5/3/2019 Lessons from Huawei: when Chinese companies go global | London Business School

Lessons from Huawei: when Chinese companies go global

Huawei didn’t just go west. It went global. Here’s how

By David De Cremer
16 April 2018

Leadership Globalisation

I
n today’s business world it is accepted as a given that if your business is still
operating in local and regional markets you may as well not exist. Going global
is a widespread religion for most companies and with the increased use of
advanced technology this religion is only gaining more followers. Although
expanding your business internationally can be a tough challenge, most business
people believe that the benefits outweigh the disadvantages. With the rise of
businesses going international a go-east motto initially dominated. Indeed, Asia
has been and is still recognised as an emerging market where business
opportunities are developing at pace. Moreover, the global middle-class is
predicted to reach 3.2 billion people by 2020 with the largest growth taking place
in Asia. Together, these observations make this market the place to be when it
comes to expanding one’s market share.

In the meantime, however, things are changing. Although new markets introduce
the opportunity to boost revenues significantly, one needs to be able to manage
cultural differences well. If this knowledge is not part of your company’s DNA,
going east may turn out more perilous to your financial and reputational health
than anticipated. Increasingly, a go-west motto seems to be replacing the desire to
look east. A growing number of Chinese companies are set to gain international
experience and soon to become global giants. Interestingly, international
expansion has not been on the agenda for many Chinese companies for long. In
fact, given its 1.42 billion population, the Chinese market is the biggest for any
company, including those headquartered in China. For many Chinese companies,
the penetration of new markets was not considered necessary to boost revenues
significantly. China’s market was populous enough. This, however, has changed.

ree reasons going west has taken flightPolicy

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First, the Chinese market today is competitive and fast-paced, pushing companies
Accept and continue
to explore other markets. Second, the Chinese economy shifted from a
manufacturing to a service-oriented one, which made consumers even more
Close
demanding. Indeed, the modern Chinese consumer is not so different from a
Western customer they both want quality innovative goods and services Thus by
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5/3/2019 Lessons from Huawei: when Chinese companies go global | London Business School
Western customer – they both want quality, innovative goods and services. Thus, by
meeting the higher demands of their local customers, Chinese companies feel
that they are now better placed to expand internationally as they have the focus
and skill to appeal to a broader and more global audience. Third, because the
average disposable income is rising quickly in China, costs of production and
labour have increased quickly. Therefore, expanding one’s business allows for
producing and selling more units, which, in turn, can decrease the costs per unit.
The growing ambition of the government to make China great again has turned
many companies into a strategic asset to achieve this national ambition by
becoming influential at the global level.

Of course, I hasten to say that this shift from going east to going west is happening
gradually. Today, it is still the case that few Chinese corporates have become
household names in the west yet. Most are still on the learning curve when it
comes to adopting and acting on a global mindset. One important reason for this
concerns a switch in mindset and behaviour. When companies decide to go
global, they are asking their people to start thinking and acting with a global
mindset. Indeed, the decision to go global for any company usually starts with the
CEO convening her C-suite leaders. She communicates that the need exists to
expand the business and thus to go global. It takes just a few seconds for the CEO
to explain the global ambition. However, for those listening, reality quickly kicks in.
This global ambition will involve global mobilisation of their people. How do you
install a culture where a global mindset is not prescribed but, rather, where people
are empowered to enact global plans? For most modern Chinese companies, the
question is a big one. Having shifted from one of the most closed countries in the
world to the second largest economy, Chinese companies are not overly familiar
with the practice of dealing with different cultures.

Huawei takes people global

One Chinese company that has treated its global ambition as a people-led
movement is Huawei. This Chinese telecom giant employs more than 180,000
people worldwide and serves more than 3 billion customers (the US market
excluded). The company has always been a private organisation that is owned
largely by its employees (about 98.6%). Being an employee-owned company
makes it less surprising that for its founder Ren Zhengfei and any Huawei executive
people matter most when important business decisions are taken. Moreover,
Huawei is recognised as a company aiming to create an integrative work culture
where east and west meet, where employees’ enjoy a heightened global sense of
awareness.

Huawei considers people its biggest asset and combines that with cross-cultural
sensitivity. The powerhouse is not satisfied with using procedures and strategies
that will suffice in a Chinese-only market context. Rather, the company is focused
on achieving the highest quality level possible, as its standards are global. For
instance, the company supports and supervises its employees to work abroad.
Unlike most Chinese companies, Huawei usually prepares them with high global
standards such as safety, health, language, customs paperwork, laws and
regulations, local customs and etiquette. How did Huawei escape the typical traps
Chinese companies step into when going global? Much has to do with the
thinking and philosophy of their founder.

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this message across to his employees? The founder is known for his love for using
historical events to illustrate his thinking. His use of storytelling Accept emerges
and continuepartly
from his frustration that he considers most Chinese business people to lack a
sense of historical awareness. As Zhengfei once put it: “Today’s leaders Close are fire
fighters – they have no sense of history. Therefore, they more easily repeat the
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5/3/2019 Lessons from Huawei: when Chinese companies go global | London Business School
mistakes of the past.”

What does this look like in action? Notice how Zhengfei recalls the second half of
the 1990s, when Huawei moved beyond China: “Russia is great – there is no way
back – behind us lies Moscow.” He borrowed these words from Vasily Klochkov,
who was an officer in the Soviet Union’s Red Army. In 1941, when fighting the
Germans to protect the city of Moscow, Klochkov and his regiment were willing to
sacrifice their lives as they believed in what they were doing. It was a call of time. In
a similar vein, Huawei’s actions – once they decided to go global – were considered
the buds of capitalism in China. Nevertheless, Zhengfei and his team were
convinced that a Chinese company can have global influence in service of the
homeland China.

Furthermore, Zhengfei also reminds his employees that Huawei decided to move
beyond China to prove its identity. Huawei is characterised by its purpose to serve
customers by connecting people via communication. As Zhengfei noted: “We need
all our employees to take action.” There was only one clear value proposition, he
said. “Serve our customers.” The dream of connecting people via communication is
one that spans the entire world and therefore Huawei considers itself as having a
global identity. Consequently, Zhengfei pursues global leadership. Zhengfei said:
“We must stand at the forefront of globalisation rather than act as ‘air force
commanders’ with our heads in the clouds. We must keep our feet on the ground.
Our senior managers and experts must go to the forefront and fully immerse
themselves in the entire process from lead to cash.”

In this way, global leadership implies two ideals: determination and persistence to
conquer ground. Zhengfei believes that Huawei’s employees should be soldiers
that gain experience in their global strategy efforts. As he noted several times: “I
want you to go places where strategic resources are concentrated and explore
alongside others and broaden your horizons. Someone once said: ‘If you’ve never
even seen the world, how can you possibly have a world view?’”

How experience creates global leadership

Building on the founder’s philosophy, Huawei has moved to an employee
performance system that measures “global experience”, an important criterium for
identifying future leaders. As Zhengfei noted: “You need to get down and manage
at the front lines to get a true tasting of things. To qualify for greater responsibility,
you need successful experience in the field.” A belief exists in Huawei that leaders
of global (and virtual) teams need to be able to diagnose and interpret potential
cultural tripwires in the group. In other words, one needs to be able to understand
and deal with how cultural differences might impact team functioning to take up
leadership within Huawei. Leaders are expected to go out there and gain
experience in their field offices around the world to improve work situations and
efficiency in serving customers with diverse cultural backgrounds. In this sense,
global mobility in Huawei high potentials is systematic. In other words, the notion
of global to Huawei leaders means integrating Chinese and western perspectives –
not simply being Chinese in a global world. In fact, Zhengfei noted that “the
management teams in our research centres in China must be world-class and
have a global perspective. They must not operate like a local team, because a
Chinese style will lead to complacency.”

Leading the global challenge at Huawei

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Chinese way of working and thinking. Chinese values and outlooks circle a global
way of working. To achieve this, Huawei prizes spiritual and value-driven leadership,
Accept and continue
with a focus on customers. Employees stand a good chance of accelerating into
leadership positions when they demonstrate value-driven leadership by serving
customers. Being a global company, then, also means that a global Close
mindset is
needed to achieve this customer-centric focus. In addition, however, a value-driven
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5/3/2019 Lessons from Huawei: when Chinese companies go global | London Business School
needed to achieve this customer centric focus. In addition, however, a value driven
leader also facilitates the development of other employees so that they can
become company heroes, by promoting customer service and satisfaction. Leaders
at Huawei are regarded as being responsible for mobilising employees to achieve
customer centricity worldwide.

Collectivism and individualism join forces

A global ambition entails Huawei leaders transcending Chinese ways of acting and
thinking, but it does not mean leaving Chinese traditions and values behind. Think
back to Klochkov’s borrowed quote: global leadership is a marriage of individual
and collective thinking. Zhengfei has infused Huawei with the idea that
“collectivism should allow for individualism, because each individual is different
and thinks in his/her own way. However, individualism must serve the collective
interests of the team.” It is in the expression of this belief that the company’s
ambition to bridge cultural differences is clearly emphasised. It underscores the
idea that individualism should be used by the collective – who can then develop
and diversify it.

Zhengfei said: “People should compete in solidarity and be united in competition.”

How? The firm should celebrate individualism in the pursuit of the collective.
Individualism drives people at Huawei to create value and contribute to China,
noted Zhengfei. One could say that the underlying motivation for Huawei to go
global represents an effort to bring together the western and Chinese dream.

The western dream includes a focus on an individual search for creativity, vitality
and proactivity. Fuelled by liberal values advocated in western democracies, the
pursuit of one’s individual dreams have become a synonym for being successful
and effective. The Chinese dream does not focus on celebrating individual
ambitions and goals, but more on achieving a collective effort and sense of pride
all pointed towards supporting the nation of China. Can these dreams be
reconciled? At Huawei, this question does not pose a dilemma. Instead, the
company is known to embrace the idea that company cultures should celebrate
opposing forces and ideas. In its ambition to operate as a global company, Huawei
chases the western and Chinese supreme.

Further reading
Huawei: Leadership, Culture, and Connectivity by Tian Tao, David De Cremer and Wu
Chunbo

Related
Changemakers: Natalie Pietrobon

See more

Author
DAVID DE CREMER
This website uses cookies to distinguish you from other users. This helps us to provide you with a good user
experience and also allows us to improve our website. Privacy & Cookies Policy
David De Cremer is the
KPMG chaired professor of Accept and continue
management studies at the
Judge Business School, Close
University of Cambridge, UK,
a co founder and director of
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5/3/2019 Lessons from Huawei: when Chinese companies go global | London Business School
a co-founder and director of
the One Belt One Road
center at Cambridge and a
fellow of the Royal Dutch
Academy of Science. He has
published more than 250
academic articles and book
chapters and is the author
of “Pro-active Leadership:
How to overcome
procrastination and be a
bold decision-maker”

View articles >

Comments 1

AslanR 1 years and ago

This article is based on falsified narratives for Huawei. I have worked for 6 years in various
locations for Huawei and the organisation lacks Human resource communications. The
o...

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