Xinhua Insight: Huawei's code to success

China must do more to protect intellectual property (IP) if it wants its companies to come up with original products and compete abroad, according to the founder of Huawei, the Chinese telecoms giant that has been successful largely through R&D.

"Only if it protects intellectual property will China see more inventions. Ensuring originality is respected will attract more people into this field and help original ideas grow into industries," said Ren Zhengfei.

Huawei has become a standard-bearer for China's industrial sector after its 30-year rise from a small workshop into one of the world's leading manufacturers of telecoms equipment. Spending 10 percent of its annual budget on R&D, Huawei is of even more interest now that the government is encouraging startups and bigger companies to "innovate" in the hope that their creativity and modernization can spur the slowing economy.

Ren Zhengfei founded Huawei in the southern Chinese city of Shenzhen in 1987. He has kept himself out of the media spotlight and rarely speaks to reporters. However, in a sit-down interview with Xinhua, the 72-year-old gave his views on the company and tech market's past, present and future.

Ren noted how Chinese companies have missed out on the first wave of the Internet boom. "Global tech giants like Cisco, Google, Facebook and Apple have emerged with the popularization of broadband, but there were few Chinese companies involved, and this is because of weak IP protection," he said.

All is not lost, however. Ren sees opportunities for China to lead in emerging sectors, such as virtual reality, in the coming years -- providing the reassurance of IP laws being enforced.

"TICKET TO THE WORLD"

Huawei stands out among Chinese companies for employing nearly half its workforce in R&D positions. The company held more than 50,300 patents by the end of 2015, a year in which it made the fourth highest number of patent requests in the European Union.

Earlier this year, Huawei signed a major patent licensing agreement with Sweden's Ericsson under which the two firms can use each other's patents in certain types of technology around the globe. Ren compared it to "buying a ticket to the world."

He outlined a strategy of friendly competition "under the IP umbrella."

"We've paid a lot of patent licensing fees over the years. Meanwhile, we've also received a large sum and signed patent deals with many companies," the company founder said.

UNCOMPROMISING, FOCUSED

Huawei operates in more than 170 countries and regions and employs about 170,000 people worldwide. Its net profits last year rose to 36.9 billion yuan (about 5.67 billion U.S. dollars) and global revenue grew to 395 billion yuan, up 37 percent year on year. For the past few years, its annual growth has averaged 30 percent.

The immense success has fueled speculation over whether it will go public. But Ren dismissed the possibility, explaining how he thinks responsibility to shareholders may cause it to compromise and lose focus.

"We have always remained distant from quick money like stocks and the property market," he said.

"I remember there was a stock exchange downstairs at a Huawei office, crowded with people trading stocks. Upstairs, Huawei executives sat quietly like a pool of water. We were absolutely undisturbed.

"Had the company gone public, the shareholders would probably have forced me to expand sideways... and we would not have secured our threshold like we did," he said.

Ren is optimistic about the company's potential to lead "the future information society," but he also warned against corporate sloth after a period of rapid growth.

Huawei succeeded because it committed to one focus and invested heavily in its core businesses of telecommunications, including building infrastructure for phone and Internet operators, Ren said.

"Huawei remains committed to telecommunications. For the past 28 years, we have done only one thing. We became the leader in big data transmission, and now we intend to stretch that lead." Endi