Ren Zhengfei: Dreams, without the actual thing, is nonsense

On December 3, 2010, Ren Zhengfei, founder and CEO of Huawei, held a seminar with key employees in the consumer terminal business. In this seminar, Ren’s views on 26 issues are very important for understanding Huawei’s development.

Ren Zhengfei: Dreams, without the actual thing, is nonsense
  1. How to design Huawei phones successfully and with differentiation from a human perspective?
  2. Ren Zhengfei’s view on the low-profile publicity of data cards
  3. Ren Zhengfei’s guidance on the market positioning of several major products of the terminal company
  4. the conflict between Huawei brand on cell phone products and the company’s traditional operation business
  5. Ren Zhengfei’s expectations of the terminal company’s channel construction
  6. Ren Zhengfei’s guidance on the construction of external research institutes
  7. the company’s expectations for the future of the terminal and the terminal’s position in the industry
  8. Ren Zhengfei’s views on the internal consumption of the company’s products
  9. Ren Zhengfei’s views and suggestions on branding and communication work
  10. as long as there is competitiveness, it is a major project, and there should be a reasonable incentive mechanism
  11. how to make the company platform work to support the development of terminal business
  12. must make great efforts in vertical integration, so that our internal resources should be gathered in one point
  13. Ren Zhengfei’s clarification of the status of Huawei terminals in the whole Huawei Group
  14. Ren Zhengfei never agreed with the concept that terminals must compete for every inch of land
  15. mobile broadband terminals to go their own way, terminal investment can be increased
  16. establish core production capacity
  17. prefer to grow slower than inventory
  18. Ren Zhengfei’s view on local manufacturing strategy
  19. based on their own training and selection of cadres, the responsibility of leaders is to create results
  20. make Huawei an open platform
  21. the most important point of core values, is all for the customer
  22. Huawei will gradually go in the direction of brand
  23. product excellence is our foundation
  24. reform can only rely on themselves
  25. the current platform of cooperation between terminals and industry soft
  26. the future of change, one is the innovation of business model, one is the innovation of technology

Summary of the discussion between Ren Zhengfei and key employees of the terminal

We think it is not easy for the terminal to develop in these years. We were forced to launch the terminal because our 3G system could not be sold and we had to buy the terminal because we could not buy the supporting handset. I should say that you have done well, very successful. Guo Ping invented the resale route, specializing in customizing low-end cell phones for large operations. Well, it worked.

Today we are a more democratic meeting, I hope that everyone speaks freely, what ideas you have you say, including the more than two hundred brothers of the overseas link, you want to speak as soon as possible to speak. My communication may not be correct, I am a person with a rather insular knowledge, so I have invited Xu Zhijun, Guo Ping, Tao Jingwen, Deng Biao, Wan Biao, Yu Chengdong, etc., they can also answer for me, you can also answer. I especially hope that you have different opinions, opposing views, today opposed, tomorrow do the right thing. We all do not say anything, we do wrong, and pay a greater price later.

Let’s start, who is the first brave?

1, how to design a successful Huawei phone from the human perspective, with differentiation?

Jiang Habing: I am the cell phone product line Jiang Habing. Because the cell phone is the closest to the consumer in the terminal, it is more difficult, and not good enough. To do consumer goods is to do business with people, our understanding of human nature is not deep enough, we do cell phones in Huawei, how to do from the perspective of human nature in one sentence, how to do it differently from other companies, and to be successful?

Ren Zhengfei: The understanding of human nature is more difficult, especially clothing. The apparel industry is supposed to be more successful on a philosophical level, on a psychological level. And we tend to look at world famous brands from a technical point of view. This is elementary school students looking at the world. For example: the complexity of human nature, from the movie “Lust – Caution”, Tang Wei played more successful.

We have no consumer psychology research office in the terminal, how to lead, so we are following these years. Cell phones will be fashionable. The future of consumer goods like fashion, the volume is very small, a lot of lots, large companies difficult to do. In the fashion, how will you win? American men want to hold the phone larger, hand holding a little more comfortable. Masayoshi Son wants to customize cell phones for the elderly, and only asks that the phone’s words be larger and that it be able to make calls and send text messages. He said that Japanese and Korean companies are ruled by engineers who are thirsty to show their talents, and the more complicated the phones are made. People say you Huawei is a politician in power, so will make such a simple thing to.

But Huawei is also ruled by engineers, so it still can’t make this simple “fashion” for the middle-aged and elderly. How do we determine the needs of our customers? In the era of fashion, how do we enter? We are large volume, standardized, which is the advantage of large companies, but the era of small volume, we still have no advantage, this is a big question.

Guo Ping: To deal with the standardization and globalization of Apple and other companies, I think we have to nationalize, regionalize, and segment customers and markets to win. Apple has a strong marketing and technology innovation capability, he can make only four products in four years. So we must segment customers and markets, we can’t have a product like Apple that sells well all over the world, but we must have a product that sells well in a certain region, and we have to do it along this line.

2, Ren Zhengfei’s views on data card low-key publicity

Su Jie: Data card has gone slightly better in these years in the terminal company, mainly because the leaders of the terminal set the right strategy for data card, and eventually dragged others to death. This year, the cumulative shipment of data cards exceeded 100 million units. The company is relatively low-profile, both internally and externally ……

Ren Zhengfei: Who gave you the rumor that you should keep a low profile and not let you promote. Who personally heard me say this? You young people are enthusiastic and active. If your customers are also such a group of people, why can’t they go crazy together. When you young people talk about keeping a low profile, you are asking me to be your cannon fodder. And you say that I asked you to keep a low profile. You are so tall and fit, you should help me block some fire.

  1. Ren Zhengfei’s guidance on the market positioning of several major products of the terminal company

Su Jie: I have a request, when the cumulative shipment of our data card exceeds 200 million units, can you take a photo with our data card team and invite us to have a meal.

Ren Zhengfei: It’s no problem to take a group photo and have dinner, but it doesn’t need to exceed 200 million units. Don’t set your goal so high, you can do it anytime.

The terminal company has several major products, and we can make market positioning respectively.

The first product is the fixed network terminal. Fixed network terminal requires a deep understanding of the network technology, the network back platform and front communication we have the deepest understanding of the ability. We are most likely to respond positively. As long as MKT keeps an eye on customer needs and can grasp the trend in time in different countries and different nationalities, I think fixed network terminals will definitely dominate the whole world. In the terminal business, anything is possible. We are not a defense, we are an attacker. MKT has to improve its approach a little bit, to actively improve MKT’s capability, the fixed network terminal will definitely become the world’s leading product, the back side has strong technical support for you, but you have to solve the understanding of the demand by yourselves.

The second is mobile broadband (including modules). Mobile broadband is a purely technical issue, the technical problem is the channel problem, in the channel problem, we are better than others. If we increase the platform investment in the channel problem, increase technology investment, increase chip investment, we are likely to remain the winner in the future on mobile broadband. But Samsung is fast.

Third, I think in the terminal, we are not innovative enough, not enough capacity. Own to seize their own advantages, to make a few good products. If you can’t do it yourself, you can also OEM, but OEM can’t become the center, otherwise once the trend changes, your channel, your service without water, will all dry you up. I think the company’s response to the end market is not enough. For example, last year, at the Bauma exhibition, someone took our cell phone, but could not connect to our cloud? How could we not be able to connect to such a large department internally? I just find it strange. We need to think about what our strategy is and how we can win. Low profile alone does not work, low profile is the king mentality, the world is all yours, you are low profile. Terminal you are behind, you are still low profile.

4, Huawei brand in the cell phone products and the company’s traditional operations business conflict

Zhang Jun: we are pushing Huawei products, especially mobile phone products, with the Huawei brand, so there will be some conflict with the company’s traditional carrier 2B business promotion and publicity strategy.

Ren Zhengfei: You can come up with your own name, I am the most supportive. You dare to do, the company has no strategy to restrain you.

  1. Ren Zhengfei’s expectation of the terminal company’s channel construction

Zhang Weiping: You just mentioned the fashionization of cell phones. Cell phones as consumer electronics, very important is the channel. In the past, they were resold through carriers. I would like to hear Ren’s expectations for the construction of channels in terminal companies.

Ren Zhengfei: The problem of the channel is how to prevent internal corruption generated by the channel. We have not done the channel for a long time because we have not built up the ability to prevent corruption for a long time. The terminal has to build the channel and learn how to prevent corruption from arising?

Tao Jingwen: In fact, the operator resale is also a channel, the operator is also a partner. This year we are also increasing the construction of channels, we want to be open, transparent, channel policy to comply with the rules of the industry, the industry’s channel policy is still very transparent. We can not completely abandon the channel because we are afraid of corruption, resale is not a collection, nor is it customized, the key is the import and export system and channel policy to do clearly.

  1. Ren Zhengfei’s guiding opinion on the construction of the Institute of External Studies

Chen Chuaning: My question is: What are Ren’s guiding views on the construction of the Institute?

Ren Zhengfei: Since we are doing fashion, if we do French fashion brand, we should have French people in France to participate in doing it; if we want to do American type, we should be in the United States; if we want to do multi-color, we should be in Latin America. The product planning department should be decentralized and built in the area of the main customer demand. If the Chinese pack the world, it will be a failure. We have to change from the era of relying on the Chinese to fight the world to relying on the network to provide support and support to the world, so that we can win. Product design must be close to customers, not behind closed doors.

Second, we must strengthen the benefit sharing mechanism. I think the world’s best benefit-sharing mechanism is Apple. First of all, can the software company’s cloud allow cell phones to connect in? Huawei’s cell phone can not be on Huawei’s cloud, which is a big joke. The sector should not be cut into this way because of the interests, your interests can be separated from the world? Apple used to have 100,000 applications, now there are more than 200,000 applications, the next is a million applications, 10 million applications, when can your terminal company catch up? Without the right distribution mechanism and benefit conversion mechanism, we can monopolize the world by ourselves, holding our own stocks and not wanting to make efforts to advance. So the product planning center should be scattered all over the world, so that those who can hear the gunfire can call for gunfire.

7、The company’s expectations for the future of the terminal and the terminal’s position in the industry

Luo Yuzhou: A few days ago, we organized to learn “Grafting does not grow into a big tree” by Mr. Guo in the management optimization newspaper. In the actual operation of the regional department, the brothers of the terminal and the platform are a bit more defeated because our competitors are Apple, etc. The brothers of the platform are a bit more victorious because Nokia and Ericsson may not be the rivals anymore on the big road. What are the company’s expectations for the future of the terminal? What is the position of the terminal in the industry?

Ren Zhengfei: Let me ask a question first, can you be the first in the world?

Luo Yuzhizhou: This is the dream of every employee at the terminal.

Ren Zhengfei: Don’t dream about it. I’m worried that you can’t be number one in the world, and it’s hard to be number two or three. You can’t surpass Samsung. Koreans are the most tenacious and hardworking. Nokia has such a large scale. In between there are cookies, and Sony Ericsson ah, LG ah. ZTE ah than we are competitive, although the scale is not as big as us, but more competitive than us. You want to be the world’s first, you have to take one step at a time.

Say the network on the road, they are twenty years so climb over ah. The terminal also has to go step by step. Do not see people walking in the big road, you still walk in the small road, only from the small road to go to the big road. There is no fairy emperor, there is no savior, it all depends on ourselves. Not we plan a bright future, you will be able to achieve it. Dreams can’t just have dreams, without something practical, it’s just nonsense.

I think the terminal to actually change themselves, to change from internal factors, first of all, to change the internal distribution mechanism and external distribution mechanism. External allocation mechanism Apple has done a very good example, internal allocation mechanism Huawei gave you a very bad example. Huawei this mechanism is to cultivate lazy people, lazy, conservative. Terminal companies should be low wages and high rewards. Dare to revolutionize, do not dare to stay revolutionary, can return to Huawei technology. No reform of the distribution mechanism, there is no dream. We do not have a dream, the dream is yours. A mother-in-law can not give birth to a child for her daughter-in-law, right?

8, Ren Zhengfei’s views on the internal consumption of the company’s products

Du Guoyu: During our expansion in Western Europe, we found that some terminals are not only developed by terminal companies, but also by network side and software companies. For example, IPTV set-top box, terminal companies are doing it and software companies are also doing it, so we are in conflict in the market; there is also PON terminal in fixed network terminal, all operators require ADSL gateway to evolve in the direction of PON in the future, which requires the integration of the two product forms, I found that the company is fighting internally and customers do not understand it, so I would like to hear Mr. Ren’s view.

Xu Zhijun: There are historical reasons for this status quo. At the time of the terminal company’s capital operation, the PON was classified as the access network product line. Now the basic consensus has been reached, all home-oriented terminal research and development are integrated together. Sales model, the future may be through the terminal, may be through the network, this is being discussed, will solve this problem.

Ren Zhengfei: We have three IPTVs, and sometimes it’s not a war between two, it’s a war between three. I brought them too, to hear how you fight, you have to form a synergy. You can’t have an internal war and an external war.

I think ZTE is good in many aspects, when I visit your office, I hope to see the slogan on the wall have to learn from ZTE which point? I showed EMT He Shiyou’s speech on the Internet, such an insightful speech, they very much agree. Yesterday, Chen Lifang showed me your advertisement, which is very long-winded. In fact, it is just one or two sentences, just make it clear in a concise manner.

I went abroad, someone sent me the latest cell phone, Xu Zhijun saw it, immediately took away to the terminal company, you see, this is how sensitive. Only the offense is likely to succeed, defense is impossible. No eager to meet with customers cadres, immediately retired from administrative positions, afraid of contact with the media, you also do not do administrative cadres.

The desire to succeed is the nature of Huawei people. How can you succeed when you have no desire to succeed and you are compelled, not exuberant, when you meet customers and the media? Therefore, I suggest that you remove all those who are not eager to see customers from the administrative cadre positions, I give them the opportunity to be experts, but to be able to be experts, otherwise they will not be able to mix. You can’t lead the sequence forward if you don’t see the customers, if you don’t lead them to the back of the line with reasonable needs and reasonable support.

9、Ren Zhengfei’s views and suggestions on branding and communication work

Chen Mei: You have always said that we should learn from ZTE in branding and communication work, but in Huawei’s communication work, we often encounter some publicity red lines, such as not using celebrity endorsement and not advertising in news and financial newspapers. The terminal is a fashionable and constantly innovative product, are we allowed to break through these red lines?

Ren Zhengfei: I suggest that you be brought up to the administrative cadres, and replace those who are not allowed to break the red line or do publicity. Those who dare to break through the red line is to grab food back, will share a little to me. ZTE is our example, ZTE’s media budget is how much? First catch up with ZTE, don’t catch up with Samsung first, Samsung is still too powerful.

Chen Mei: From the point of view of investment, catching up with ZTE is entirely promising.

Ren Zhengfei: I’m not talking about the level, the level of catching up is still a problem. Budget to catch up, do more right. What does it matter if you do it wrong at first, correct it and change it again. ZTE has a part of the people who used to speak on the network is not good, the interaction process to people scolded, scolded to understand themselves, the level is high up, into the high people, we can not catch up.

Things are like this, to dare to go up. Dare to win in order to be good at winning. Media relations, you are consumer goods, to have the characteristics of consumer goods, especially you have to do the channel, there are two problems, one do not internal corruption, the second is that the channel to sell you something do not know what you are, how to sell? We are the head store, LV brand is the head store to do. 70% are advertising costs, packaging, endorsement are very expensive. Luxury goods have the law of luxury consumption, consumer goods have the law of consumer goods, you can not find the law now.

10、As long as there is competitiveness, it is a major project, and there should be a reasonable incentive mechanism

Han Shitao: I am a major project Han Shitao ……

Ren Zhengfei: I think the terminal should not have a major project department, I never said to set up a major project department, you just want to succeed, which is a major project.

Han Shitao: At the beginning of the year, it was said that the terminal should not participate in vicious competition like the system. Now ZTE has made some adjustments, put the scale in the first place, profits and margins are declining, the scale is growing very quickly, which has put a lot of pressure on us, do we also have to make adjustments in this area.

Ren Zhengfei: What kind of strategy to take you need to figure out for yourselves, in the end, whether you first make the scale bigger, or first make more profits, this do not let me give you judgment, otherwise your CEO should not take so much money. The most important thing is to improve your competitive ability now. I just said four points, from fixed terminals, mobile broadband to cell phones, to vertical integration, which point is appropriate, you consider to set. As long as there is competitiveness, it is a major project. You do not know whether you will lose to others, how can you say that major projects into success? What do you mean you can’t go up? I think there is still a problem with the incentive mechanism. Do not work to take a lot of, desperately rushing people do not get a lot, there is no a reasonable incentive mechanism.

11、How to make the company platform work to support the development of terminal business

Lv Junfeng: In these years, the terminal pays a lot of rent to the platform every year, including the platform fee paid to the platform, which accounts for more than three points of the sales revenue every year, so I feel a bit heavy burden. The KPI assessment index of the current platform, the terminal only accounts for less than ten percent, the terminal into how, for him does not care too much.

Ren Zhengfei: The first point is that we face a very significant reform next year. The next year or two, the reform is very strong. In the future, we are a unified platform, this large platform will have four operation centers, an operation center is the operator pipeline platform, we require the pipeline growth from 2% to 10%, now their growth rate is 2%, but the profit is not bad.

There is also a consumer goods, this year’s growth rate is expected to be 22%, ZTE growth of about 35%, we are 13% lower than ZTE, obviously in a weak, rather than strong, this is an operating platform. There is also the enterprise business, we release cloud computing, is also part of the enterprise business. The four profit-making operation centers are separated, and the common platform is all to support. The representative office and the regional department may not even be a warfare force, the warfare force is centered on the system department and the customer-oriented operation center, called the warfare force, so you can also organize the warfare force to enhance competitiveness, and the platform will support you more strongly in the future. But the completion of the reform will take one or two years, it will not be so simple and quick, and the situation will change somewhat later.

As for the fact that you pay a lot of rent, and I didn’t ask you farmers to pay more food, how your plan budget is made, the key is that you have to come up with a reasonable strategy, your path of sustainable growth, and your comparability with your neighbors. You come up with reasonable strategies, but in general you have to bear the costs you pay and the opportunities you have to compete. Whether you should increase your R&D, increase your platform investment or something else is a matter for your specific department to operate, not for your superiors to decide. You feel that the rent paid more then you can pay less. Pay more or less, to be submitted to the Finance Committee to discuss, discuss with the IRB. See if the IRB agrees, the Human Resources Committee agrees, the Finance Committee agrees, etc.

12, we must put a lot of effort in vertical integration, so that our internal resources should be gathered in a point

The company has been talking about end management cloud, our cell phone in the end management cloud package, in the big platform we can play what role, how do we work with the big platform?

Ren Zhengfei: I am talking about the end of the management of the cloud, not the cell phone, the cell phone is only a part of the end, not the complete end. For example, mobile broadband technology to dominate the world, domination of the world may not be a card, but a small module, embedded in a variety of machines to go, China is called the Internet of Things, the world is not called the Internet of Things. This small module and the future integration of the pipeline platform.

The second issue, the fixed network terminal development space is endless, but the fixed network terminal changes should be very rapid, but all changes are not the same, we must put a lot of effort in vertical integration, so that our internal resources should be gathered in a point. Now we are doing our own thing internally, and next year we will reform our R&D system by focusing on solutions.

So I propose to solve the problem by solution-centered, we have already started to launch, and have appointed three solution presidents. We have appointed three solution presidents: Ding Cai for pipeline solutions, Xu Wenwei for enterprise business, and Wan Biao for consumer products. In the future, further reforms will be made down the road, such as the base station of wireless, can it be integrated with the access network into a solutions department. We did not integrate this thing by demand. So that this cloud, and many other issues, our internal organizational reform and integration also slowly tend to demand to integrate the organization and no longer to technology integration front-end organization.

Yu Chengdong: I am now doing the work of CMO, to manage the synergy between Huawei end management cloud, which is my job, but also the work of MKT, we can not tear each other apart internally, to help each other do better. The integration of end management cloud, whether internal integration or external integration, should use open thinking to strengthen our capabilities, strengthen our partners, together to do success.

About the terminal company, the five global opportunity centers, including Japan, Western Europe, North America, etc., according to the different capabilities to build regional planning, competence center construction, to be able to, as Mr. Guo just said, to achieve the characteristics of globalization and regionalization. The boss said that IPHONE has done very successfully, but the Chinese input method of IPHONE cell phone is really doing very poorly, far from Sogou and Baidu input method made by us Chinese, which is our ability to enhance our demand understanding on globalization and regionalization, and we have to strengthen our ability.

In addition, in the whole industry, the cell phone field is facing a great trend of change. In the industry, Feature Phone and Smart Phone are growing massively, in this regard, we have a very low percentage of Smart Phone this year, which poses a great risk to us in future development. How to balance Feature Phone and Smart Phone, how to improve our growth rate in the coming year, and what the boss said about constructing product capability, we have to interpret it deeply. The boss said the ability to understand the demand and the ability to build the product depends on our level.

Everyone’s whole team should be open-minded and dare to innovate. At this point the boss criticized me for not being very modest, and I am indeed not modest enough. I think our wireless and Ericsson than, not modestly say, we have a year of advantages. In the field of terminals, we dare not shout out, we fight together, the team fight. To have the ability to execute, no execution, are blind bullshit, between departments to work together.

These days attended the terminal BP seminar, feel that the work is discrete, each doing their own, there is no clear direction of battle, no synergy. Without execution is empty talk, we have to have execution. We should be keen on market analysis and hope to stand higher, look farther and look deeper than our competitors. We want to surpass, and beating our crosstown rivals is the minimum goal. If we can’t win, if we can’t surpass them, I can’t be the CMO of the terminal, and I can’t be the CMO of the platform. I have deeply understood this point, and we try to achieve it.

What ideas do you have, what IDEA can be put forward, we have to plan and then move. We are going to push the star model next year, if there is nothing very good to use, the phone is given to everyone, everyone threw away. When will people throw away the iPhone and use our stuff? Can we do this, depending on the efforts of our team, we try to act.

13, Ren Zhengfei clarified the status of Huawei terminal in the entire Huawei Group

Wu Bo: I have two questions, the first is an hour ago, you just entered the venue, said Huawei terminal is for Huawei technology system supporting to do up, after an hour, you for Huawei terminal in the entire Huawei Group’s status without a new clarification, want to ask the boss how you terminal company in the entire Huawei Group how to position? The terminal company is an integral part of the entire Huawei Group, or can only exist as a supporting product line.

Ren Zhengfei: Just made it very clear that the end tube cloud, you are one of the three parts of the world. Probably with the pipeline, consumer goods, enterprise and other, and other four core business to form four operating platforms, so you are in the company is there three parts of the world, and even you are perhaps more active than three parts of the world.

Like the core network, how many people it took to develop it, two million users of the core network, sold for less than two U.S. dollars a line, such a large core network of one or two million dollars so sold. The core network is very difficult to sell. Cloud computing is flying out of this. So you can think of how to position the law? The terminal is more and more important in the future network, how to touch the software can not touch, he must be through the terminal to achieve sharing with people. Our company will turn into a big software company in the future, but the software can’t be touched, so we have to rely on you to embody this software. Once you touch the screw, you can see that there is a lot of software inside.

So the terminal has a very important strategic position. We spoke an hour ago and now speak no change. In the past, the state thought that the terminal is very profitable, not to us to do, we had to register a company overseas, who knew that this small company overseas to now so large, slowly after the state approval to move to the domestic. The domestic sales platform is not as big as overseas because we did not start at home, but overseas. We have come this far, we have hope, to do well and bigger.

Guo Ping: I would like to add that, as the boss mentioned earlier, Huawei’s consumer goods sector is one of the four core businesses. The people of the terminal company should have confidence in themselves. On the one hand, the terminal is a consumer product, which has a vast market and can be operated greatly according to the operating characteristics of consumer products. On the other hand even from the operator’s point of view, the most core strategic partners, not network pipes, but software and terminals. You see Apple, in each country only pick one operator to be a partner. Around the world, the terminal space is actually much larger than the pipeline, we just haven’t done enough. Apple has done four years to make four terminals, and made itself into a company with a market value of more than $260 billion, the most valuable in the world.

14, Ren Zhengfei never favored the concept of terminal inches

Peng Yulong: mobile broadband has been explosive growth in recent years, has achieved a good market share, the company’s strategic requirements for us next year is the market share inch, but we are now facing a problem ……

Ren Zhengfei: I did not say that we must fight for every inch of land, when did I say that every inch of land must be fought? You have to look at my speech in the representative offices of small countries, I spoke after the impact on small countries is very large, in addition to the two regional ministries may still have problems, most of them are very profitable. I was very happy to hear the report from Central America in Costa Rica, and finally they understood what it means to be a small country. Small countries is to do or not to do, want to do, do not want to do, the results they do almost all monopoly, and the price sold very high, high profits do. I did not say that you have to fight for every inch of land, you may have consumed a lot of bullets this way, but only defended an inch of land.

15, mobile broadband terminals to go their own way, the terminal input can be increased

Peng Yulong: the difficulties we are now facing is the increasing competition with rival products homogeneity, our lack of investment in innovation, mobile broadband annual investment in research and development costs of only 2%.

Ren Zhengfei: I have never complained about your mobile broadband terminals, including your throwing low prices in Europe, causing anti-dumping in the EU. You know how serious the results of this activity of anti-dumping, not only the impact on Huawei, but the entire China has a very big impact. Thanks to the Public Relations Department, thanks to this Expo, which we had the conditions to give access to 27 countries of the EU. I met with the presidents and prime ministers of 12 countries, I communicated with the ambassadors of 27 countries at the same time, and I also flew to Europe several times to talk with the leaders of the EU. Of course we have a series of means behind us, we pay hundreds of millions of euros, you have heard me say that your terminal mobile broadband once? Today you hear this for the first time, I do not blame you guys, wrong on wrong.

Then how to do it right in the future? You have to find your own way. Also I never agree with the concept of the terminal inch of land, the world is too big, how much land can you fight for, Genghis Khan and Hitler have collapsed, you are not as good as him. You have to find the right growth path for yourself, do not create your own internal panic. Your data card sold for more than twenty euros a piece, you say how the EU can not anti-dumping.

So mobile broadband terminals to go their own way, you say that the R & D costs are only invested in 2%, I do not know why, we have criticized Huawei for not investing enough, Guo Ping’s article also criticized the company for not investing enough, we are also not investing enough in the research and development of the pipeline platform, we want to change this status quo. Pipeline input has been raised to 12%, how much do you terminals have to mention to be reasonable, you can increase the effort.

16、Establish core production capacity

Liang Chaorong: Now the world’s large terminal companies only Apple and Huawei do not have their own production capacity, Huawei has not been their own production capacity, the future to 100 million units, 200 million units, 300 million units, is it still this strategy to continue?

Ren Zhengfei: We have to establish core production capacity, otherwise we do not have a deep understanding of the supply chain and can not open up. The reason why our pipeline system is doing well is because we have maintained our core production capacity. We maintain part of the production capacity, mastered this part of the ability, so that outsourcing cooperation is clearer, I support the terminal to restore this thing, to build this thing. Do not completely dump out, so too opportunistic, once the risk, it is full of loss. If there are difficulties in the recovery of the core manufacturing areas, you can ask the former departed employees to come back and come back to build this up. We should not be difficult to restore the short, thin and small manufacturing capacity, the Japanese is short, thin and small. We can find some Japanese and Korean experts.

17, rather to grow slower, but also do not inventory

Zou Xiaohui: Just now the boss talked about several issues in the supply chain, I first followed by two questions. The boss has set two tightening curse for the terminal company, one is internal corruption, the second is the vicious inventory. Previously, the terminal business is just a trial, do not have a big risk on the line, but now we have to attack, we have no new changes in inventory requirements? In the terminal consumer goods industry, I understand that inventory will always accompany its growth.

Ren: I’m not changing my view. I want the supply chain to become a little more flexible and plan for a faster response time. Inventory may constitute the ultimate death, maybe once or twice the inventory is dead. Aggressive attack does not necessarily have a large inventory, in supply we must study how to respond aggressively, how to shorten the supply cycle, how to increase supply flexibility. I would rather have a slower growth than inventory. And as products become more and more fashionable, the risk of inventory is getting bigger and bigger.

Xu Zhijun: the strategy of inventory can not be adjusted. Terminal growth model and network equipment is completely different, for network equipment is an inventory supply, is to buy raw materials to produce and then supply on order. Apple iPhone 4 to today, he also has supply problems, for consumer products, is a starvation supply, keep 90% of the demand supply will be fine.

Ren Zhengfei: sales are big, the market can be slightly larger in proportion to the inventory is acceptable, but the inventory point of view can not be changed.

Zou Xiaohui: I have a little different opinion, in fact, the terminal as a consumer product, the price is the regulating factor, the price down inventory will go down.

Guo Ping: I do not agree. I now give you a free black and white TV set do you want? Free you may not even want.

Ren Zhengfei: I think we need to learn the management of consumer brands such as clothing brands. Each top clothing brand actually has two brands, one high-end and one low-end, in fact, the same goods, the point of sale is not the same. The terminal sales model and supply model, in addition to inventory can not be compromised after the other can be considered, as fashion is becoming more and more serious, some things are out of date, you can not send out.

Guo Ping: Last year, PALM died because of inventory, before that Ericsson’s cell phone also died because of this, Siemens also sold back several hundred million euros, also died because of inventory.

Ren Zhengfei: the terminal development of the two dead ends: one is internal corruption, one is inventory, this I do not compromise.

  1. Ren Zhengfei’s views on local manufacturing strategy

Zou Xiaohui: Now we are entering globalization and regionalization, about localized production overseas, the terminal has been wavering, we have tried several times, found that it is still the cheapest to produce in China, for this piece, the company’s future on the local manufacturing strategy, what are the considerations?

Ren Zhengfei: I think where the lowest cost will be manufactured, which I do not deny. We still tend to internal management costs to continue to reduce this strategy, deep paddling, low for the weir. In terms of manufacturing costs, as we increase the volume, how we manufacture. Now looking for first-class outsourcers, such as Foxconn, now Foxconn wages, is not to increase our processing fees, then there are some low-end cell phones can be done in the second-rate manufacturers, not necessarily looking for Foxconn. Foxconn is a high-grade manufacturer. We are still manufacturing in low-cost places, because the terminal is not as difficult as other transportation, so that you how to manufacture I do not oppose, and can find out the law with the seasonal fluctuations, find out later, flexibility, flexibility to expand mass production, I do not oppose, but still oppose the inventory, probably because the inventory will die.

Tao Jingwen: terminal one is inventory, one is quality, one is internal corruption, these three things will not compromise. This is a driving force for us to improve management in our business strategy. We have to consider how to increase supply flexibility after the volume increases up, but not by increasing inventory to solve the problem of supply.

19, based on their own training and selection of cadres, the responsibility of leaders is to create results

Xiao Guangsheng: I am very concerned about the development of cadres, I returned from the front line to the terminal cadres Department in April, in the front line and headquarters have found a problem, the terminal cadres and other systems of the large platform cadres flow less, in the front line, found that the platform cadres grow up to become the regional department of vice president, president, the channel is very smooth. May I ask the boss, what are your considerations for the mobility of cadres in the terminal company, which is now positioned as one of the four core industries? Can you import some better cadres from other systems because of the lack of cadres in the rapid development of the terminal?

Ren Zhengfei: I think the terminal should not always expect to transfer people from outside, in fact, this is silly, why do you want to give others to sit on the mountain that is hard to fight, you can also be bigger and stronger.

I told Guo Ping, first you have to sum up the historical experience, the historical battlefield breakthroughs, which people broke through, these people are not still motivated today, motivation can not be used; who in this breakthrough tore the mouth of the big, tear the walls of the mouth, which people? Are these people still energetic, take out. In the terminal what percentage of such people, if 70% of the people have such a resume, you will be invincible to the world. Do not exclude us to send you cadres, but based on their own training and selection of cadres, cadres are playing up. The responsibility of the leader is to carry the dynamite pack, must create results, only in front of the achievements, there are the interests and status of the brethren.

20, Huawei into an open platform

Liu Cheng: Just now you mentioned product regionalization, nationalization, localization, Mr. Guo also mentioned, we made an attempt this year, is to cooperate with QQ, do QQ cell phone concept, we are now the biggest difficulty is the many regional countries around the world, to do regional content integration and cooperation, the company does not have a good platform to support, want to hear how Mr. Ren consider.

Guo Ping: Mr. Ren just talked about the end of the management of the cloud, about open cooperation, in fact, has pointed out this road, terminal companies do not expect themselves to fight the world.

Because it is Huawei, it is easier for us to reach major global customers and understand their needs than any other domestic company. But the local customer demand we can not create up, we should make Huawei into an open platform, so that many local applications and services can be accessed up. If Huawei can, ZTE may also be able to do. If we can not do a few companies, I believe that the vast majority of other companies can not do. I think there are some changes with our original business model, like what Mr. Ren just criticized, we can’t connect with the software company’s application. First of all, we need to be open from the mechanism, mentality, rather than expect Huawei to do everything for my customers. In the management team internal division of labor above, Yu Chengdong also made a statement, next he will be responsible for leading the way to open up the company’s internal and external cooperation, we hope there will soon be improvements.

Deng Biao: I would like to add that the joint meeting between the software company and the terminal company has been held twice, and I believe that the joint meeting will be routine in the future, and the senior management of the software company and the terminal company will ensure that there are routine meetings to solve the application problems. I think the relationship between application software and terminal is just like the left leg and right leg of a person, we have seen several successful ones in the industry, Apple has the terminal first and then the cloud, Google has the cloud first and then the terminal. I think Huawei’s terminal and application software will also be developed in this direction. I think Huawei’s terminal and application software will also develop in this direction. The boss just said that our terminal and cloud were not connected at the last BaFin. I can promise that we will be able to connect in this exhibition.

21、The most important point of core values is that everything is for the customer

Liang Bo: Now the terminal is developing rapidly, and the industry competition in the terminal is very cruel, and now the terminal has high requirements for fashion innovation, and there are many new people joining every year. At this time I think there is a problem of Huawei’s core cultural values inheritance, what do you hope for us to inherit Huawei’s core cultural values and better support the development of the terminal business?

Ren Zhengfei: Actually, I don’t know what core values Huawei has, they are summarized by them, not by me. I think the most important point of Huawei’s core values is that everything is for the customer. As long as you have this value, you will have the value of survival. Huawei has a lot of values, but in summary, only one, is all for the customer. You see as long as the customer and the people who can play together, are promoted very quickly, at least the pipeline system is so. You see a lot of young people are now very high position, in fact, is every day with our customers together. The second terminal inside to dare to use newcomers, the terminal is not so complicated, there is nothing that can not figure out. The grassroots cadres should be centered on people who can do things, people who can’t do things constantly communicate all day long, constantly meeting, confused; people who can do things come up, how to fight this war, to make this clear, people who can do things you communicate to go, do ideological work, the war must be won, it is very simple. Our company’s internal communication complex, is to let many people who do not understand the official, you just need to change this situation, you have hope.

Xu Zhijun: I emphasize a few words at this point, our company everything for the customer, the past talk is for the operator, but the terminal company’s ultimate customer in the end for whom, is the final consumer. The terminal company now can not start to see the operator as a customer, our real customers are consumers.

22, Huawei will gradually also go in the direction of brand

Mats Barvesten: In the cell phone industry chain, we know that brand manufacturers can add value to their products through their brands, while manufacturers without brands can reduce the cost of their products through their factories, thus gaining low-cost competitiveness.

Ren Zhengfei: Now we have changed our previous strategy of not doing branding, we used to do low-end cell phones, we do not do branding, do not do channels, the savings are just our profits. But we just said, we now want to learn from ZTE, and then we began to do brand, not a little not to do brand. Brand and channel are related, I hope your organization gradually think through this problem, we will gradually start to do brand.

23, product excellence is our foundation

Zhang Hongmei: General Ren you said we should learn from ZTE, to do fashion …… in practice, I said to see all the project, the most commonly used words is “ultra-low price” “super bottom price ” “ultra-low-end”, such a guiding principle, how to fashionable?

Ren Zhengfei: Don’t mix learning from ZTE and fashionable, ZTE is not fashionable now, don’t get it wrong. What is the point of learning from ZTE? Fashion is my description of the future, not ZTE’s.

Guo Ping: I’d like to add a comment to what Mats Barvesten and Zhang Hongmei said earlier. In terms of strategic management, we are now caught in the middle, with no cost advantage and no technology advantage, and we are caught in a dangerous situation. How to get out of this situation? In the long run, brand building is a process, and it goes hand in hand with the product itself.

In the short term, my expectation for the cell phone product line is to find differentiation and find stars. HTC does not do much advertising, but it is now the world’s fourth largest cell phone manufacturer; the domestic Coolpad, not so much advertising, but has become a high-end cell phones, business phones synonymous. So we should not only see these leading manufacturers like Apple and Samsung, but also HTC and Coolpad around us, with their product differentiation strategies.

When I went to see the General Manager of Unicom, he said Huawei can do cell phones? We really have a variety of very best-selling cell phones, we can do the image of low-end cell phones, but to now, we can do Smart Phone, can have to adapt to the future of cell phones, the same we need to carefully design a number of differentiated cell phones, so as to establish their own position. Product excellence is our foundation, completely rely on shouting like Qinchi do brand advertising, is the easiest to do in Chinese companies, but often no core competencies to match, is not sustainable.

24、Reform can only rely on themselves

Ren Hongliang: The terminal company is now at a junction where we are moving up the scale and will encounter great challenges. Previously, when the scale is small, we play guerrilla warfare, do market segmentation, easy to win the battle. But now the scale is large to a certain extent, we have to fight large-scale battles, and our opponents are gradually becoming industry leaders. Within the next few years, the terminal company in the business model, the basic ability to improve and distribution mechanism, I would like to ask the boss company’s management has the determination and plan to do changes and optimization?

Ren Zhengfei: Change means you have to change yourselves, not us, you have to be prepared for this psychological change. There is no savior, there is no immortal emperor, you only rely on yourselves.

25、The platform of cooperation between the terminal and industry soft at present

Liu Le: May I ask the boss, what is the agenda of the current cooperation between the terminal and IndustrySoft? I feel that the current cooperation is forced, a bit like the Communist Party of the year. At present ZTE learned to surround the city to fight for help, the year before last year they data card ultra-low price to combat our profits, so that our cell phone is difficult to do, this situation we are very passive. Samsung is now the imperial army, and he is now doing the same thing in the open and in the dark. He is holding high the mobile flag desperately attacking home solutions, two-pronged approach. This year, including the Ba Expo, their overall entry into the field of family, we are very passive; back, Mr. Guo in the 08 Macau exhibition and 09 Ba Expo proposed to do a thousand dollars of smart phones, Tao this year to make this smart phone, I think if we can bend the road to overtake the car, defeat the white bandits and the Imperial Army, then we do not have to make more efforts in the family, and our family solutions should also be fashioned? Cell phone fashion is needed, girls love to be beautiful, but the family should also be fashionable. Just now you said that the family field does not need, I think it may not be correct, because the family solution and underwear is the same, is also part of the fashion. I’ll raise this question and ask Mr. Ren for guidance.

Ren: Do not misunderstand what I said about fashionable, fashionable not only means beautiful, but also includes function and performance, fashion also includes buttons.

Secondly, you talk about competition, we should not expect that we encounter all the foolish competitors, our opponents will only be smarter than us, not dumber than us. Because say no matter how to call people, people are very smart, we are stupid, that’s why we were defeated. So the only measure is only to become smarter and more competitive, and do not expect them to have no strength.

The third problem, the software is not the final form, if it does not go with the terminal, it is actually no way out, including electronic banking, there is a form of human-computer communication, so the software should be more to throw to you. This time you have to establish a win-win basis, you do not think you are very powerful, and then you are ready to destroy others, and then do everything yourself.

I think our company is problematic in many ways, and it is only when problems exist that there is hope. Without contradictions, without problems, life may stop. I think in this process of contradiction we need to strengthen comprehensive coordination and mutual understanding, as well as the correct mechanism for the distribution of benefits. I emphasize the benefit distribution mechanism. Because the economic situation of our company is very good next year, the salary distribution, capital distribution and the proportion of dividends are higher, at this time I think our team should not be lazy and do not think that they earn more money.

The problem of money has been made very clear, the money bag to the wife, you have no money, poor start to work harder, you have to adhere to this principle, you will certainly not be lazy; secondly you have to strengthen and your friends in society, classmates communicate more, publicize our hope and brightness, publicize that we are not lazy, we got the money through struggle, so that they understand what it means to struggle, so that more people join us, so that We only have more hope for tomorrow.

26, the future of change, one is the innovation of business models, one is the innovation of technology

Wang Jiading: From the sales point of view, we face two types of customers, one is the operator resale, one is the partner in the open market. In the spirit of low for weir attitude, our water flow to our partners, in the process, how to ensure effective flow? Now the terminal business model, transaction model is constantly updated, also like the flow of water, I would like to ask the boss, the terminal company and the entire delivery platform should be how to respond to the uncertainty of the results with a rule of certainty, what are the main rules that have been determined?

Ren Zhengfei: The future of change, one is the innovation of business model, one is the innovation of technology. These innovations are given to you, think about how to do? And we have a role model in front of us. Samsung is our role model, Apple is our role model, the power of role models is infinite. Some foreigners do not understand, we will come from ZTE to interpret, to interpret how they understand and we do not understand.

The innovation of business models in our system cannot be dogmatic in what we say the rules are. So what do you mean by the rules of determination, is the determination of the distribution mechanism. Look how powerful Apple is, every day there is a cloud flying over, every day there are millionaires produced. A cloud went in, immediately someone used, that immediately share the money.

Our team is getting bigger and bigger, so how to innovate? To play the collective thinking, we all bravely go to the battlefield. I think you’d better shave your heads, how to go to war without shaving your heads? The terminal company had a very big contribution this year, but don’t be lazy just because you are rich. I caution everyone, do not give up the opportunity to others, do not think that outside the monk to recite the sutra, you can read, you have great talent in the terminal, you do not have talent, how can you do from zero to five billion dollars, so you have to firmly believe that you are able to produce a good monk, is able to recite the sutra, the sutra is also written by yourselves, not written in Sanskrit, but written by yourselves in words, Sanskrit written you do not understand, can not read understand.

This article comes from WeChat public number: blue blood research (ID: lanxueyanjiu), author: Blue Army General Staff

Posted by:CoinYuppie,Reprinted with attribution to:
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