Daily Management Review

Huawei Could Be At A Disadvantage By Changing Political Environment In China


Huawei Could Be At A Disadvantage By Changing Political Environment In China
Shockwaves have run through China after the news of the arrest of the chief financial officer of the Chinese electronics giant Huawei - Meng Wangzhou, who is also the daughter of the founder of the company Ren Zhengfei.
Huawei is based in China and is considered to be the flag bearer of China;’ effort to push for innovation and the efforts of the second largest economy to the world to be recognised beyond its hitherto image of being a low-level manufacturing hub. The company has been very successful globally with its range of smartphones and has made the world take note of the company. It has also created innovative products and marketing strategies that have helped it to successfully penetrate multiple markets of the world.
At a crucial juncture when the Vi Jinping led Chinese government is pushing for boosting its innovation capacity to be able to compete with global players, the success of Huawei lies in the fact that revenues from its foreign markets account for more than two thirds of its total revenues. Chinese strategists also view the company to be an important player in its trade war with the United States
Huawei’s position in the Chinese corporate society is a complex one despite its global success. The Chinese government is pushing to policies that entail a switch away from private-sector companies and fostering state-owned enterprises. The policy of the Chinese authorities to go soft on private sector companies and allow them to do almost wherever they wanted could be reaching its end and this transition might be hurting Huawei too.
In the soon to be held celebrations to mark the 40th anniversary of opening up and reform of the Chinese economy, Meng’s father and Huawei’s founder Ren Zhengfei was not included in the list of top 100 entrepreneurs. Ren was not allowed to join the Chinese Communist Party on the pretext that his family at one time had links with the Nationalist KMT before the Revolution in 1949 even though he was a member of the the People’s Liberation Army.
The changing attitudes of the Chinese authorities towards private companies is reflected in the complex relationship between Huawei and the Communist Party despite the fact that company has been at the forefront of innovation in the second largest economy of the country.
Meng is from Ren’s first marriage to Meng Jun who is the daughter of a former senior official in Sichuan province. Ren also has a son, Meng Ping, from the first marriage. While working at Huawei that son has sometimes made use of his surname and wanted to be known as Ren Ping. However, Ren has attempted to keep himself away from portraying his children as possible heirs to Huawei.
There are also questions about the structure of the company. There are questions about Meng Wangzhou’s own marital status.  
None of Ren’s daughters have taken their father’s surname possibility because of the multiple marriages of their father and something that is not encouraged by the Communist Party.
“We call on the Chinese government and society to offer moral support to Huawei and Chinese diplomats to offer timely assistance to Meng,” it said in an editorial. “Obviously Washington is resorting to a despicable rogue’s approach as it cannot stop Huawei’s 5G advance in the market,” it said. “We also support Huawei in its legal battle with the US to prove its innocence and thwart some Americans’ plot to throw the company off track,” it said.