Oram on Huawei

Rod Oram writes in the SST:

At first glance it seems improbable that ambitious New Zealand companies could learn much from Huawei, a remarkable corporate success story even by the standards of its extraordinary home country, China.

Our companies are small and slow growing. One reason is they struggle to commercialise R&D and to develop into international businesses.

Huawei was a domestic start-up only 26 years ago. Yet, today, it is a global technology powerhouse leading its telecommunications equipment sector. Its revenues from 140 countries were US$35.4 billion last year, 70 per cent from outside China. It is aiming for sales of US$70b by 2017.

I like their structure:

Being employee-owned helps the company to focus long term. Huawei is not distracted, like many western companies, Ren said, by the sharemarket’s hefty demands for short-term investment returns.

“We can control and mange our lust, our greed. Instead we provide a good service for our customers and make reasonable money.”

Of Huawei’s 150,000 staff, half own shares. They have to be Chinese nationals but allowing other citizens to participate is under consideration, a company spokesman said.

Employees have to be with the company for at least two years, and they and their teams have to be performing well to be invited to buy shares. This has been a good source of capital for the company.

Having employees as shareholders is one of the smartest things a company can do. Look at Port of Tauranga compared to Ports of Auckland.