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4 key decisions in the ZTE Hou Weigui era: missed chips

via:博客园     time:2018/4/26 14:15:36     readed:339


Text/box rice

Source: Boxi Finance (ID: daxiongfan)

In 2017, ZTE ushered in the brightest year in recent years, with net profit of 4.57 billion yuan, a year-on-year increase of 293.8%, and other financial data also showed a larger increase. However, shortly after the publication of the financial report, the United States announced that it would impose sanctions on ZTE. In the next seven years, it will ban US companies from selling components, goods, software and technology to ZTE.

The sanctions are a deadly blow to ZTE, including the inability of ZTE's products to use chips and even the Android operating system. This has seriously jeopardized the survival of ZTE, and ZTE founder Hou Weigui has come out on the Internet. “Firefighting” This incident brought the 76-year-old grandfather back to the people's perspective.

In ZTE's case, this may be "to the dark moment", Hou Weigui out of the mountain can turn the situation? Step by step to the world’s fourth-largest communications equipment manufacturer, what important decisions did he make at the key moments in the history of Zhongxing?

I. ZTE restructuring

In the 1980s, with the open door to reform and opening up, overseas companies entered the Chinese market one after another. The telecommunications sector was once monopolized by the “seven countries, eight systems,” including Ericsson of Sweden, Alcatel of France, Siemens of Germany, and Fujitsu of Japan. Eight national models of the country.

Hou Weigui, who was an engineer at the time, worked as a technical section chief at Space Flight 691. He was sent as a technical expert to the United States responsible for the introduction of technology and equipment. This trip made him exposed to the new world. He first truly realized the telecommunications industry. power.

"The arrival of the United States was equal to another planet. "Hui Weigui recalled.

Hou Weigui made an important decision after returning home. In 1985, 43-year-old Hou Weigui convinced leaders to lead the team south to Shenzhen and founded ZTE Semiconductor. Originally wanted to do IC products, but too much money, in order to survive, he first made electronic watches, fans, telephone processing business.


Hou Weigui (third from right) and colleagues at the beginning of the venture

Until 1989, ZTE developed the first digital program-controlled switchboard with independent intellectual property rights in China, which transformed itself into a communications equipment manufacturer. Under the monopoly of “seven countries, eight systems,” the ZTE vigorously attacked the rural market.

Within a few years, ZTE’s sales exceeded one billion yuan. This income was very thin before the appearance of program-controlled switches. For example, the telephone service, 200 people work per day, can earn about 200 pieces, and all the services for the whole year amount to several hundred thousand yuan.

While the company's performance has increased dramatically, Hou Weigui has encountered problems that almost all startup companies will encounter: property rights issues.

Shareholders are arguing for their interests. The Hong Kong-based joint venture party has failed due to poor management and has retired. ZTE is likely to be in trouble. How does Hou Weigui decide? He and other technical veterans raised funds by themselves. In 1993, Wei Xiantong was established. Together with the 691 plant and Shenzhen Guangyu, ZTE Corporation was established. In China, a new model of “State-owned holding, authorized operation” was created in China, and the company was The company was reorganized into one of the first batch of “S&P” mixed ownership companies in Shenzhen Special Economic Zone. Hou Weigui served as general manager.

The design of this equity model directly circumvented the shareholders' intervention in the business and obtained sufficient freedom for the management. The more important significance is that this restructuring will instill vitality for ZTE's development in the market economy, and it will allow ZTE to escape the tragedy of destruction. Another major domestic communication equipment manufacturer, Dragon, has failed to test the old and new systems. In less than a decade, it has reached the end of the corporate life cycle.

Second, bet CDMA, PHS and mobile phones

From ZTE's restructuring, it shows Hou Weigui's ability to manage. On the bet of PHS and CDMA, Hou Weigui's strategic vision can be seen.

In 1995, ZTE began to explore the CDMA project. Three years later, China Unicom held its first CDMA95 bid, but it was shelved temporarily because Qualcomm’s intellectual property issues have not yet been resolved.

Ren Zhengfei withdrew Huawei's 95 team and transferred to 2000. ZTE, on the other hand, continued to increase its investment and jointly developed CDMA with China Unicom.

Hou Weigui’s choice seemed to be a great risk at that time, because the time for China Unicom to launch the CDMA95 project was uncertain, and CDMA2000 was more advanced. How far the 95 can go is also a big problem.

However, Hou Weigui analyzed that China Unicom will certainly launch a CDMA project. Even if it turns to R&D 2000, it will require the accumulation of 95 standards. Taking a step back, even if China Unicom does not adopt 95, ZTE can also seek overseas markets.

As a result, in 2001, China Unicom restarted the bidding, and finally selected an enhanced version of CDMA95. ZTE won the bid and obtained 10 provincial exchange and base station system procurement contracts, which accounted for 7.5% of the market share. In the second year, Unicom sponsored the second-phase bidding for CDMA. ZTE won the bid again and won a 15% share.

In the year when China Unicom restarted the bidding, PHS quietly entered China. At that time, many people inside ZTE and Huawei thought that PHS technology was behind, and Huawei even directly refused the cooperation of Japan’s Kyocera.

It is of vital importance that national policies are conservative and have been blocked and postponed for several times.

PHS business, do or not? This is another difficult problem before Hou Weigui. After some reflections, he analyzed the doubters in this way: First, after the demerger of the domestic telecommunication industry, Telecom and Netcom have an urgent need for PHS in order to survive; Second, PHS technology is very mature in Japan, UT Star Kang has already been deployed in China; thirdly, compared with mobile, PHS charges are low and one-way fees are charged.

do. Shortly afterwards, the national policy was gradually liberalized. The demand of PHS suddenly showed an explosive growth and there was often a huge vacancy. ZTE took advantage of this opportunity to enter user needs. By 2003, the PHS business of ZTE had accounted for 1/3 of total revenue. .


PHS gave Hou Weigui great confidence. He decided to march into the mobile phone market. The stability is Hou Wengui's style.

Based on the cooperation foundation between ZTE and telecom operators, ZTE's mobile phones are rapidly gaining momentum from the market. In 2003, the sales volume of three major mobile phones of ZTE reached 4.5 million, and the sales volume at the end of the year actually reached a record-breaking number of more than one million. Mobile phone sales accounted for nearly 20% of ZTE's total sales.

The two seemingly "adventurous" decisions made by Hou Weigui eventually led ZTE to survive the Internet winter and maintain steady growth. Even Huawei, who has suffered great performance dips, Ren Zhengfei also wrote an article "Winter for Huawei" to reflect on Huawei's development.

It can be seen from this that Hou Weigui’s decision making based on market and technology development is of practical significance, he does not easily risk his betting on the uncertainties of the future, but he can also sniff the market opportunity at a critical moment. Grab quickly.

Third, open up the international market

Another thing that reflects the stability of Hou Wengui is the investment in technology. Unlike Huawei's heavy gold orphans, Hou Weigui prefers to put eggs in multiple baskets and explore at low cost.

In the years before the large-scale commercialization of 3G, WCDMA, CDMA2000, and TD-WCDMA three systems existed at the same time, and the leading parties behind them were Europe, the United States, and China. For the unclear situation, Hou Weigui's strategy is to: not give up WCDMA, moderate investment; rely on CDMA95, transition to CDMA2000; and Datang to draft TD-WCDMA, for government support.

TD-WCDMA is China's first attempt at international standards, and most manufacturers do not have confidence in this, and they dare to invest less in large-scale. At this crucial moment, Hou Weigui concluded that this is a government will. Only success will not be allowed to fail. It will surely give strong support to the policy. Therefore, a long-term follow-up study was conducted, from the initial investment of dozens of people, and later the entire team achieved More than 3,000 people.

In 2009, China Mobile obtained a TD-WCDMA license. In the bidding process, ZTE became the biggest winner with its technical advantage. Even if WCDMA later became mainstream, this decision still guaranteed ZTE's stable and sustainable operations, as well as support and exploration of new technologies.

In terms of Hou Wengui, TD-WCDMA is likely to be a "technical leader" "chasing dreams." He is also pioneering the development of the international market.

"The developed countries were still at the stage of investing more income and less. With the increase of orders from developing countries, there will be more and more investment in developed countries." "This is also Hou Wengui's mouth's "two-eighth law", that is, 80% of the investment is in developing countries, 20% in developed countries.

Based on Hou Wengui’s judgment on the international market at that time, ZTE focused the overseas battlefield on the “third world countries,” and the basic telecommunications facilities in many countries in the Middle East, Southeast Asia, and Africa were all created by ZTE’s employees. masterpiece. For example, in Ethiopia, Europe and the United States Communications Corporation believes that the local environment is complex. Digging trenches and burying cables are difficult in remote areas. It is difficult to implement the project. However, ZTE has stepped up to build the facilities.

In addition, ZTE's overseas sales of mobile phones are also very impressive. In 2017, the global market shipped 42.65 million units. Currently, ZTE mobile phone ranked fourth in the United States, Canada, and Mexico, and ranked fifth in Spain, Russia, and third in Australia. .

Fourth, to create a missing cattle culture "chip" & rdquo;

Helping "third-world countries" to build telecommunications facilities, it was revealed that Hou Wengui brought ZTE's "cow culture" to believe in the spirit of the old cattle. He worked with balance and stability, and he was able to perform hard work.


Once, the Network Division met in Nanjing and the person in charge asked Hou Wengui to speak. As a result, the plane was delayed and the flight was delayed at 7 o'clock in the evening. The result was delayed until 11 o'clock. However, Hou Wengui looked at the book while sitting in the waiting hall. Until the person in charge called him to go back, he returned. .

In terms of management, Hou Wengui is also very modest and contrasts sharply with Huawei's wolf culture. Communicating with employees, Hou Wengui never condescended, and he does not easily deny others. Even though many people suggest quitting an employee, Hou Weigui still insists that this person is available and gives him multiple opportunities.

In the era when he was in charge of ZTE, Hou Weigui lost a total of three senior executive positions, including two of them. He was also sent to study in the United States. After returning home, Hou Weigui re-arranged his work for them.

Elegant, humility, pragmatic, heavier book, and the affability of the elders, is Hou Wengui's impression of the public, but this warm culture also brings some negative effects to ZTE, affecting ZTE's strategic decisions, such as on "chips." ” Problems.

Around 2000, ZTE and China National Development and Investment Corporation jointly established ZTE IC and started the development of 3G mobile baseband chips in Asia. However, ZTE's culture is mainly based on experience exploration, rather than a bold trial and error. Eventually Hou Weigui chose to give up, missed important opportunities, and also caused the emergence of "destruction" after the US sanctions.

The result of this decision cannot completely negate the innovation of ZTE. According to Yin Yimin, chairman of ZTE, ZTE spent Rmb12.96 billion in R&D in 2017, accounting for 11.9% of revenue. As of December 31, 2017, ZTE has a total of more than 69,000 pieces of global patent assets and more than 30,000 authorized patent assets. Among them, there are more than 1700 patents worldwide for the 5G strategic layout.

ZTE's patents are also very beautiful internationally. In 2017, ZTE also took 2965 PCT international patent applications to occupy the second position in the PCT international patent applicants, and for the eighth consecutive year, the number of international patent applications ranked the top three in the world. It is the only company in China that has won this honor for 8 consecutive years. .

Regarding the direction of Zhongxing culture, Hou Wengui himself commented: “The most valuable thing I left for ZTE is not book wealth, but a kind of corporate culture that has been precipitated for many years and recognized by all employees. ”

This time Hou returned to the mountain with a gentle and unassuming manner. Can he once again turn the tide?

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