The Lesson of the Huawei Ban: Digital Walls Can Crumble As Quickly As They're Built
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Heroes are forged, not born. During World War II, the famous IL-2 kept flying even after being riddled by anti-aircraft shells and machine-gun fire from other planes. Although badly damaged, it finally made its way back home. Contents June 2019 01. Ren Zhengfei's Interview with The Globe and Mail 01 02. Liang Hua's US Media Roundtable 34 03. David Wang's US Media Roundtable 51 04. Q&A Session at MWC Shanghai 2019 76 05. Q&A Session at the Launch of Huawei's Intellectual 93 Property White Paper 06. Ken Hu's Speech at MWC Shanghai 2019 108 07. Song Liuping's Speech at the Launch of Huawei's 118 Intellectual Property White Paper 08. Catherine Chen's Byline in Los Angeles Times 122 July 2019 09. Ren Zhengfei's Interview with Yahoo Finance 127 10. Ren Zhengfei's Italian Media Roundtable 169 11. Ken Hu's Interview with Les Echos 191 12. Q&A Session at the Launch of Huawei's 2018 209 Sustainability Report 13. Catherine Chen's Brussels Media Roundtable 223 14. Q&A Session at Huawei's 2019 H1 Business Results Press 246 Conference 15. Liang Hua's Interview with Bloomberg TV 263 16. Liang Hua's Speech at the Launch of Huawei's 2018 276 Sustainability Report 17. Liang Hua's Speech at Huawei's 2019 H1 Business 286 Results Press Conference Ren Zhengfei's Interview with The Globe and Mail Ren Zhengfei's Interview with The Globe and Mail June 27, 2019 Shenzhen, China 01 Ren Zhengfei's Interview with The Globe and Mail Nathan VanderKlippe: Thank you very much for your 01 time today. I'd like to start by asking a few questions, just about recent news. Can you help me understand what is happening with FedEx and the Huawei packages? Is there anything special in these packages? They said that this was an operational error. Do you believe that? Ren: Each year, we ship over 100 billion US dollars in goods to different destinations across the world through logistics service providers such as DHL and FedEx. All of these goods are normal goods. There's nothing to hide about them. As for why FedEx delivered packages destined for another country to the US, we have no idea. Only FedEx can tell us what really happened. Nathan VanderKlippe: Can you explain what you're 02 doing with Futurewei in the US? You've said many times that you have no intention of splitting off part of the company, but isn't that in fact what you're doing with Futurewei? Can we expect to see more of this sort of thing in the future? Ren: According to the US sanctions rules, as long as a component or technology contains US elements, it will be subject to US sanctions. Work involving Americans may also be considered to contain US elements. So, 02 Ren Zhengfei's Interview with The Globe and Mail Futurewei is a special case that was designed to meet the US's legal requirements. Nathan VanderKlippe: Is that one way for you to solve other problems for Huawei in the future? To divide up parts of the company and locate them in different places around the world? Ren: No. I don't think there is any other country in the world that would adopt this Entity List practice that the US does. So we won't duplicate the Futurewei model in other countries. Nathan VanderKlippe: You've said that Huawei does 03 not cooperate with the military on research, but we learned today that a series of people have co-authored research papers with the Chinese military, and identified themselves as working for Huawei. Does this not prove that Huawei cooperates with the military in China on research? Ren: Huawei has no research partnerships with the military at an organizational level. These few people must have acted on their own, in their own interests. We are not aware of why they chose to do this. You can speak to them directly and ask them why they did this. Nathan VanderKlippe: Do they still work at Huawei? 03 Ren Zhengfei's Interview with The Globe and Mail Will they be fired? Ren: As far as I know, there is only one person who is still working at Huawei. All the other people had left Huawei some time ago. Nathan VanderKlippe: And will that one person be fired? Ren: I don't know. I don't know anything about this person at all. He is too many ranks below me. Nathan VanderKlippe: What would be your message to other employees? Would you say, "Don't do this"? Would you warn other employees to say, "This is not allowed for Huawei employees"? Ren: Our products are only for civilian use. If someone works on anything for other purposes, it may affect their performance appraisals. At Huawei, we require every employee to contribute to our core businesses. If someone has made contributions elsewhere, how can they receive recognition from their departments? Nathan VanderKlippe: Is military research cooperation allowed for a Huawei employee or not allowed? Ren: It's not allowed. 04 Ren Zhengfei's Interview with The Globe and Mail Nathan VanderKlippe: You have a number of your most 04 important suppliers, such as Google, Arm, and others, who have been lobbying very hard for exceptions from the US entity listing so they can continue supplying you. What is your expectation for that process? Do you still plan on a sort of complete ban for the US cooperation with Huawei? Or do you expect some of your key suppliers to be given exceptions? Ren: It's understandable that our US suppliers are actively lobbying the US government in the hopes of being exempted from this ban. Such lobbying efforts are in their own best interests. Likewise, Huawei needs to buy huge quantities of products and technologies from these companies. Unfortunately, I don't think the US will remove us from the Entity List. They have added Huawei to the list not because we have done something wrong and need to be punished, but because they want to destroy us. If someone wants to condemn you, they can always trump up a charge. That's why I think the US won't let up in the short term. Nathan VanderKlippe: So you don't expect any of your key suppliers to gain exceptions as they've been asking for? That's not what you're planning for at this moment? 05 Ren Zhengfei's Interview with The Globe and Mail Ren: I'm not saying that they won't be successful. I just said that their efforts are completely understandable. We're not worried about the impact of the Entity List, and there are three major reasons why I feel this way: First, our team is more united than ever. Before Trump launched his attacks against Huawei, our team was getting sloppy. But because of the attacks, our team has become more united in working towards our goal to survive and thrive. We're becoming stronger-willed, and we are working with increased drive and passion. Second, we are creating a united front with our partners. We aren't angry with any of those US suppliers who can't continue to supply us. We understand, and we want to cooperate with them whenever it's possible. We will open our arms to embrace cooperation with more companies, no matter if they're Chinese or non-Chinese. We will enhance cooperation with any company that is willing to support us. As the Chinese saying goes, "A just cause attracts much support, an unjust cause finds little." This is how we are building a united front. Third, we are still moving in the right general direction. The US has been attacking our 5G, but 5G is only part of our network connectivity business. Huawei is a global 5G leader. We are also well ahead of others in the optical transmission, optical switching, access network, and core network domains. In this industry, we can continue to 06 Ren Zhengfei's Interview with The Globe and Mail develop by relying on our own chips and software, so we aren't affected by the US move at all. The impact on our consumer business is relatively larger. By adjusting to the new environment over the next one or two years, our consumer business will be able to continue growing. Despite the impact of the Entity List, we sold 10 million of our new P30 series of smartphones within 85 days of the launch. This shows our customers' trust hasn't declined. As of May 30, we had sold 100 million mobile phones. I believe we can gradually resolve the difficulties our consumer business is facing in the second half of this year or sometime next year. Nathan VanderKlippe: You said "adjusting ourselves 05 to the new environment", you figure that in one or two years you will have fully adjusted to the new environment. Can you help me understand what "fully adjusted" means? Does that mean at that point you will have the ability to produce all of your products without relying on American technology or American patents, et cetera? Ren: We have many patents and so does the US. We have signed cross-licensing agreements with US companies for many patents, and there are no issues 07 Ren Zhengfei's Interview with The Globe and Mail with cross-licensing. We would never want to live without the support of US technologies, components, and products.