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How Chinese culture led Huawei from surviving to thriving

beijingwalker

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How Chinese culture led Huawei from surviving to thriving​

October 7th, 2023

Chinese technology giant Huawei has achieved technological breakthroughs perhaps not despite US export controls and trade sanctions, but because of them. Chinese spirit and organisational culture played a big role in how the company reacted to adversity. Grace Wang writes that it is impossible to understand China’s technological development in the last few decades, and Huawei’s innovation experience, without acknowledging Chinese culture.

Huawei released its new Mate 60 Pro on 29 August. The company’s new smartphone with advanced chips is shocking news to the world. Chen Ziang, an industrial expert, said to the Singapore-headquartered LIANHE ZAOBAO (联合早报), “what really needs to be noted is that Huawei’s new mobile phone is the first ever to support satellite phones. These capabilities are used in self-driving cars, intelligent robotics, and Huawei ChatGPT.” Shocked at Huawei’s technological breakthrough, some in the US are wondering if the US export controls are failing or if Huawei is violating certain export controls.

I am not surprised at Huawei’s new release of Mate 60 Pro, as I have spent the last eight years researching China’s global innovation city, Shenzhen, where Huawei is headquartered. Since 2018, US trade tension with China marched into a technological war over future technological supremacy and global power. Chinese technology companies have become major targets. Many Chinese firms that were faced with the sudden ban on high-end technological components started to stockpile US computer and electronic products, to face the threat of a “silicon curtain” from the United States. From 2016 to 2019, US exports to China in semiconductors and other electronic components rose unstoppably, Huawei being one of the major contributors to the surge. The company’s rapid development and adoption of 5G networking equipment, cloud computing, artificial intelligence, as well as its high-end smartphones, require the storage capacity of efficient, high-performance chips.

Huawei, the largest telecommunications manufacturer in the world, was thrust into the spotlight of the US-China trade tensions, despite its limited market share in the United States. Its fast response to US technological sanctions has embodied a deep-rooted Chinese spirit and organisational culture, as expressed in an old Chinese saying: “爹有,娘有,不如自己“(Dad has it, Mom has it, but it is better to have it yourself.)It is impossible to truly understand China’s technological development in the last few decades, and Huawei’s innovation experience, if anyone fails to acknowledge Chinese culture.

Culture shapes organisations

Culture is a carrier of meaning which provides a shared view of “what is,” and most importantly “why it is.” It is about the story and collective memory in which people, both in society and in an organisation, are embedded. Elizabeth Skringar noted: “Organisational culture [is shaped by] the main culture of the society we live in, albeit with greater emphasis on particular parts of it.” Therefore, to understand Huawei’s self-dependent innovation, it is critical to comprehend China’s struggling technological development history since the founding of the new China.

In 2019, in an in-person research interview with Huawei’s rotating chairman, he commented on how world history and politics influenced Huawei’s innovation culture:

Huawei always has a plan B. It is not because we want to stop business and trade with America (though we never truly entered the US market). In 1949, the United States initiated the Coordinating Committee for Export to Communist Countries. The purpose of that committee is to restrict its member states from exporting strategic materials and advanced technologies to socialist countries. There are tens of thousands of products listed in the sanctions, including cutting-edge technology products.

Back in 1949, as a newly founded country, China was not affected by the technology export control to communist countries. But it faced the withdrawal of Soviet specialists during the Sino-Soviet split, when China was developing its nuclear weapons and missile technology. Mikhail Klochko was a chemist and Stalin prize winner who went to China as a member of a Soviet scientific mission. He wrote that many people, including himself, suddenly received telegrams in mid-July 1960 ordering Soviet scientists, engineers and technicians in China to depart soon. Though the Soviet helped save China years of effort and incalculable cost by training Chinese scientists and engineers, China still lacked capacity to advance its own indigenous capabilities for technological breakthrough at that time.

The US-China relationship opened a new chapter in the early 70s, over a decade after the departure of Soviet scientists and engineers. It is said that senior American officials facilitated data and technology sale to their Chinese counterparts. The Ford administration even encouraged their European alliance to provide the Chinese with access to Western technology. In spite of China’s globalisation and the country’s vast market access in exchange for Western technology transfer at the early stage, one thing is clear: experiencing technology export control to communist countries as well as the Soviets’ sudden removal of its scientific experts only reinforced the old Chinese saying in Huawei’s innovation culture: “Dad has it, Mom has it, but it is better to have it yourself.”


From indigenous innovator to industry leader

“Huawei does not want to seek approval for licenses on the international stage. In order to maintain our competitiveness in the industry, we need to set our standards.” The disruption of the global semiconductor supply chain was not a surprise, as Huawei’s rotating chairman commented in the interview. World history and volatile politics have taught the company to focus on indigenous innovation to be technologically self-sufficient. But in my analysis, Huawei’s ambition to be an industry leader to set international standards demonstrates how organisational leaders signal change and shape the culture, as role models at the top. Leaders can set the cultural tone by connecting their personal values and beliefs with the company’s purpose.

“We learned from Nokia initially”, said Huawei’s CEO, Ren Zhengfei, to Manuel Castells, author of The Information Society and the Welfare State – The Finnish Model. Nokia was a once industrial telecommunications and mobile phone leader. In the book, Castells and his co-author Pekka Himanen examined how Finland developed its tech ecosystem and created international giant Nokia in a national system different from the United States’, in the post-Soviet era. An in-person interview on 2 August 2019 with Mr. Ren, along with a group of other scholars, reinforced what I read about Huawei’s success before this conversation. As Huawei’s founder, Mr. Ren affects its organisational culture.

In the early 90s, the telecommunications industry in China blossomed. Most international giants such as Cisco dominated the Chinese market due to their sophisticated technology and international reputations. As a domestic player, Huawei, who has been playing catch-up since its establishment, could only build something new, something different, and something non-existent to steal a march and win. For instance, by 2010, international telecom operators were starting to build their 4G networks by developing tri-band antennas to meet operator demand. Huawei’s wireless team proposed the “five-band, three-mode” SingleRAN solution to differentiate the company from international giants. As a result, in 2016, Huawei was awarded with the “Multi-band Antenna Innovations for Nationwide 4.5G Network” prize at the annual Global Telecom Business Summit. In 2023, at the Mobile World Congress (MWC) in Barcelona, Huawei’s FDD Beamforming series was awarded the “Best Mobile Technology Breakthrough” title, which recognises Huawei’s continuous research and innovation towards building a global 5G network.

Huawei’s development and innovation is strongly influenced by founder Ren Zhengfei’s attitude towards learning and innovation. Since the release of Mate 60 pro, most international media outlets have been chasing the story that iPhone sales went down in mainland China, though Ren said in a recent Chinese interview that his daughter had to use the iPhone when she studied in the US because of its convenience and quality, stressing that Apple is always Huawei’s teacher.

“After four years of tackling tough problems and the hard work of 200,000 employees since the US sanctions, we have basically established our own platform, and … [it] may not share the same basis with the [one in the] United States in the future, but the interconnection is certain”, Ren said, when delegates from the International Collegiate Programming Contest, along with fifty-eight gold medal winners, paid a visit to Huawei in September 2023. How will you interpret Ren’s words depends on your understanding of Chinese culture and its struggling history – a story from surviving to thriving. Ren’s words might imply that thanks to US sanctions, Huawei was pressured to develop something more advanced, faster than planned. Export controls helped Huawei understand: “Dad has it, Mom has it, but it is better to have it yourself” – and have it faster.

 
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