On April 25, 2015, a devastating magnitude-7.8 earthquake shook Nepal, leaving 9,000 dead and thousands injured. The international community rallied to help. The world’s largest telecom equipment maker was one of them. Twenty minutes after the earthquake, Huawei’s local engineering team ran to its local customer carrier to work out an emergency response plan, which would eventually cut the number of non-functional base stations from 30% to below 6% in the next few days.
“Ensuring network stability is the biggest social responsibility for Huawei,” states Ren Zhengfei, the PLA veteran and engineer who founded the company. Now one of the world’s largest smartphone and telecom equipment makers, Huawei Technologies is an employee-owned company with approximately 85,000 working shareholders. The founder Ren holds less than 2% of shares.
This is a telling episode in Chinese companies’ “go global” process as their overseas activities extend beyond profit seeking. In the past decade or so Chinese companies are increasingly expanding their presence abroad, growing sales and financial assets. Data published by United Nations Conference on Trade and Development (UNCTAD) in 2016 shows that China is the third largest foreign investor in the world after U.S. and Japan, committing $128 billion worldwide, up from $123 billion in 2015.
Thirty years ago, Ren founded Huawei with an initial capital of RMB 21,000 ($5,642) in Shenzhen. Today the company is operating in 170 countries with 180,000 employees globally, and it is still growing. Riding on its RMB 521.6 billion ($75.1 billion) annual revenue Huawei leaped from 129th to 83rd place in the latest Global Fortune 500 List. Tencent and Alibaba made it to the prestigious ranking for the first time this year.
With power comes responsibility. “Chinese companies” remains a catch-all phrase tarnished with human rights violations, sweatshops, substandard products, and serious environmental pollution, and their international expansion has been subject to increased scrutiny. In 2012, an influential US congressional committee called on the state government to boycott Huawei and its competitor ZTE for concerns of a being potential threat to U.S. national security. A leaked report later showed that the NSA had hacked into the email servers of Huawei in hopes of learning whether the company was spying on behalf of Beijing.
CSR – A tool in global expansion
Huawei is part of the new generation of Chinese companies who have realized that getting rich is no longer enough: they must seek to build up a reputable brand to win support not only from local consumers but the public and government. Corporate social responsibility (CSR), which essentially requires companies to conduct business beyond compliance with the law and beyond shareholder wealth maximization, and to provide quality of life for those affected by their corporate activities, becomes a secret weapon.
When Huawei entered Nepal in February 2014, Chinese ambassador to Nepal Wu Chuntai remarked at the inauguration (in Chinese): “Huawei and Nepal Telecommunications will bring benefits to local telecommunications consumers and promote Nepal’s economic development together.”
Most consumers know Huawei as a smartphone brand with its flower-in-bloom logo. Less discussed is its biggest revenue driver: network equipment that underpins telecommunications systems, which brought in $41.9 billion in 2015 and the crown from Ericsson in 2012. Nearly half of the world’s LTE networks have been built by Huawei, Walter Jennings, Huawei’s VP of corporate communications tells TechNode.
When disasters struck, the consequence of damaged networks is as much economic as it is social, says Jennings. Huawei maintains a business continuity management (BCM) system that allows it to quickly restore customers’ networks following critical emergencies, helping to safeguard life and property. Each year, the privately-held company published a 100-page CSR report detailing its sustainability activities worldwide from Information Communication Technology (ICT) training for students in Africa to first response in disaster-struck areas.
With 7,838 CSR reports published worldwide in 2014, CSR reporting showed a sharp 30% rise in popularity over just four years. The Chinese government has also been swiftly enforcing CSR regulations over the past decade. At the 2015 National People’s Congress, the government announced a shift in China’s focus from economic growth to one of societal balance and harmony. Since then the number of CSR reports in China has surged from 32 in 2006 to 1703 in 2015. CRS development in China is still low, however, says a 2009 blue book released by state-affiliated research centers. About two-thirds of the top 100 Chinese companies are still lacking in CSR efforts.
Huawei’s hold on the global telecom industry will last for many years to come, and so will resistance from overseas communities with a Huawei footprint. As the giant puts more phones and better network connections around the world, CSR may be one of its strongest tools to win trust and respect.