Huawei’s cautious opening of the factory doors

In a manufacturing plant at Dongguan, a nondescript town about an hour outside the southern Chinese city of Shenzhen, a robot arrives to collect the latest box of Huawei smartphones rolling off a production line.

Stand in the robot’s path and it politely tells you (in Mandarin) to move aside. The robots are busy here – this plant produces 1.3 million smartphones a month; some will likely end up in New Zealand.

Huawei sold 139 million phones last year and ranks third behind Samsung and Apple.

Robots are steadily replacing people in Huawei’s Chinese plants.

“They are more efficient and the quality is better," New Zealand journalists being shown through the plant were told.

According to Huawei, only three phones out of every million fail the rigorous quality control tests.

Humans still have a role - there are 28 of them on each Huawei production line, mainly putting cameras into the phones and testing functionality - but their days are numbered.

Word is that the nearby Foxconn plants (which make smartphones for Apple and Samsung) have 250 people on each production line.

“That’s because people are still cheaper (than the sophisticated robots) for now.”

But, it is clear from the smile on our guide’s face that Huawei doesn’t think the cost difference will last much longer.

The Dongguan plant is producing Huawei’s flagship products, the P10 and Mate 10, devices that rival the latest Apple and Samsung products.

Until now, journalists have not been allowed near these high-tech plants.

The company’s paranoia about journalists is lessening, although getting into the plant required the removal of every piece of metal, including wedding rings. The chances of getting a camera through security were zero.

A group of Italian journalists visited just ahead of our New Zealand contingent. Italy has been a breakthrough market for Huawei (where it now has a 25 percent share) and is hugely important as a European beachhead.

The company’s paranoia about journalists is lessening, although getting into the plant required the removal of every piece of metal, including wedding rings. The chances of getting a camera through security were zero.

Huawei’s decision to open up to the world’s media is driven by two things. One, the confidence in its latest products to compete with Apple and Samsung and two, it needs to convince western nations, particularly the US and Australia, that it is not allowing the Chinese government to use it as part of its spying activities.

Huawei builds mobile phone networks as well as handsets, and last year, revenue from this division topped US$42 billion dollars.

In New Zealand, Huawei developed 2degrees network and the Chinese company is currently rolling out Spark’s 4.5G network in Auckland, Christchurch and Queenstown.

A man-made lake at Huawei's headquarters. The company prides itself on being seen as the most desirable employer in China. Photo: Mark Jennings 

British Telecom is a customer, but the US and Australia have kept Huawei out of their networks on the basis it may compromise national security.

This is a touchy subject at Huawei HQ in Shenzhen. In an interview with the group of New Zealand journalists, Huawei’s head of global PR, Ada Xu agreed that sensitivity from “Five Eyes” nations was a problem.

“We hope that by being more transparent as a company this will become less of an issue,” said Xu.

“We are open to any kind of investigation because we are doing nothing. We are a business and we only want to do business.”

Huawei executives are acutely aware that any evidence of it allowing Chinese spies into the mobile or broadband networks it’s built would be catastrophic for its brand.

But in China, the relationship between companies and “The State” is murky. This is not a democracy and under Xi Jingping, the Chinese government is using many levers to aggressively pursue its foreign policy and economic agendas.

“Huawei never positions itself as a Chinese company but as an international company."

The company’s founder and current chairman Ren Zhengfen spent 10 years in the Chinese Army’s engineering corps and held the civilian equivalent of a high military rank.

The negative image of the Communist Party in western nations is partly why Huawei stresses its global outlook.

“Huawei never positions itself as a Chinese company but as an international company. We are the most developed Chinese international company.” Xu told Newsroom during an interview at its headquarters in Shenzhen.

Huawei became a global company both out of desire and necessity.

It needed access to technology it didn’t have. For example, its partnership with German camera manufacturer, Leica, has given it access to world class camera technology and the halo effect from the German brand.

Design and aesthetics are done in Paris, research into cloud applications is carried out in Seattle and 5G work is the remit of Canada and Shanghai.

This geographical spread means a significant number of non-Chinese work for Huawei and the company now hires in some of the world’s best advertising and public relations agencies.

But for all its global outreach, Huawei is - intrinsically and culturally - a Chinese company, albeit with some unusual twists.

Customers and guests, which now includes international media, are waited on hand foot by Huawei employees who work in the company’s reception department.

For such a huge company, Huawei has an unusual ownership structure – all its shares are owned by its employees.

Dressed identically, they resemble airline flight attendants but all have university degrees and see it as a stepping stone to greater things in the company.

Most work at Huawei’s huge headquarters in Shenzhen which is spread over 200 hectares of beautifully-landscaped grounds and gardens.

The mainly low-rise buildings look out on artificial lakes, one of which was inspired by a Monet painting.

It is not what you would expect to find in one of China’s industrial heartlands but Huawei was born when Shenzhen was little more than a fishing village over the border from Hong Kong, and land was cheap.

For such a huge company, Huawei has an unusual ownership structure – all its shares are owned by its employees.

Seventy thousand of its 180,000-strong workforce own shares and the founder, Ren has less than two percent.

Despite that relatively small shareholding, Ren ranks as one of China’s billionaires, and the company’s spectacular growth has turned many of its employees into millionaires.

The working conditions and the financial rewards mean Huawei can attract China’s best and brightest workers, and (as the company likes to quietly point out) it is now seen as the most desired employer in the country.

Mark Jennings travelled to China as a guest of Huawei.

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