Business & Economy

Inside Huawei, Chinese tech giant in US crosshairs

By Javier García

Shenzhen, China, Mar 25 (efe-epa).- Mobile white shelves that open slowly and automatically like a safety vault are hiding one of the most well-guarded treasures of Huawei: the share documents of over 121,000 employees who own company stakes.

The world’s largest telecom equipment manufacturer, which has become the enemy No.1 for the United States in its campaign to block Chinese tech development, guards the shareholding certificates of its employees like a treasure.

The collective ownership, one of its kind in the world in a tech company of this size, has allowed Huawei to finance itself, invest a large part of its profits in research and incentivize its engineers.

Huawei’s founder and CEO, Ren Zhengfei, controls just 0.9 percent of its shares, while more than half of the 200,000 workers across the world own the remaining 99 percent.

The Employee Stock Ownership Plan, launched in 1990, has been growing since then.

In the last decade, the number of shareholder-employees has doubled.

Only workers are allowed to own shares as Huawei is not a listed company on any stock exchange. It protects it from speculative market volatility and the pressure to offer short-term dividends.

“The external investors want to maximize profits. If we allow them to enter the company, we could not invest so much in research and development, which is central for our competitiveness,” Hou Linlin, the director of the share management department, told EFE.

Hou proudly showed the share certificates stored at a country estate, part of Huawei’s enormous headquarters in the southeastern Chinese city of Shenzhen.

Apart from thousands of unknown shareholders, the room also holds the documents certifying shares of the CEO and two of his children: CFO Meng Wanzhou and Ren Ping, head of a subsidiary.

The heirs own a smaller stake than their father.

The shareholding employees have a single vote each in electing its 115-member committee of representatives. The panel appoints the management board of the company.

According to the US-based National Center for Employee Ownership, the employee stake in Huawei is “authentic,” unlike other private companies in China.

However, Ren enjoys veto powers in the board, while his family occupies high company positions and subsidiaries.

US sanctions on the Chinese tech giant, which overtook Ericsson in 2014 as the world telecom leader and became the second-largest mobile phone manufacturer in 2018, have had a massive impact.

The crisis intensified in September 2020, when Washington banned global producers of semiconductors from trading with Huawei if they used any US product.

Months earlier, the Trump administration called the company a national security threat and pressurized Washington’s allies to keep Huawei out of their future 5G networks.

The firm turned to diversify its activities in sectors, such as self-driving vehicles, artificial intelligence, industrial application of 5G and (eventually) 6G, and the Internet of Things.

Sustained investment in R&D is an advantage for the firm that allows it to explore diverse businesses.

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