Beijing Times, 12/27/11
Ren Zhengfei, president and CEO of Chinese telecom equipment and terminal manufacturer Huawei, has issued an internal memo entitled "The Spring River Flows East," the first in which he addresses concerns over selection of his successor.
According to Ren, in the company's early days, there was no real management system. This changed in 1997, when Ren and professors from China's Renmin University together discussed a "basic law" for the company, from which Huawei's company culture took shape. In 2004, with the help of a US-based consulting firm, Huawei established an executive management team (EMT), which created a rotating EMT chairmanship system. Under the system, the eight members of the executive management team take turns as EMT chairperson, each for a term of six months. With the rotating EMT chairmanship system already in place 8 years now, Huawei this year started a rotating CEO system. Under the new system, each member of the board of directors takes a turn as the company's CEO for a period of time. Ren favors this system, as it ensures that the company's success or failure does not depend on just one person, and balances out various competing interests within the company, facilitating smooth growth.
Ren indicated it should not be "one single person" who succeeds him, but rather "several successors." Regarding Huawei's future, Ren said he believes in Huawei's "inertia" and in the wisdom of his successors.
Editor's Note: In 2010, industry sources claimed that Ren Zhengfei was angling to have his son, Ren Ping, succeed him. According to rumors, a large sum of money had been paid to Huawei board chairwoman Sun Yafang to induce her to leave, but Huawei vehemently denied this claim. For more information on this topic, please see "Huawei Denies Chairwoman Ousted," MD 11/09/10 issue. According to the Wall Street Journal, industry sources say Ren Zhengfei, while still Huawei's leader, is currently focused on supporting other high level executives under the rotating CEO system. It is not clear if Ren is planning to formally resign from the company soon. In the internal memo, he revealed that he twice underwent cancer surgery several years ago, but he is reportedly currently in good health. If Ren Zhengfei, who previously served in the People's Liberation Army, were to step down, it might help pave the way for more active expansion in markets like the US, UK, and India, where the company has sometimes met resistance due to national security concerns. In October 2011, US officials blocked the firm from participating in the construction of a national emergency communications network, and earlier this year, US authorities also rejected Hauwei’s proposed acquisition of technology firm 3Leaf. Last year, eight US senators suggested Huawei is controlled and funded by the Chinese military.