China's Huawei Braces for Board Revamp as Western Markets Beckon

  • It will elect new board directors for the first time in years
  • New blood will lead Huawei into a next phase of growth

Huawei Unveils an AI Enabled Chip

Huawei Technologies Co. will shake up its board for the first time in six years as the Chinese company prepares to push deeper into developed markets such as the U.S. for growth.

China’s largest networking gear maker will in 2018 elect directors for the first time since 2012, rotating Chief Executive Officer Guo Ping said in an interview Tuesday. That’ll reshape the board at a company controlled by ex-army engineer Ren Zhengfei, and infuse new blood into a telecoms giant that last year became the world’s third largest mobile phone brand.

Guo Ping.

Photographer: Qilai Shen/Bloomberg

It’s now eyeing new businesses such as the cloud, and markets from Europe to Japan. Huawei, which in 2016 declared it will someday surpass both Apple Inc. and Samsung Electronics Co. in market share, has long been hampered in the U.S. by questions over its links to the Chinese government -- an issue that’s come before Congress. But Huawei could conceivably enter the market through partnerships with local providers, though Guo said the priority for now was to strengthen its existing positions: Apart from China, Huawei is a major force in markets from Africa to Eastern Europe.

“We are very open in choosing partners. We only provide services and will not use customers’ data, that’s what differs us from other players,” Guo said in an interview with Bloomberg Television in Shanghai. “Some U.S. companies have come to us for partnerships. They wanted a local player to help them provide services inside China. There are all kinds of possibilities.”

Huawei is one of a handful of Chinese companies to have built a global business over the past decade, initially using low-cost networking gear to gain market share abroad. But a breakneck expansion from equipment maker to mobile brand has come at a cost. Its earnings grew at their slowest pace in five years in 2016, as it sank money into 5G research and a marketing blitz. 

Its main business of telecoms gear is slowing as phone carriers rein in network rollouts to prepare for the advent of faster 5G standards. Later this year, its Mate 10 will go head-to-head with the hotly anticipated 10th-anniversary edition of Apple’s iPhone. 

The company is now in the midst of a re-think about the way it conducts business. The focus is on profitability, exploring overseas business and moving its smartphones higher up the value chain -- where it will clash with Apple and Samsung more often. Executives have also spoken publicly about the need to re-tool a culture bogged down by bureaucracy and waste.

Next year, representatives appointed by shareholder-employees will vote on a slate of new directors to be nominated by the current 17-member board. It’s unclear whether the 72-year-old Ren, who founded the company in 1987, will remain and Guo didn’t address that specifically.

“Mr. Ren has led Huawei over the past three decades and given Huawei a very clear direction,” Guo said. “For the successors or followers, we will stick to this direction. We are expecting more breakthroughs in this area, I think that’s the request and hope for the new management team.”

— With assistance by Yuan Gao

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