot; magazine out of the top ten most
influential companies, Huawei is the only Ranking enterprise.
The author believes that Huawei as a Chinese, non-listed, private, high technology
enterprise, is a &quot;phenomenon&quot;, for Chinese enterprises, their
imitation and reference value is not great, but hidden behind the success of the
phenomenon in Huawei operation and management of the philosophy and concept, is
worth thinking of Chinese enterprises and entrepreneurs.
Huawei Ren Zhengfei, president of management can be attributed to the ideological
balance. Since 2001 in the sum of Huawei Ren Zhengfei the &quot;Ten
management points&quot;, regardless of how the external environment change,
of &quot;adhering to balance development&quot; has been placed first. Can
speak, Ren Zhengfei core of the idea of management is to balance, balance is the
highest management philosophy. Zhengfei claimed to be a
&quot;gray&quot; who, in his view, between the gray between black and
white, is very difficult to grasp, that is, the level of leadership and mentor.
&quot;Equilibrium is the most effective form of productive forces,&quot;
&quot;continue to adhere to a balanced development of ideas and promote
reform and improvement of the work. Equalizer is the most effective form of
productive forces. Through the consistent improvement, and continuously enhance
organizational vitality, and improving the overall competitiveness, and continue to
improve average efficiency &quot;, which is a long stick to the core values of
Huawei has 20 years of growth and development path is built dynamically to achieve
success and benefits, operation and management based on the balance, through
continuous improvement, improvement and improvement, Huawei continued to
strengthen and enhance the management capacity, and then enable enterprises to
embark on a positive development. Huawei&#39;s success, once again the case
of Chinese-style shows, balanced management is really the core competitiveness of
2005, along with the quickening pace of internationalization of Huawei, Huawei to
re-sort their mission vision and development strategy. Its strategic position on: 1. For
customer service only reason Huawei exists, the development of customer demand is
the driving force of Huawei; 2. Quality, good service, low operating costs, the priority
to meet customer needs, enhance customer competitiveness and profitability ; 3.
continued management transformation to realize efficient process operation to ensure
quality delivery of end to end; 4. jointly with the Friends of the development of both
competitors and partners together to create good living space, shared the interest of
the value chain.
Not difficult to see from the above strategy, Huawei&#39;s strategy is both
concerned with management (the first), but also concerned about the management
(second); both concerned with the business outside (the first and fourth), but also
concerned about the internal (second and third) . Can be said that the management
philosophy based on its strategy of Huawei, a full and balanced strategy.
In the business model, the Huawei&#39;s macro-oriented business model is
customized, product development roadmap is customer driven, to provide
comprehensive and timely customer service as the company&#39;s value and the
only reason for existence; in management mode, Huawei micro-business model is
process-oriented organizations, the completion of various elements from end to end
enterprise, high quality, efficient and effective management; in the internal core
values, corresponding to build a high performance culture characterized. As Ren
Zhengfei said: &quot;In 20 years of painful ordeal, we finally established a
&#39;customer-centered, striver-based&#39; corporate culture, which the
company slowly out of the dilemma.&quot;
Also not difficult to see, Huawei core values advocated by the same internal value
orientation (hard) and the external value orientation (customers) an organic and
balanced together. Overall, this model will be customer value, business efficiency and
management efficiency and high performance together organically in order to achieve
an effective harmony, a dynamic equilibrium.
It can be said, Huawei proposed macro-and micro business model business model is
built on the basis of rational thought, and its essence is the dynamic balance
management into a practical meaning of &quot;Huawei model.&quot;
Huawei in the early stage of development, the focus of the enterprise located in the
business, is also very weak for a company concerned, is undoubtedly a wise choice,
because &quot;to live, is the company&#39;s last word,&quot; the
company want to live, and to a high-tech enterprises, to grow and the need to give
priority to the efficiency of enterprises. After 1997, the company based on changes in
the status and external environment, transform the strategic focus, strengthen internal
management, by introducing world-class enterprise management system in the
management of enterprise-class integration and, through management efficiency to
promote the business benefits increase.
For Huawei, the strengthened management, the implementation of IPD, ISC as the
core of the management changes that make up the management of the short length of
wood, because the management is really the core competitiveness. For each
department, project team and the director speaking, with the personal commitment to
implementation of the system performance, it has not simply functions of the
departments or functions of the manager, the company strengthened its management
body functions, the department has actually transformed the cadres To set
management functions and business functions as one of the managers. Therefore,
managers face an urgent role and the role of the conversion, and then realize their
operational capacity and management capacity in the balance. Thus forming a
virtuous circle: the individual level, the personal ability and responsibility of the
dynamic equilibrium; at the organizational level, to achieve departmental business
objectives and the management efficiency of the dynamic equilibrium; at the
corporate level, to achieve power and profit, business and management, organizational
strategic objectives and organizational capacity of dynamic equilibrium.
Truly realize the dynamic equilibrium of the enterprise, the winner must be business,
not growth, not development, is not successful is difficult.
Duiyu Huawei&#39;s future development, we have reason full of confidence,
support this confidence reason is this: in Mr. Ren Zhengfei&#39;s leadership,
Huawei to balancing its management philosophy, and the Practice after 20 years,
Huawei Chenggongdazao Le the balance of world-class enterprise soft power.
This is a terrible balance of power!