House of Huawei: The Secret History of China’s Most Powerful Company
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I'm Andrew Schwartz, and you're listening to The Truth of the Matter, a podcast by CSIS where we break down the top policy issues of the day and talk with the people that can help us best understand what's really going on.

To get to the truth of the matter about Eva Doe's new book, House of Huawei, The Secret History of China's Most Powerful Company, we have with us none other than The Washington Post's technology policy reporter, Eva Doe. Welcome. Thanks very much for having me here.

So this book is absolutely epic. House of Huawei. It reminds me of Game of Thrones. It's got all the intrigue and it's real. So tell us what drew you to this book.

And precisely why is the Huawei story so epic? Well, yeah, this is exactly what drew me to this story of this one company and that Huawei is a Chinese company that has business in almost every country around the world. And especially when there are geopolitical conflicts, that's when their boots on the

And that's been the way they've been doing business from their founding in 1987 to the present day. And so through this one story, you get a lens into sort of China's role in the world and how it's evolved in a big way. Well, you know, one of the interesting things about it is this is one of the richest, most powerful companies in the world.

started by Ren Zhengfei, who's something of a folk hero in China. And he talks about himself in the humblest terms. He's a parts salesman. You talk about that in the book. How did this company go from zero in 87 to really what it is now today? And the question I guess we all have is, did the communism part of it help?

Yeah. And I think the answer is yes, that they have managed to sort of have a foot in each world between the capitalist experiment in China that started in the 1980s and sort of the communist backing from the government. And if you look at their history since their founding, they were one of the first private tech companies allowed to be founded in Shenzhen back when it was still a pilot program. And they've

sort of surfed each policy wave since then and been at the forefront. And that's been very key to their success. Tell us, what did you learn about Ren Zhengfei, Huawei's founder? Really interesting fellow, to say the least, and the head of a dynasty. So Ren Zhengfei,

He was born in 1944 in an impoverished part of Guizhou province in southern China to quite humble roots. And so he lived through the famine. He lived through the Cultural Revolution. And these were formative experiences for him. And his parents were both schoolteachers. And you sort of see that emphasis on education and reading and literature here.

inculcated in Huawei's culture. And that's part of what made doing this project so interesting is the company has this culture of executives sort of putting their thoughts to paper, not only about their immediate business, but their role in the world, their role in China and their role in the world at each stage.

And what did you learn about him along the way as you reported this out? Well, his early career, he had worked as an army engineer and then...

This, of course, is the source of a lot of the concerns about Huawei's connections to China's government over the years, which is, you know, his early career was in the military. And what does that mean for his connections to the government? And I think it had a very notable impact on sort of his disciplined culture and the way he runs this company, Huawei Oil.

has sort of a militant culture, even to the present day, where they run recruits through boot camps. He uses a lot of military metaphors in his speeches, even to the present day.

I would say it's probably not the key explanation for Huawei's success or Huawei's connections to the government in that, you know, he was one of many, many, many former military engineers who tried to start their own company during the 1980s. So that's one facet, but that's one of numerous facets for how the company has become what it is today.

Well, what else stands out to you about him? I mean, one of the things that you describe in the book is the grandiose way in which he lives. He came from a very humble beginning, but he and his family who have built this company certainly aren't living in a humble way anymore. They're living in a sort of storybook fairytale way. Can you describe what that is? And then I want to talk a little bit about why Huawei is so controversial.

So, Huawei today, the Zhenyuanfei, he's built these sort of palace replicas on

on Huawei's R&D campus, you know, modeled after Versailles, modeled after castles around the world. And there's this really over-the-top sort of nouveau riche style to the company and to the man. You walk in and there's glittering chandeliers, there's marble sculptures and fountains. And, you know, years ago,

One of Huawei's employees had asked leadership about whether this was wasteful, why they were doing this. And his response, Zhengzheng Fei's response was, you know, we do this for our clients. Like they bring over telecom executives and government officials from all over the world. And they've built this kind of bizarre Disney-esque wonderland to wow and impress their clients.

In your reporting, what do clients think of it when they enter this space? Because it really is a Disney-esque escape from what we learned in your reporting. And I think a lot of Americans don't know a lot about Huawei, which is why your book is so interesting. Yeah, well, you know, much of Huawei's customer base is Disney.

in developing markets around the world. And for many of telecom executives from smaller countries who come to visit Huawei, they come away very impressed by how modern the company is, how new and shiny their businesses are, and it gives them some trust in this company. And I think the

The perspective is often quite different for executives coming from Western countries, including the US. They approach the company with much more distrust. Let's talk about that a little bit. Why is Huawei so controversial in the United States? You're reporting on this all the time for The Post. You're here in DC where the controversy rages at its apex. Why is this company so controversial to US policymakers? Yeah.

Yeah, I think the primary reason is because they are still today the world's largest vendor of the equipment that make up phone and internet networks around the world. And increasingly in the information economy is what is of value. That's all the phone calls in a country. That's all the internet traffic of a country. And

There's enormous concerns in the governments of each country about if this data can be hacked and how to reduce the risk of it. And of course, in Washington right now, there's a lot of debate about how to respond to the salt typhoon hacks, which has been called the largest hack of U.S. telecom systems in history from China-based hackers. And so these are some of the largest hacks.

telecom companies in the United States. And so you can see how it's an ongoing issue of, you know, are these networks secure and how to secure them? And one aspect of that is

the nationality of the equipment that makes up these networks. And what are U.S. policymakers most worried about? Are they worried about Chinese spying through Huawei? I mean, I know that some U.S. businesses, particularly some of the chip makers in this country, want to be able to do business with Huawei, but our government, our Congress, our executive branch don't want that. And they say that it's a national security risk. Can you lay out a little bit about that?

Yeah, there's probably two main parts of the concern. One is that even after rounds of sanctions on the company, starting from the Trump administration, Huawei is still...

you know, number one in supplying equipment for phone and internet networks around the world. And that, you know, potentially increases the risk that China's government could infiltrate networks around the world, which Huawei, of course, denies it. They say they have not participated in spying yet.

at all over the years. So that's one aspect of it is the cybersecurity. And then the other aspect is Huawei is also China's most advanced chip designer. They have this high silicon unit and they've been working on AI technologies and advanced chips for a number of years. And

So increasingly, that has also been a target of the U.S. government because these chips go in everything. They are in data, big data centers. They're what run advanced AI algorithms. And this is a key company in this ecosystem for China.

So Eva, if there's one thing that Democrats and Republicans tend to agree on in Washington, it's that they don't trust China very much. They don't like China very much. They don't trust Chinese companies. What is the basis for this distrust into Huawei? Yeah, it's quite interesting that there is this bipartisan consensus.

on China being seen as a risk now where Democrats and Republicans agree on few other things, especially because not that many years ago there was a bipartisan consensus in the other direction that globalization was widely accepted as the tide that lifts all boats. So I would say the source of this distrust largely is because China...

is now a real technological rival. I think for much of the history of modern globalization, China just seemed too far behind. It could not be a serious rival technologically. But then,

You see a company like Huawei, and it is number one in its field around the world, despite U.S. sanctions. And not only number one in sales, but also it's number one in patent filings. And it's producing some of the most advanced research in its niche field. And that's something that I think for both Republicans and Democrats, they see as incredible.

something they need to take seriously as a competitive threat. You know, experts view this differently. Some experts think this is a tremendous security risk. Others think it's a negligible risk. And then there's everyone in between. What did you learn from reporting on some of these risks? And how does it actually impact the company itself? So I would say one thing that I learned is that telecommunications networks, they are

are intertwined with governments, military, and intelligence gathering objectives. And that's something that is often...

difficult to really understand the details from the outside because a lot of it is classified in any country. But, you know, there is through every period, there's a military interest and an intelligence interest in these networks because, you know, if you're going to tap phone calls, if you're going to tap data, these are the pipelines that the data runs through. So in that respect, it is a real concern for any nation.

And Ren Zhengfei says he's just a pipe salesman. Yes, that was one of his quips. He says he's just a pipe salesman. He doesn't control the water that runs through the pipes. And that is, in a way, partly true in that when governments are seeking to do wiretaps or to tap data, usually the first line, they would go to the telecom operators, which is not Huawei. They're the supplier of the equipment. But there have been studies...

that show that, you know, the equipment manufacturers, they often, they are involved to a degree in that they're providing customer support to their clients, the telecom operators. And, you know, sometimes in many cases, they even have sort of outsourcing deals where they're helping to run the networks. And so in that case, they would be receiving some of these requests.

What is Huawei's role in emerging 5G and AI tech? Well, for 5G, the 5G generation of wireless communications is where China really wanted to pass on the curve. And so you saw Beijing put enormous resources into being at the forefront, both for R&D for 5G and also deploying the networks. And they did that.

deploy them faster than the United States and many other countries. And so that was something that caused a lot of alarm. And Huawei and ZTE were sort of the two big companies producing this 5G equipment in China as part of these larger governmental hopes.

And as for AI, their chips are used in sort of these driving these advanced AI algorithms and in these big data centers. Is part of this that U.S. policymakers believe that the playing field is uneven because the Chinese government seems to be or is propping Huawei up?

And are they worried about there being unfair competition, if you will, or us really losing ground in things like AI because of the state's investment in AI? And here, of course, we have a much different way of investing in our companies.

Yeah, definitely. We've seen an enormous amount of discussion about this quandary in recent years, sort of accelerating since the first Trump administration about how do you compete with China's economic model, China's industrial policy, which is not really free markets. It is picking winners and losers and putting enormous resources of the state behind it.

And you do see some programs in the U.S., like the CHIPS Act, which is the biggest government subsidies that we've seen in a long time for the high-tech industry, and which is a high-stakes experiment of, you know, can the United States bring some element of that industrial policy melded with traditional U.S. capitalism to create the innovation for the next generation for the United States?

Ava, finally, I want to ask you, do you have a sense of where Huawei's leadership wants to take it into the future? Yeah. Well, one thing that Ren Zhengfei, the founder, has said repeatedly is,

He really wants his company to survive beyond himself. And so starting from even 1990s, he's been very preoccupied with this question of succession, and he's built sort of a team of rotating executives who all share some of the power to sort of distribute the risk of succession and

So, you know, he said repeatedly he wants Huawei to be a company that will survive 100 years. The company was founded in 1987. So still a long way to go to 100 years for him to achieve that goal. Thank you. What are some of your final thoughts about how this is going to play out politically, given that there's a new administration in town, given that there's a new Congress in town? Yeah, well, from...

From President-elect Trump's pick so far for his cabinet, you know, there are a lot of security hawks in the lineup. And so we can expect his team to be pretty tough on China. I think they will probably continue to

be scrutinizing companies like Huawei because despite the rounds of sanctions from his first term, Huawei hasn't died. It's not only survived, but it's still a leader in its field. Eva Do, thank you so much for coming on here and sharing some of these insights into this terrific book. The book is called House of Huawei, The Secret History of China's Most Powerful Company. And it's a great holiday gift.

Thank you so much for having me on the show. If you enjoyed this podcast, check out our larger suite of CSIS podcasts from Into Africa, The Asia Chessboard, China Power, AIDS 2020, The Trade Guys, Smart Women, Smart Power, and more. You can listen to them all on major streaming platforms like iTunes and Spotify. Visit csis.org slash podcasts to see our full catalog.