From the garden of Paraquat to Huawei University

The "Ling" of the Oriental Ghosts.

Huawei's annual sales reached an astonishing 220.2 billion trillion yuan in 2012 – surpassing Ericsson as the world's largest telecoms equipment supplier.

In the same year, Huawei announced a profit breakthrough of 15.4 billion yuan (which does not include the $12.5 billion bonus for employees). The same year, Huawei's research and development costs as much as 29.9 billion yuan, equivalent to the annual output value of many of China's top companies.

This is China's best quality of a private enterprise, not one.

If you look at the data alone, founded more than 25 years, Huawei from 6 employees to 150,000 employees (including more than 30,000 foreign employees), from 20,000 Yuan venture to sales 220.2 billion yuan, as a no background, no resources, lack of capital of private enterprises, Huawei will be a large number of Western century giants have chopped off. It is regarded by many multinational rivals as "The Phantom of the Orient".

In fact, in the late the mid 1980s, when Huawei started its business, more than 400 communications manufacturing enterprises were born in the country, but the industry was destined to be a death race, and the winner must be the one who died late. Huawei lived to the end.

Why does Huawei live to the end? The background theory, the relationship theory and so on have come out, is this it? Why is Huawei not listed, why not the interview?

Ren, who graduated from Chongqing Construction Engineering College in 1968, joined the army. When he was 45 years old, he was a layman in communications, and 25 years later, with a 1.42% per cent stake in a 150,000-person business, breaking the cruelest law of the global IT industry, Huawei has a doorway.

In a sense, Huawei is the test ground of any positive and non management thought. The military-born Ren likes to talk about the Battle of Shangganlin: The U.S. military used computer simulations, that can be in a day to take positions, but later the results of the U.S. military surprised.

The reason is that the computer can only simulate conventional things, it is impossible to simulate someone will go to plug the machine gun eye, someone on fire will not move, this is the power of the spirit. Ren believes that the core value of an enterprise is "Ling", "Ling" may not directly produce "food", but once the enterprise lost the "Ling", will never produce "food".

The observation of Huawei should begin. "But know that you may not be able to reach the height of Huawei, but the direction must go right." ”

First scene: Bantian detail--a fragment observation from Huawei Base

Clearly, this is a close look at Huawei's opportunity.

One day in June 2013, our correspondent rushed to Huawei's Bantian base in Shenzhen, a modern base of nearly two square kilometres, which was built in 1997. It is said to have been a shock to the foreign customers who came to visit, "because many people could easily associate it with ' telecoms sweatshops ' before they came to Huawei." ”

From the garden of Paraquat to Huawei University

The day of the arrival of Huawei, this newspaper reporter to stay in the Paraquat Park, in fact, Bantian base of the large staff dormitory area. A European-style small building arranged neatly, the corridor in the wallpaper some have been pan old, and some are just paved with new paper. The rooms here are separate and small but the facilities are very large. Because of the mosquitoes in South China summer night, the room is equipped with electric mosquito-repellent incense.

In the case of Paraquat, the majority of single employees, in Huawei, many grassroots staff can apply for free. But the garden, after all, is limited in size, and in its own street is dubbed by Huawei employees as "village" in the building, there are also a lot of tenants from Huawei. However, this so-called village, perhaps should be counted as the highest level of Chinese culture, a "village".

Today, most of Huawei's 150,000 employees are undergraduate or above. However, no matter how high your degree, the position before the Huawei, you must participate in a "brigade training" course. For many of the people who attend the training, the place where they start and stay every day is the herb garden.

Huawei University is about 10 minutes away from the Paraquat park, only hardware will be invested billion, new employees pay training before the three months, and the company to report the berth tickets can be reimbursed. It is said that the training cycle is now shortened as the training system matures.

In fact, Huawei's uniqueness is embodied in the initial training course. After entering the University of Huawei, first of all to edit the class, teaching management team by instructors, class teacher, assistant class teacher, thought tutor composition. Instructors are responsible for discipline and military training, while ideological instructors are old experts who are mainly responsible for arranging courses and communicating with students.

In this completely closed, semi militarized training, cultural courses accounted for half, such as integrity, self-criticism, unity and cooperation, collective struggle, mutual assistance, responsibility and professionalism, obedience to organizational rules, customer-centric and so on; the rest is basic knowledge of the work, such as confidentiality, information security, quality, fire, office software, etc. Of course, the most important thing is about Huawei's status and communication expertise.

After graduating from the University of Huawei, the new employees will start to divert, some of them to Huawei in the domestic base, and some to overseas countries. In the same way, he also went to work in area A of Bantian.

A district is Huawei's administrative headquarters base and command hub, the environment chic elegant, first-class facilities, Huawei's boss Ren will be in A1 office.

The electronic screen of the exhibition hall

It is a huge electronic screen in front of the Huawei Company showroom in Bantian. The screen scrolls with the work of some of Huawei's employees.

Huawei employees all over the world, a touching picture in the video, appeared in the 2012 Japan Fudao earthquake. At the time, local residents had left Fudao because of a nuclear leak at the plant, while Huawei's employees in Japan had to go to Fudao to renovate communications equipment after wearing the anti-radiation gear.

In fact, war, natural disasters and other sad moments, is often the hard work of Huawei time, because this period of communication equipment often need to repair. As a private enterprise, Huawei has been able to surpass the European century rivals in 25 years, largely because of its devotion to the spirit of the struggling people.

Of course, pay and return in this business is proportional. "Don't let Lei Feng wear socks, don't let jiao tired out of liver disease." "In the high-speed operation of Huawei, the" high salary "line. According to Ren, Huawei is "high efficiency, high wages, high pressure" of the "three-high" enterprises, "higher wages is the first impetus."

Today, know "Huawei" the name of a lot of people, but wise up, believe that people outside the telecommunications industry, more than 90% are completely unaware of the High-tech enterprises of the specific business projects, Huawei is a lot of people do not know it to remember and spread the reason is very simple, is "a high-paying enterprise."

Ren in the enterprise to carry out the "workers have their shares" incentive mechanism, so that employees and enterprises to work together to benefit, formed an organic destiny community. For example, according to Huawei's 2010-year performance, each share dividend of 2.98 yuan, if an old employee holding 500,000 shares, he will receive dividends at the end of more than 1 million yuan.

This equity allocation within Huawei is called virtual restricted stocks, Ren's shares accounted for 1.42%, the remaining shares are held by the staff holding Committee. Employee elected representatives enter the board of directors and take control of the business direction.

At present, Huawei in the internal issue of Virtual Limited shares about 11 billion shares, each share value of about 5 yuan. This is the equivalent of an internal stock exchange, which over the years Huawei has raised even several times more money than some of its peers have raised in a domestic a-share. If the shareholders want to quit, Huawei is now taking the value of the enterprise model, the original equity and value-added part of the retreat to employees. This kind of retreat and ease of the way to obtain the approval of employees, but also for the development of enterprises to raise valuable funds, and the holding staff also in the rapid development of Huawei has won a substantial equity gains. For example, from 2000 to 2010, the Shanghai Composite Index rose from 2,073 points to 2,808 points, increasing 0.35 times times. In the same period, if the investment in Shanghai's house, increased 5.4 times times. If you invest in Huawei's virtual restricted stocks, the value added will reach 15 times times.

Since Huawei is not a listed company, the key to this model must be to solve the problem of trust in the enterprise. Ren's solution is to invite Deloitte, one of the five major companies, to conduct financial audits of the company every year, including the cost of the dry cleaning of the hotel during his personal business trip, which should be paid by individuals, and the careless reimbursement of public funds will be corrected by the audit, which solves the problem of trust.

A driver's code of conduct

When we arrived in Shenzhen, Shenzhen was in high temperature, but the lad who came to pick up the machine was still in suits. This is a little surprising to us.

According to Tong Hua, the vice president of Chongqing Sheng, who has visited Huawei for several times, today's Huawei services, such as transport vehicles, have been outsourced, and if, according to the internal standards of Huawei in previous years, the guests are able to feel Huawei's customer-centric corporate philosophy

Drivers are all in a suit, the car spotless, to any customer, they open the door early, a hand on the car door, a hand on the roof along, said: Hello! Please be careful. "Don't drive fast, concentrate, don't slam on the brakes and throttle." Customers go to play, they wait silently in the car. When the customer first saw him, he must have opened the door, a hand on the car door, a hand on the roof along, said: "Hello!

To eat time, the customer finished, he will be punctual waiting at the door. When they have to eat with their customers in special situations, they quickly finish their meal and wait in the car.

In fact, many of the entrepreneurs to visit Huawei after visiting Huawei, are a bit of a monk, a see how many people and how many equipment enterprises, why can do more than 200 billion yuan of sales? More to their enlightenment, is a 2002-year annual conference video: Ren summoned more than 10,000 employees, suppliers, customers, etc. to attend the annual meeting , the staff's high morale is shocking, and even more shocking is that the whole activity process no one's cell phone rang, the toilet also did not find cigarette butts, which in general business is unimaginable.

Deep observation: The Logic of Huawei

To learn Huawei, Huawei is not replicable, because "current" is not replicable. But learning Huawei will undoubtedly benefit people, and its successful systematic logic, pioneering thinking and accurate grasp of the market, are worthy of in-depth study and experience.

Perspective one: Unmatched low cost advantage--comparison of Huawei's advantages and disadvantages with competitors at home and abroad

This is an era of rapid technological development, in which the electronic information industry is a highly knowledge-intensive, updated very fast high profit industry. Prior to the 90 's, the installation of telephone to the post office to pay 5000~6000 Yuan, the Post and telecommunications Department for each telephone 2000 yuan up to the price of the switch manufacturers to purchase switches (telecommunications room used in the telephone to continue the hub equipment, a device can be access to hundreds of or even tens of thousands of lines), The cost of the switch is only 300~400 yuan/wire (a line is a telephone). The profits of the equipment manufacturers are very considerable. This is the profit logic of Huawei's initial venture.

Huawei 1988 to act as the agent of Hong Kong Hung-year company's program-controlled switchboard started, 1992 sales revenue exceeded 100 million yuan. 20 years later, Huawei sales growth of more than 2000 times to 220.2 billion yuan, to become one of the world's largest communications equipment manufacturers, 150,000 employees, research and development personnel 46%, in the world has 23 research institutes and 34 innovation centers, but also the world's only unlisted 500 strong enterprises.

Huawei's growth soared, domestic and foreign rivals have fallen. Why?

To analyze Huawei's growth logic, the first thing to look at is its competitors.

Domestic and foreign competitors in the 90 's, Huawei in the international market facing Ericsson, Alcatel, Siemens, Fujitsu, Lucent, Nortel and other international competitors, are strong technology and strong financial resources. Domestic competitors are the dragon, Datang, ZTE Three, and Huawei and said "huge China", but only the Huawei family is a purely private enterprise, the system brings competitive advantage. Both of them are state-owned enterprises with state-owned research background, although the early 90 's hit, but in the fierce competition in the outcome of the failure can be imagined. ZTE is a mixed-ownership enterprise formed by state-owned enterprises and private capital, "state-run Private", and 2012 overseas and domestic revenue amounted to 84.2 billion yuan.

Domestic rivals are hard to rival Huawei, and only international rivals pose a threat to Huawei. In comparison, Huawei has a huge advantage, that is, cost advantage, and relatively recessive advantage.

Huawei's Low-cost research and development advantage Huawei's main competitive advantage is its very low cost of research and development--low-cost intellectual human resources. An internal report from the Siemens board of Directors in 2004 found that Huawei's low-cost advantage came mainly from low research and development costs.

According to the material, Huawei's research and development staff per capita cost of 25,000 U.S. dollars a year, and European enterprise developers in the per capita cost of 120,000 ~15 million dollars per year, is 6 times times of Huawei, Huawei Research and development staff of the average annual working hours of about 2,750 hours, The average working time for European researchers was 1300-1400 hours (Sell-off 35 hours, but many holidays), with a 2:1 per capita job input.

According to 2004 data, Huawei has 13,000 software and hardware developers. If the cost of employing 13,000 European developers is invested in Huawei, Huawei can hire 78000 people. If the efficiency of Huawei's developers is only 80% of those of European researchers, and given the time spent by Huawei's employees, it can be calculated that, under the same cost, Huawei in 2004 amounted to 125,000 (78000 0.8 2) research and development capabilities for similar companies in the West, Research and development input and output than near most Western companies 10 times times!

Or, Huawei invested 1 yuan in the development of things, European companies need to invest 10 yuan to do it.

This is the beginning of Huawei has, and has continued to this day to the big core advantage of small beats.

A small case on the basis of the same technology, Cheap is the king. The first of Huawei's customer strategy is: "Not to sell the most expensive, only sell the best, not only low price, better quality." "Huawei invests money in product technology research and development, but the product price is not expensive, only maintain a reasonable profit margin." So how far is Huawei's cost-leading strategy leading?

Huawei has been using the Low-cost strategy, the classic case from the 2008 China Telecom CDMA bidding.

August 2008, China Telecom nearly 30 billion of the CDMA large single trigger equipment manufacturers a new round of bidding for battle. Rung (France Alcatel, the United States Lang two international giants under the global impact of Huawei had to be merged), the Canadian Nortel and domestic ZTE's offer in 7 billion Yuan ~140 billion, Huawei has reported to let all people surprised the ultra low price, 700 million yuan! This price, by the industry called "Naked Ben." Yet even at such low prices, Huawei's profits are still impressive.

No one doubts Huawei's investment and strength in research, development, cost and overall solutions. This shows that the telecommunications equipment industry as a whole high rate of return, and Huawei cost leadership strategy is strong.

Someone once asked why Huawei was successful? Two executives who have worked for 9 years in Huawei have made a very interesting statement, one said: "Because we circled a fertile land." The other one describes the image: "The electronic communications industry is a deep water, only deep water can raise large fish." "The fertile field means high profits, and deep water means huge market space."

Other cost advantages Huawei's other major cost advantage is embodied in raw materials. In the 90 's, Huawei spent a relatively low cost on raw materials, through good long-term cooperation with upstream suppliers of raw materials, and lower domestic resource prices than in general. Huawei's material costs have fallen to 3%, with obvious advantages, under the scale-economy effect of millions of devices sold annually.

Moreover, Huawei's domestic transaction/delivery costs were relatively low, the quality cost is very low compared with foreign countries, the efficiency is not the most sensitive factor, many can make up by the interpersonal relationship factor; Also, China has not been a system of intellectual property business rules, which becomes the lowest cost of domestic "transaction", in addition, The domestic service cost is low, also became the advantage.

Through analysis and comparison, we can see that Huawei has a series of inherent low-cost advantages in this industry. Under these preconditions, what kind of business strategy does it need to take to achieve today's success?

The second point of view: "Benefit community" to transform the decay into magic--how technology owners and market owners realize 1+1>2

There is a small story that can become an alternative annotation of Huawei. At the beginning of 1993, in a small auditorium of Shekou in Shenzhen, Huawei held a 1992-year year-end summary meeting, when all staff 270 people, for the first time witnessed the heavy face of Ren, the voice of the vicissitudes of the truth revealed. After the meeting began, I saw Ren on the stage said "We survived", the tears can not be said to go on, hands constantly wiping tears ...

This is a mirror. From this we can see the hardships and humiliation that Ren had endured in his early years, and how determined he was when he adopted the strategy of total win market and full shareholding. Would rather with all equally, would rather own only 1.42% of the shares, but also let the partners, let the staff and their own desperately to big business.

Capital and market exams at this point, Huawei already has a prominent cost advantage, but it also needs market size.

There is no strong financial strength, the cost advantage is again obvious, it is difficult to enlarge the market, then the cost advantage of economies of scale is not reflected, Huawei is tantamount to no advantage. The key is money, but 1992 Huawei sales revenue is only 100 million yuan, this money is far from enough to do the market. What's more, research and development is a long process that costs a lot of money to recruit a large number of technicians and to invest heavily in it. At this time Huawei funds extremely nervous, facing the death test.