Page 1 of 15

I. ) Introduction.

The following analysis has been prepared to discuss the organizational

culture of the Chinese company Huawei. Issues will be collected to lead to

discussion. Based on some magazines, newspaper, relevant literature books

and reports published by Huawei itself, the following sections will introduce

Huawei, discuss issues, outline the theoretical framework of Edgar Schein

and look at the organizational culture of Huawei according to Schein’s model.

Page 2 of 15

1. ) The background of Huawei and its environment.

Huawei Technologies Co.LTD. is a Chinese multinational networking and

telecommunications equipment and services company with a headquarter

located in Shenzhen, Guangdong, China, which originally was a sales agent

for a Hong Kong company specializing in private branch exchange (PBX)1

switches. Formed as a private firm owned by employees, it was established

by Ren Zhengfei-- the president of Huawei (Huawei.com, 2012). As a leading

supplier, Huawei is dedicated to providing enterprises, telecom carriers and

consumers with competitive services and ICT2 solutions. Currently the

products and solutions of Huawei have largely covered over 140 countries,

serving almost one third of the people worldwide (BBC News, 2012). To

strengthen the competitive edge of equipment and solutions, Huawei has

been committed in research and development with the research department

consisting of almost 62,000 staff, which accounts for 44% of the whole

personnel in Huawei. According to Huawei.com (2012) Not only did Huawei

expand domestic business, but also corporate with other multinational

enterprises to enlarge the extend quotient in the international market.

Presently, twenty-three Huawei research institutes were founded worldwide in

the countries such as Germany, the UK, France, Italy, Russia, India and so

on. Moreover, Huawei has launched 34 Joint Innovation Centres with the

leading companies for the sake of transferring its cutting-edge technology to

competitive advantage (Huawei.com, 2012).

2. ) Case about Huawei.

Over the last two decades, Huawei developed from a sales agent to one of

the top-tier firms that compete with Cisco Systems3, Alcatel4, and Lucent5 at

the same stage and even obtain more offers from the top network operating

Page 3 of 15

companies (Newsweek, 2006), which is an absolutely milestone in

China where the high-tech industry was lately burgeon. On 10th April, 2005,

the president Ren Zhengfei was featured in the "The Most Influential Man Top

100" by the American Newspaper Time (Time, 2005). Then on 31st August

2005, according to the result of the investigation among readers of the whole

world done by financial times, Huawei was honoured “one of the top ten

brands in China” (Financial Times, 2005). However, because of the cruel

competition amongst entire telecoms-equipment industry, an increasing

number of companies were afflicted with a substantial deduction of profit,

creating the merge between firms that aimed at improving the situation by

mutual advangage. Alcatel-Lucent which was combined by Alcatel and Lucent

Technologies in 2006 is a case in point. They supposed to benefit from

greater geographical reach. Unfortunately, the merge showed no recovery,

conversely, it witnessed six consecutive quarterly loss (The Economist, 2008).

While other competitors were struggling through, Huawei also suffered a

series of defeat when they expanded business abroad for political safety

reasons. For instance, from the year 2001 Huawei has suffered a lot from the

business in America, such as legal issues with Cisco, failures in 3com

purchasing (Global Times, 2012). Despite the difficulties, in 2011, Huawei

owned a position amid the Fortune Global 500 (Fortune.com, 2011) with

continuous effort and researching. One year later in 2012, the sales revenue

of first half year reached CNY 102.7 billion (Huawei.com, 2012), which

enabled Huawei to exceed Ericsson6 to become the largest telecoms-

equipment-maker in the world (The Economist, 2012).

Unlike other corporates, Huawei, though facing embarrassment, showed

excellent performance in the intensely competitive markets which deeply

stimulates curiosity about the factors contributing to its drastic growth. Instead

of the visible strategies deployed by the company, the invisible factor--the

Page 4 of 15

unique organizational culture in Huawei plays an irreplaceably determinant

role in the consecutive success of Huawei. The world is saturated with vague

sections which is a big challenge for the soft issues of the manager ,

especially culture (Peters & Wateman, 2006). Based on the journals, news

bulletins, corporate publications and relevant academic literature, the

following sections will mainly analyze the feature of Huawei culture and how

how it behaved under the organizational culture in harsh economic conditions

using the theoretical framework of Edgar Schein.

3. ) The theoretical framework of Edgar Schein.

3.1) The awareness of the importance of organizational culture.

Culture has been and still is studied via several concept, all of which have

their own distinct approach (Hill, Wu, Beadle & Brown, 2012). Furthermore,

having perceived the significance of organizational culture, numerous

scientists had developed diverse cultural models such as Hofstede, Trice and

Byer, via arduous researches (Schein, 1992). Not only had scientists noticed,

but the president of Huawei perceived that the organizational culture was so

important that he noted it in the Letter to the Freshman illustrating that the

material resources will ultimately exhaust but the culture will never die (Ren ,

2005).

3.2) The organizational culture concepts defined by Edgar Schein

It is acceptable that the definition of organizational culture framework founded

varies little or greatly from different scientists. After learning from other views

and considering scientist the research, Schein (1992) defines organizational

culture as a basic assumption pattern that was created, discovered or

developed when the group were dealing with problems of external

Page 5 of 15

environment adaption and internal integration or that was recognized for the

valid outcome and had to be imparted to new members whom were set to

regard it as a correct way to perceive, feel and comprehend the issues. For

example organizational culture is the result of learning. Then after four years,

organization culture was defined as a series of implicit assumptions which

were built during social communication or through the process when the

members were sharing history and expection, concerning how a group share

and determine their cognition, thought, feeling and the overt behaviour

(Schein,1996).

3.2.1) The main concepts of the theoretical framework Edgar Schein

In order to add accuracy to the definition of organizational culture, Schein has

divided it into three levels by regarding basic assumptions and value along

with behaviour as the essence of culture and the expression of its essence

respectively (Schein,1992).

Figure 1: Three Levels of Culture defined by Edgar Schein (1992)

Page 6 of 15

According to the graph, elements belonging to artifacts are easily discerned

such as symbols, taboos, rites and so on, though some of them are relatively

hard to understand. For certain companies whose core values are part of this

level, they will benefit a lot if they grasp the idea of it because the core values

could conduct the behaviour of its staff. Another level-- Espoused values

involves certain invisible factors like trust, honestly, core values and so on.

Then the core part--basic assumptions which is taken for granted because of

the invisible impact on staff which become the nature of them and the

company (Schein, 1992). As Nira (2008) states this three level model makes

the understanding of the organizational culture easier and also can be applied

to lead change.

3.3) The reason why the theoretical framework of Edgar Schein is selected.

Compared with other models, Hofstede's in particular, the theoretical

framework of Edgar Schein involves a wide range from exterior aspects, like

office design and uniforms, to the interior aspects such as values, beliefs and

rites (McSweeney, 2002). Besides, Schein focus on the essence lies deep in

culture rather than the material level whose information is limited and not

profound. Moreover, apart from the common ways most scientists used during

the research, Schein combined the methodology of other fields, for instance,

treating culture the way the psychologist treats the patient (Schein, 1992).

4. ) The organizational culture of Huawei according to the three levels.

4.1) Artifacts

As a technology firm, Huawei considers it as the greatest asset to manage

employees validly (Huawei People, 1998). To ensure the happiness degree

Page 7 of 15

amongst the staff, Huawei has stuck to creating an harmonious atmosphere

within the company. Take the staff dormitory Baicaoyuan as an example

(Huawei People, 2011)- while the idea of giving up the dormitory was popular

in plenty of companies, Huawei insisted building comfortable apartments with

pleasant surroundings for staff to live, which not only had solved their serious

housing problems but also strengthened the relationship among the staff.

Meanwhile, for those working in the branches abroad, Huawei also offered

hotels or houses with excellent condition, providing the staff with the feeling of

home. On the other hand, during the rest time, Huawei also held activities to

enrich staff lives which, at the same time, cultivated the team spirit (Luo,

2006). The visible efforts Huawei has done for the staff were regarded as

useful incentives to raise the job satisfaction and staff morale, which will

ultimately bring high performance (Byars & Rue, 2004) and consolidate the

staff loyalty simultaneously, especially when Huawei was confronted with

dilemma.

4.2) Espoused values.

4.2. 1) Core values.

Figure 2: McKinsey 7S Framework (Peters & Waterman, 2006)

Page 8 of 15

As can be seen from the 7S model, Shared Values stand in the center of the 7

factors which means it is the key point of venture success (Peters &

Wateman, 2006). Core values are the basic faith within a company which

explain to staff that what success is and that if the staff work based on the

values, they would eventually successd. Besides, dependeing on the values,

companies could create the criteria of success (Deal & Kennedy, 1982 ). Such

an inspiring shared value created by enterprises will give staff chances to

seek ways to accommodate the environment, thus the staff will feel being

valued and devote themselves to serve with high quality and stick to creative

thought and contribution (Peters & Waterman, 2006). There are 7 elements in

the core values or shared values in Huawei which enable it to achieve the

vision of “enriching life through communication” (Huawei.com, 20).

Figure 3: Core values of Huawei (Huawei.com, 2002)

A. Customers First and Dedication

The very core values have contributed to excellent performance of Huawei in

Page 9 of 15

the hazard economic market conditions. Drucker (1946) defined Enterprises

as someone who creates customers. Customers first is an general recognition

by enterprises, so it not hard to understand that “Huawei exist to serve

customers” and regard the needs of customers as the motivation of create

jobs (Ren, 2001). But Huawei has done better, for example, Huawei allocates

a lot more professional engineers in the branches abroad exactly because

they understand the requirement of the customers abroad. However, thinking

is not enough to win customers, dedication speaks louder and is the only way

to payback the customers trust (Huawei.com). Such sharp sense of business

and faith to customers are cornerstones of the success of Huawei.

B. Integrity

Willmott (1993) state many great companies pay more attention to set a well-

defined values and make a correct decision when faced between right and

wrong, especially when ethics and morality are involved. However, for the

heated question of why Chinese people are diligent but not wealthy, Chen

(2008) replied that it is because the credit system is not effective in China.

Without a perfect credit system, what Chinese could do were the simple easy

jobs. This awkward situation renders the technology enterprises stiff to win

bids. Having realized the status quo, Huawei spares no effort to emphasize

the importance of integrity, for instance, when Huawei was suspected by

Australia government as to be banned to bid the national broadband network,

it decided to offer Australia access to its software source code and equipment

which is secret to a company, displaying its integrity in business. (BBC News,

2012)

C. Teamwork

It is noted that quality and service are common characteristics of excellent

Page 10 of 15

enterprises. To achieve this goal, simply relying on the effort of top

management personnel is far from enough, instead, all the staff are

responsible for the success of the company (Peters & Wateman, 2006).

Within a multinational firm like Huawei, teamwork is of great significance

because it deals with both domestic and foreign business between which

certain balanced operation is essential. What is more, from the five culture

dimension model7 (Hofstede, 1980) China is a highly collectivist culture where

people act and behave in the interests of the group and not necessarily of

themselves (The Hofstede Center, 2012). As a result, Huawei as a pillar

corporation in china, the staff work in Huawei have team spirit, at the same

time, perfect reward system, punishment measure and allocation approach

formulated by manager are all highly related with collectivism (huawei.com,

2012). Also like Buchanan and Huczynski (1997) stated that team spirit as

always goes along with the concept of synergy which is the awareness that

when working as a team one plus one equals three.

D. Openness and initiative & Continuous improvement

Continuous improvement which is based on openness and initiative

guarantees a company to stay competitive in the market .To achieve this goal,

learning is necessary. This point stated in the core values of Huawei shows

that it attaches great importance to learning. Senge (1978) said that learning

organizations create their future through continuously consolidating their

ability. Specifically, all the staff in a company work together and obtain

knowledge for the same goal-- the continuous improvement of the company

(Rossiter,1997).

There are several characteristics of a learning organization concluded by

Lassey (1998).

Page 11 of 15

Figure3:Learning organization Comparative Model8(Lassey, 1998)

According to the basic laws of Huawei (1996), it conforms to the model above.

For the sake of this, Huawei has established a branch in America--Futurewei9

in 1993 in order to learn from the best IT companies (Zhang, 2009).

4.2.2) Basic rules of reward.

Peters and Waterman (2006) considered people-based concept as one of the

eight features of excellent companies. He stated that staff are the basics of

quality and productivity. Therefore, reward system plays an essential part of

the company, like Jobs (2011) said there is only way employees will fulfill the

dream of their company is to share in the dream, Reward systems are the

Page 12 of 15

very mechanisms that make this happen. Reward system, however, is much

more than bonus plans and stock options, while they usually include both of

these incentives, they can also include awards and other recognition, non-

monetary bonuses such as a simple thanks. The greatest management

principle is that the things that get rewarded get done (Dowling, 2007).

Ren (2005) suggests that whether an enterprise is suitable for the

development of talent people, it is mainly depend on its organizational culture.

Never letting Lei Feng10 suffer is a determinant rule of human resources

management in Huawei which meets the idea that no pain, no gains.

Furthermore, Basic Law of Huawei (1996) identified that the evaluation on

performance suggestion of the staff base on the challenging task assigned to

them. In addition, ability of the problem solving in the tasks could counts more

than the Educational background. The regulations set by Huawei initially

guarantees the fair competition in the firm.

4.3)Basic underlying assumptions

4.3.1) Wolf culture of Huawei

Huawei is in a firm that adores the spirits of wolf. It is noted that fostering wolf

spirit is of great importance when an enterprise is approaching for the reasons

of the characteristics of wolf: a sharp sense of smell, an indomitable spirit and

team-spirit (Ren, 2005). The challenge of the violated market forces the

company at present age do discover a hidden opportunity they can exploit to

gain more business, and make new decision to tackle the changeable

international market (Miroshnik, 2002). According to the practices and

successful cases, the essence of wolf culture is the offensive awareness

when coding with drawbacks and pursuing excellence. On one hand this

essence is the core part of wolf culture, on the other hand, it is reinforced by

Page 13 of 15

the hazard awareness of Ren Zhengfei who stated that the faster and

smoother a firm developed, the more easy it will be to neglect the

management problem behind it (Chen, 2007). In addition, the risk in

international business become more and more disputed, cross- cultural risk is

a situation or even in which a cultural misunderstanding puts some human

value at stake. Therefore, be aware of these risk is important in business

(Cavusgil, Knight, & Riesenberger, 2012). Such awareness of risk carried by

Ren Zhengfei was imparted to staff and is the very factor of the correct

response of Huawei to embarrassments (Ren, 2001). Moreover, the wolf

culture deep in the mind of the staff promotes them to seek every opportunity

to combat with competitors.

4.3.2)The leader--Ren Zhengfei

If the core values are the soul of a company, then the leader or the hero is the

person who carries and pursues them (Deal & Kennedy, 1982). Actually, the

president Ren Zhengfei is one of the main elements of Huawei culture. Nearly

all the excellent enterprises are affected by one or two leaders of the group

because organizational culture involves the value of leader and behaviour

which could last for several decades even if the leaders are gone (Peters &

Waterman,2006). As the founder of Huawei, Ren Zhengfei influenced Huawei

so deeply. Plenty of speeches and books written by him are popular not only

among the staff but throughout society. To be honoured the The Most

Influential Man Top 100 has already admited his successful leading ability.

Different from other leaders, Ren Zhengfei has experience of ten years

military service, which brought about some unexpected problems for Huawei

because of political safety. However, from a different point of view, those

distinctive 10 years shaped him with a strong sense of responsibility,

determination, modestly and unbending spirit when encountering drawbacks.

Page 14 of 15

Twenty years ago, Ren Zhengfei insist on allocate 10% of the sales to

research fund, and if necessary the proportion will increase (Basic Law of

Huawei, 1998) which demonstrates his foresight to the high-tech industry.

Twenty years ago, Ren Zhengfei insist on allocate 10% of the sales to

research fund,and if necessary the proportion will increase (Basic Law of

Huawei, 1998), which demonstrates his foresight to the high-tech industry.

5. ) Conclusion.

In summary, Huawei showed unique organizational culture which suits its

environment. For the sake of this, though it is faced with difficulties, it still

perform perfectly and become worldwide known over these years. The clear

core values, leader, and other elements clearly demonstrates its valid culture

which stimulates the staff thus improve the productivity. Though Huawei is still

a young company, it will be stronger if the core part of the typical

organizational culture is kept and accepted by all staff completely.

Page 15 of 15