Huawei’s Chief Executive Director for “Capital”
Guo Ping is one of the three rotating CEOs of the Chinese technological giant Huawei, who are changing every six months. The revenue of the company, which is the leader in supplying network telecommunication equipment and number three among smartphone makers, jumped 32 % in 2016 to $ 75.1 billion, while net profit rose 0.4 % to $ 5.3 billion. The investments in R & D were $ 11 billion last year. Guo Ping has been in the company since 1988, having gone through various positions in the group – he was responsible for the research and development, supply chain, business development and others. He was also president of Huawei Device. Currently he is also the deputy chairman of the company’s board and he is head of the Financial Committee. Guo Ping was in Bulgaria where Huawei announced its partnership with BTC in the area of the cloud services.
Huawei’s corporate structure is unprecedented in China, and in many other places – the three CEOs with rotative positions. At the same time, the employees obtain shares in the company, which is interesting for a Chinese company. Why did you bet on this model?
I actually think there is such a rotating principle everywhere. The Prime Minister of Bulgaria is also on a rotating basis, so this is quite normal. What is extremely important for Huawei is based on this principle to have a team of leaders. At Huawei we strive to have no one dominate the company. More than 10 years ago, we invited a US consulting company to help us structure the company’s leadership. It was then recommended the founder of the company to be the chairman. He did not want to be an executive director, and we came to the decision to have a rotating executive body. At the moment, we have three executive directors in the company on a rotating basis. I’m actually one of them. So during this period I am responsible for all of the company’s activities. What is important to know about the company is that leadership is a matter of a collective body rather than of individual qualities or characteristics. If we look at the past 10 years, we are doing really well. We managed to get into the markets and over the competition. We will continue to observe our principles. In fact, Huawei is a high-tech company and we do not rely on any natural resources other than the human resources and the human potential. For us, it is very important the success of the company to be projected on the employees of the company, who give their best to this success. From this point of view, there is a virtual shareholding for Chinese employees in the company. Three years ago, this model was also transferred globally to the other countries.
How do you decide which of the employees to participate in the scheme?
The company has established principles and methods for selecting people who have shown results and contributed to success. Me and my colleagues are convinced that the more Huawei employees participate in this virtual shareholding scheme, this is a prerequisite for the company’s further development and success. We live in times of truly turbulent development and change of technology, and what is most important is people with abilities, people who are talented and ready to give of themselves to be part of this family. I am convinced that we will continue to observe this principle in the future – the employees of the company will also be its shareholders.
What are the two other executive directors doing when the third is occupying the post?
In fact, the company has a 7-person committee that takes decisions. At the moment when I am the Chief Executive Officer on a rotational basis, I am also the chairman of this committee. The other two of my colleagues are members of this committee. A story I was told by one of our consultants long ago is that the birds fly in the form of a triangle when they fly from Europe to Africa. But the bird that leads is not at the front of them all the time, but it changes with others. The principle is the same for us.
You recently announced your business plans for cloud technologies – the launch of family public clouds that you will develop independently and in partnerships with telecoms. How many agreements do you have and where do you place the new signed agreement with BTC and your business in Bulgaria?
This is a very good question. Currently cloud services growth is one of the highest. In the world, if we take as an example the United States, Western Europe or China, at around 20% usability of cloud services within a year or two maximum it is achieved over 70% usability of these services. Huawei is a company that has developed cloud computing technologies, and we really hope to be in favor and help different countries to make transformation towards these services. Our strategy in Europe is to cooperate with companies that can provide very high information security. Huawei as a company provides infrastructure and a platform for cloud services, as our understanding is that our partners are capable in a very short time to deliver these services to the local markets. For example, in Europe we have cooperation with T-Mobile and we have built the so-called public cloud. We also have cooperation with Orange and Telefonica. Huawei is a company that provides equipment to build an infrastructure and one of its principles is not to touch the data itself. We believe that this data should not go beyond national borders, and that is why we consider this cooperation as a very good symbiosis with our partners. Regarding Bulgaria and our cooperation with BTC, we believe that it fully complies with these principles and this will further contribute to the development of the sector in Bulgaria. We are convinced that it is precisely telecom operators, providing cloud services are the best partner for governments as well as for business and society. We, as a company, will support operators such as BTC, T-Mobile, Telefonica and Orange at the stage of cloud service development to be successful and market leaders.
What are your expectations from the business with BTC in the future?
Regarding business development issues, my understanding is that Mr. Spas Roussev is more likely to answer such questions. What I see can be expected from 2018 to 2019 is that cloud service usage will increase from 20% to over 70% in Bulgaria. I can only hope that BTC in partnership with Huawei will be one of the main providers of cloud services in this market. I think there are perfect conditions in Bulgaria if we look at different perspectives. First of all, the country has a very low level of corporate and income taxation. On the other hand, Bulgaria has extremely large capacity in the IT industry and technology, so I do not see a reason why Bulgaria will not be successful. In fact, what my colleagues have told me is that the country appears to be the Silicon Valley of Southeast Europe. I myself, after arriving in Sofia, on the way from the airport, saw signs and advertisements of many high-tech companies. It is these high-tech companies that can benefit greatly from the development of cloud services in the country and respectively to be customers of this cloud.
Have you considered other future projects here? For example, in relation to Brexit, as Huawei has a strong presence in the UK – are you considering moving some of your business there to other countries and possibly to Bulgaria?
We operate in every European country. Except in England, we operate in Germany, France, Ireland, and so on. In fact, Huawei’s policy is to focus on centers where there is a potential to have very good employees in the field of various researches. For example, last year I had a meeting with the Prime Minister of Ireland who asked me why we have built a center 500 km from Dublin, in Kirk. I told him there is a lot of talent there. In order to develop cloud services in Bulgaria, the most important thing is to have a complete ecosystem development.
Do you think we have here the necessary specialists to develop the whole system?
If we look at the sectoral point of view, let’s take the example in the healthcare sector, image processing is needed. If we look at transport management, there is a need for geographic data processing. Virtually every field has different specialists to participate in the development of these services. This is a potential for many companies. For example, from the point of view of the development of the intelligent city, if we made it in Bulgaria precisely on the basis of cloud technologies, what we can see is that, on the one hand, it will attract providers of various services from all over the world. On the other hand, companies that build such applications and services – Bulgarian companies that are competitive enough, for them it will be one of the easiest ways to go out in other markets.
When we talk about Huawei’s entire business, the results for the last year have shown that profit growth is slowing. At the same time, your R & D budget is bigger than ever. Why is this and what is behind the numbers?
Huawei has three main directions, and our view is that we must continue to make breakthroughs in all three. That is why we are increasing our investments in development. For example, the largest economies have already announced that they will build 5G mobile networks in 2018. They must solve a very large number of connections. In this respect, a development of new technologies is needed to achieve this. On the other hand, we also support operators, such as BTC, which have not had cloud services so far and want to develop in this area at some point. What matters to us is to be able to provide our partners and customers the most competitive servers and the best storage. For example, in the next stage, we will invest more than $ 1 billion to build an ecosystem, in application development, platforms and technologies, specifically to help develop this area. The last few decades what has been done is to provide communication between man and man. But with the new generation of mobile networks, the goal is to secure human-machine connections and, above all, machine-machine connections. Indeed, in this connection are needed additional investments that we make in order to reach the next stage in the development of the telecommunications industry.
When do you expect the 5G technology to be entirely adopted in Europe and in particular in Bulgaria? Does your partnership with BTC mean that you will cooperate in the future in the field of 5G?
It is expected this year to fully establish the 5G network standard. What we know is that Japan, China, Korea and the United States have already been announced that in 2018 will have a commercial use of a 5th generation network. In fact, such preparation runs in all countries in Europe, but frankly I am not aware of the concrete plans for Bulgaria. In this case, maybe BTC, Telenor and Mobiltel can respond the best about their plans.
The competition in your other big business -the smartphones, is more fierce than ever and margins are constantly shrinking. You are now the third-largest player in the world. How do you plan to compete with Apple and Samsung and do you have plans to become number one?
The first thing I want to say is that I do not believe this business should be a race for a position. Our efforts should be primarily on how to provide the best technology and best service to our customers. Our main goal is not to be the number one. The most important thing is to improve our design, to provide better technology and, accordingly our clients to be more satisfied. Speaking specifically about Apple, this is a company from which we are ready to continue learning. If we are talking about a plan for the Bulgarian market, it is very simple. I personally will be very happy if the Bulgarian consumer likes much more Huawei products than the products of other companies. Our goal is in Bulgaria and worldwide to be the brand most preferred by our customers. In this sector and in this industry, we have watched companies with extremely high growth, but at the same time they have reached a point where they fell very abruptly. If we can keep this attitude towards the customers, towards the market, I’m actually convinced that we will have really good results.