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The Importance of Investing in Research

An Interview with Huawei's Rotating Chairman Guo Ping

— June 5, 2019 — Business
Guo Ping is Huawei's Rotating Chairman and spoke with us about the brand's dedication to innovation, its history and relationship with Canada and what's next for the tech giant

Huawei has long-term connections with Canada. Over a decade ago, telecom equipment vendors were seeking mergers and acquisitions. Alcatel and Lucent merged, and so did Siemens and Nokia. At the same time, Huawei was seeking a merger with Nortel. Huawei and Nortel negotiated for a long time and Guo Ping was the principal negotiator for this deal. At that time, Huawei almost became a company controlled from Canada. I talked with the then-CEO of Nortel, Bill Owens, as well as his successor Mike Zafirovski later. At first, they wanted to merge the two companies but then later tried to negotiate a merger of just the wireless businesses of the two companies. Unfortunately, Nortel decided to withdraw from this negotiation. Otherwise, the company came close to being partially controlled from Canada.

Many times over the years, Mr. Ping has attended Canadian Night at the World Economic Forum annual meetings in Davos and had extensive discussions with Canadian officials. Canada has very rich mineral resources, but in the eyes of Canadian officials, high-quality human resources are worth even more. Encouraged by Canadian officials, Huawei continues to invest significantly in technology.

Huawei is glad that the company is ahead of others in 5G. It has had many key R&D staff working at the Ottawa Research Center. So in some sense, Huawei's 5G is actually Canada's homegrown technology, and Canadians have made significant contributions to 5G. Last year, Huawei commended outstanding contributors to 5G, and some top contributors were Canadians.

Huawei is a leader in innovation. How exactly does the company foster or cultivate innovation and can you provide specific examples?

Huawei's Charter stipulates that Huawei invests at least 10 percent of its annual sales revenue into R&D to ensure that we obtain enough resources. If our business performance is very good, this percentage may increase. Second, Huawei greatly values talent. We hire the best people from around the world and leverage their strengths to help us resolve the challenges and issues we encounter during research and development. Third, Huawei works with many foreign companies and learns from them. We have established a complete R&D system which enables us to continuously innovate and institutionally launch competitive products. Over the past 10 to 20 years, we have worked with many consulting firms to build and improve our R&D organization and processes. We have spent nearly one billion US dollars in this area. Our heavy investments have generated excellent results and we are very proud that when it comes to innovation, from 0 to 1, Huawei is a tier-1 player. This is the case, for example, in 5G standards and 5G standard essential patents. Additionally, we have managed to bring equipment that was previously enjoyed by only a small number of people to people around the world, including the most remote countries and regions in Sub-Saharan Africa. Huawei has made significant contributions in this regard. We have been seeing excellent results from our heavy investment over the past 30 years.

During these past few days, we have been touring various labs and facilities and seeing the types of innovation that Huawei has been working on. I'm curious as to what you find the most exciting about some of these lab projects and if there are any of these types of projects that you're not currently involved in that you would like Huawei to be involved in?

Huawei remains focused on ICT and does not seek diversification as some other companies do. We hope to use ICT as an enabler of industry digitization and service upgrades. All our labs that you have visited are designed to enhance our ICT capabilities. The supply chain is complicated, so we have prepared to ensure its diversity. We don't plan to include components in which we invest heavily during product R&D in our business portfolio; instead, we will continue to focus on ICT equipment and services.

It's a very interesting time to be the rotating chairman of Huawei. What happens when your rotation ends? Do you have a vacation? Do you keep helping the next chairman, the person that's going to take over your role? Working as a rotating chairman is a very interesting way of managing a business because you don't get tired or you always have new challenges. So, I was wondering, how does the rotation work, and are you excited to be a part of these specific and interesting times for Huawei?

My last rotation ended on April 1. When my rotation ends, I'm still one of the seven-member decision-making team of the company. All three rotating chairs are members of this decision-making team, which exists to ensure management continuity. When I'm not serving as the acting chairman, I conduct in-depth research into some specific topics and drive those topics forward. This is like the wild geese that migrate from Canada to the UK or Europe. They fly in a V-shape formation, and several geese rotate to take the lead. When one goose is not taking the lead, they are still flying together with the flock.

Q10: What do you think Huawei as a company will look like 10 years from now?

Many technical topics have been politicized. Why? I think the reason is that technological progress has been too slow. Take our ICT industry as an example. Moore's law was identified over 40 years ago, and it has almost reached its limit. The same is true for the Shannon theorem. Currently, it feels like the Newton era has come to an end, and we're waiting for the emergence of an Albert Einstein. What we need at the moment is more investment. The leading players should not attack the latecomers. They should focus on investing more to encourage Albert Einstein of our era to emerge. The US was once the leader in this sector, but this is no longer the case. It is getting anxious and has started attacking the latecomers to avoid being overtaken. Making breakthroughs is very time-consuming for a leader, and now the followers are quickly catching up. The only way out is to increase investment in research, as well as in new science and technology to seek new breakthroughs. At Huawei, we are pursuing two purposes: First, we want to survive despite the uncompromising attacks from the world's most powerful country. Second, we are striving to make greater contributions to future technological breakthroughs.

So just over the last few days, we've learned a lot about Huawei's most exciting projects and future initiatives. Can you speak more about the brand's focus on consumer centricity?

Huawei faces different situations in each of the 170 countries and regions where we operate worldwide. We serve customers with our heart and soul, and that's how Huawei has become what it is today. I believe our commitment to serving customers has also benefited the countries in which we work. Of course, Huawei has grown robustly during this process. I believe that our commitment to helping customers resolve their problems and improve their communications will benefit humanity. This spirit reflects our customer centricity, which is the most important element of our corporate culture.
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