One of the most well-known companies in China is Huawei (AKA: Huawei). It has made such a name for itself that it can be considered one of the largest telecom companies in the world. However, when Huawei started, it was nothing but a telephone repair company. Back then in 1983, Ren Zhengfei, a former engineer in the People’s Liberation Army founded Huawei as a start-up company after he decided to leave the army.
At that time, he had not even $20 on hand and was turned down by numerous banks when requesting loans for his business. However, Ren Zhengfei received an unexpected visit from Wang Zhenying who came to give him a loan of ¥100,000.
Despite Ren Zhengfei having no experience in running or managing a company, he was determined to succeed at his new business venture. He started by repairing truckloads of old telecom equipment obtained from state-owned companies for practically nothing. Through perseverance and resilience, the young entrepreneur made Huawei flourish.
Today, Huawei’s revenue is said to be $46 billion and it has successfully expanded its business beyond the telecom industry into areas such as mobile devices, enterprise solutions, cloud computing, and consumer electronics.
This highly successful company is no longer just a small telephone repair shop in Shenzhen. it has more than 180,000 employees and operates in more than 150 countries. How did Huawei go from a simple start-up company to a multinational corporation?
There are 2 main reasons why Huawei has been able to make such a name for itself. First of all, its success can be attributed to its unique corporate culture. Ren Zhengfei’s vision for Huawei was to create an environment of respect, rather than one based on fear. What he strove for was to create a company where employees can provide input and suggestions to improve the company’s products and services.
Even when it comes to decision-making, Huawei’s employees are encouraged to provide opinions and discuss alternatives. What is more, the company also has an internal website where everyone can share ideas.
The other reason for Huawei’s success is its strong emphasis on R&D (research and development). Ren Zhengfei believed that the only way for Huawei to maintain a competitive edge was through R&D work.
In fact, over the past years, the company’s investment in research and development has been greater than its sales revenue. One of Huawei’s goals is to invest up to 10% or more of its net income in R&D each year.
Conclusion
These 2 factors, the founder’s unique management approach and Huawei’s strong emphasis on research and development have made this company a success.