Meet Huawei, the not so hidden dragon

huawei campus shenzhenI’ve just spent a fascinating two days with Huawei in Shenzhen. If you haven’t heard of the firm you will soon – it’s the world’s number two manufacturer of telecoms kit, powering all the UK mobile operators and BT, Talk Talk and Virgin Media’s fixed line operations.

It’s also number six in the mobile devices market globally, with its eyes on a higher position, and has entered the enterprise IT space where it sees big growth potential.

The trip was a chance to see and be impressed by Huawei HQ, a sprawling campus in a suburb of Shenzhen in the south of China next door to Hong Kong, rather than have an opportunity to quiz senior execs on the firm’s roadmap.

The firm has been spending rather a lot of money to show rather a lot of journalists the same thing – well, it can afford to, having made around $32bn last year.

The reason is that despite its best efforts it’s still not winning a huge amount of enterprise custom, its devices don’t have great brand recognition and, most irritatingly for the firm, it’s the subject of a high profile US Congressional investigation into links with the Chinese government.

The US has regarded Huawei with great suspicion and reckons it may have links to the PLA and the Communist Party (via its founder Ren Zhengfei) which make the firm’s products a potential risk to national security.

Needless to say, Huawei’s PR team were more keen to focus on the less contentious part of its story. And it is a very impressive story. Ren apparently founded the firm with a few thousand pounds and today, 25 years later, it has 140,000 employees, makes billions, operates in 150 countries and the average age of employees is just 29.

Yup, not really the impression many might have of the company. Due to its unique corporate structure which makes it wholly employee-owned, staff can retire at 45 if they’ve spent more than eight years with the firm with their share dividends providing a handsome retirement fund.

The analysts are in agreement that it has great technology, bags of patents and huge potential, so is the US just being protectionist?

Well, yes and no. Huawei may open up some of the source code of its products for investigators to scrutinise but apparently the big sticking point is info on how the firm is run, and past a certain point Huawei will not divulge that, so it may be deadlock for some time yet.

Ren is still a member of the Communist Party and for anyone who’s read the book The Party by Richard McGregor, this will be a cause of concern to some foreign governments – although it must be said not to the UK, which has welcomed the firm’s investment with open arms.

Now, I’m not saying I fully agree with all of the book but McGregor speaks very convincingly of the Party as acting “like a large magnet that makes iron filings suddenly cling together as it moves into position above them”, making them “stand to attention when it focuses its attention on them”.

In the end, both the West and Huawei are learning to cope with one another. We’re just starting to understand the firm a bit better and it is beginning to understand the greater level of media scrutiny, demands for more transparency and need for a more media friendly executive board – all of which are pretty alien to Chinese companies.


More Foxconn woes – the price of your iPhone 5

factoryAll the tech talk this week has been on the brand spanking new iPhone 5, which neatly shines the spotlight once again on the conditions at the Foxconn factories where it is assembled.

Now we all know Foxconn is regularly harangued by the NGOs for one misdemeanour or another. Labour rights violations at its plants have been highlighted time and again so I won’t go into them all again now.

The landmark agreement with the FLA and Apple was meant to set the tone for an improvement in pay and conditions, and at the three plants audited by the FLA things do seem to be progressing pretty well.

However, outside those factories there are still some disturbing reports.

The latest came from an undercover reporter from the Shanghai Evening News who lasted 10 days as a newbie worker at Foxconn’s Yu Tian plant, making iPhone 5 devices. Filthy living conditions, bullying by staff, forced overtime – the list of misdemeanours was usual Chinese tech factory fare, although interesting to hear it from a source other than an NGO.

Maybe that’s why Foxconn broke with usual tight-lipped tradition and issued a lengthy statement on this saying it would investigate and address any issues such as those found by the hack, adding in a rare admission of fallibility, that it is “not perfect”.

More disturbing news still came to me from an unnamed source, who claimed that 100 workers at the Taiwanese ODM giant’s Zhengzhou plant – also producing iPhone 5s – have been hospitalised after a food poisoning incident.

Now I must stress that Foxconn has completely denied this with the following statement:

Foxconn has checked with the relevant departments and medical facilities at their Zhengzhou campus and they have confirmed that there has been no such incident.

I haven’t been able to verify independently with the local hospital so for now I’m keeping an open mind.

However I think it’s pretty obvious that the labour problems in Chinese tech factories are far from over and will require the continued scrutiny and determination of the big name brands as well as the not-for-profits for some time to come if genuine change is going to happen across the board.

A final, if rather depressing footnote: Foxconn is still pretty widely regarded as a leader in the tech ODM space when it comes to pay and conditions in China.


Peel back the hype and the cloud is not all shiny

Sometimes it’s reassuring to know that, wherever in the world you travel, IT leaders are experiencing exactly the same challenges.

A day spent listening to CIOs and IT leaders at MIG’s CIO Executive Summit 2012 in Hong Kong on Wednesday confirmed my suspicions.

The major take-aways I, well, took away, from the event were that CIOs are still not taking charge of innovation, strategy and business leadership as they should; that BYOD is a huge challenge made all the more urgent by the demands of Generation Y; and that cloud projects are still by-and-large of the private variety where sensitive data is concerned.

On the latter point it was interesting to hear CIOs on stage and senior IT leaders in the audience back-and-forth about the as-yet-unproven reality of cloud computing.

This is the stuff the vendors probably don’t want you to hear, and went a little something like this:

  • Never try to ‘push the envelope with a cloud project without consulting the regulators first. One big name did in Singapore and was forced to dump his Salesforce.com investment as a result.
  • It’s very difficult to determine, but proper due diligence would include trying to decide where your prospective cloud provider is likely to be in 8-15 years’ time. An assessment of the cost of moving to another provider or moving everything back in house should always take place
  • The more the cloud integrates with your back end systems the harder it is to switch providers. Realistically speaking you need to treat these projects like an old-school SAP implementation.
  • Virtual private clouds could be the answer to many corporate IT managers’ prayers, allowing them to fulfil regulatory requirements around isolation of systems whilst taking advantage of the agility of the public cloud.

It’s the same the world over. Beneath the hype, most IT leaders are actually feeling their way with private cloud deployments and possibly using some public cloud projects for non-sensitive data.

It will take quite some time, probably years, before this changes.