It was a moment worthy of a scene from The Wizard of Oz.
That was when Huawei’s mystery man, the company’s secretive and until now largely invisible CEO Ren Zhengfei, appeared in person to give his first ever interview to western journalists in New Zealand.
Sporting the regulation dyed black hair of a middle-aged Chinese cadre and wearing an equally regulation dark lounge suit, this ordinary-looking and somewhat engimatic Chinese business leader certainly didn’t look like a wizard.
No stars and crescents or magic wands let alone a slightly more grounded Steve Jobs-like black turtle sweater and jeans.
But Mr. Ren does seem to have had the gifts of a sorcerer in the way he has created Huawei.
A remarkable success story
From its head office compound in China’s booming Shenzhen (a greyer version of the wizard’s Emerald City) Mr. Ren has – in a little more than 25 years – built his company into a global business of 140,000 employees, operating in 140 countries.
The ambitious Chinese behemoth manufactures and installs back-end carrier network telecom gear, provides infrastructure enterprise services and now produces and markets a range of consumer digital devices. Chasing hard on the heels of Apple and Samsung, Huawei is the world’s third largest consumer handset brand by sales volume and shipments.
It is a remarkable success story, no small achievement and worthy of awe and praise. But like all fairy tales there is a darker, slightly more ambivalent side to the story.
The question of trust
For around the apparently nondescript figure of Mr. Ren swirls a muddy eddy of speculation and rumour that goes deep into the well of his own personal history. His background has done a lot to influence the U.S. government’s mistrust over Huawei’s links to China’s top leadership, nurturing a belief that the company is at the Communist Party’s beck and call and could be used for cyber-espionage or worse, cyber-sabotage of critical network infrastructure on a massively destructive scale. Mr. Ren was adamant in his interview that Huawei could not, and would not, do any of these things to the U.S.A
Mr. Ren’s career history does little to assuage these fears. He was once an officer in the People’s Liberation Army (nothing amiss with that, serving your country). Like most CEOs of big Chinese companies he operates in a ‘strategic’ industry and is a member of China’s Communist Party (a necessary sort of political ‘pay-to-play’ for a Chinese business leader).
He is reputed to instil a Myrmidon-like discipline into his employees (a militaristic extension of the top-down patriarchal command-and-control management style that typifies a big Chinese company). Some of his family occupy senior executive positions in the company (a bit of nepotism in China with its tight clan culture is expected, but can be beneficial if the family executives are smart people with top professional credentials). Then there is the strongly-held belief that China’s government subsidies and tax breaks afford the likes of Huawei as well as most state-owned enterprises a market-distorting unfair advantage against western competitors in developed economies.
The need for vocal, visible leadership
These are incontrovertible and uncomfortable facts that can’t be washed clean in the corporate PR spin machine. They have to be dealt with head-on by a leader and not allowed to provide grist for innuendo and rumour that can themselves be used as political ammunition against a corporation.
A leader needs to be a vocal spokesman and be seen to lead a company in public, especially when it calls for a robust pushback to clarify facts or counter whispering criticism that can result in reputational damage.
For whatever reason, Mr. Ren until now has eschewed that responsibility and apart from writing in Huawei’s various company newsletters and financial reports he has been no more than a grey spectre behind the scenes.
Such a leadership style, if it can even be called that, is detrimental to the reputation of a company especially one with huge pretensions to become a dominant and iconic global brand.
Mr. Ren’s invisibility and silence has supercharged a belief in Washington and elsewhere in the West that he has something to hide when, in fact, his background is already public knowledge. In the corridors of Congress there are plenty of ears receptive to Chinese whispers that go unchecked.
Thus Mr. Ren’s recent public interview in NZ has come too late. He missed his chance to make a leadership impact last year to reduce the political trust deficit and at least appear to make Huawei less secretive and more transparent.
If the U.S. market is as important to Huawei as it seems to have been these last few years, judging by its bids for major supply contracts and various acquisition attempts, then Mr. Ren should have been leading the defence of his firm at the U.S. Congressional hearings in September 2012. Instead, he chose to lead from behind by sending second-line executives to represent (and fight) Huawei’s case with the U.S. House of Representatives’ Intelligence Committee. Quite possibly, cultural norms militated against risking a personal appearance at the hearings, fearing loss of face. Then again, it could have been a miscalculation.
A battle lost, a backdoor strategy
They lost that battle, with the result that Huawei has finally thrown in the towel and walked away from the U.S. market for its lucrative telecom network and enterprise businesses. Mr. Ren and his aides have confirmed as much over the last few weeks though Huawei will still sell its consumer digital devices there. This is a quite clever long-term backdoor strategy, in my view. Huawei will build its brand equity – and close the trust deficit – through making its smartphones and tablets attractive to U.S. consumers rather than trying to win over corporate enterprise clients.
Perhaps out of injured pride, personal pique or just to cock-a-snook at his American foes, Mr. Ren has somewhat counter-intuitively portrayed Huawei’s defeat in Washington as a victory. “It helps to promote Huawei around the world that we are a big company that can withstand the difficulties from the US government.” A wiser head would have left that battlefield behind rather than provoke the enemy further with a Parthian shot.
No way to lead a corporation
The speculation and half-truths follow Mr. Ren around rather like a nasty smelling ordure stuck on the sole of his shoe. You could say he’s inadvertently picked up a bad reputation while out for a long walk. Unfortunately his interview won’t come as a breath of fresh air for the U.S. government either.
Ultimately, Mr. Ren’s invisibility and a preference for not actively managing his own or his company’s reputation has not done him nor Huawei any favours. Passivity, disengagement, public silence is no way to lead a major corporation especially when it is stigmatised for the career history of its own CEO.
Belatedly, Mr. Ren has started to open up but has to do much more to shed his Oz-like leadership behaviour. He is still a mystery man, but we also know now that he is no modern magician either, finding it hard to turn around Huawei’s problematic corporate reputation.
- Phil Mead