Note: A version of this essay appeared in EE Times.
That’s the word that seems tethered to Huawei these days.
Yet, “beset with difficulties” doesn’t quite capture what the telecom giant is experiencing. As a student of communications — the type with words, not satellites — I’ve been observing Huawei from afar since China joined the World Trade Organization (WTO) in 2001. Clearly, Huawei recognizes it’s in the middle of a crisis. Rolling out founder and CEO Ren Zhengfei, who shuns the spotlight like Howard Hughes (right, satellites) did in yesteryear, to talk with journalists last month tells us this.
Is Huawei making the right moves to manage its reputation when it’s tough to see the light at the end of the gauntlet? What else should Huawei be doing from a PR perspective? With Mobile World Congress in motion, we have the perfect segue.
Yet, answering these questions calls for a look at how Huawei has handled communications in the past and historical context that transcends the company itself. To borrow a cliché, it’s complicated, with enough gradations of gray to fill Escher’s lithograph on “Relativity.”
You Say “Tomayto,” I Say “Tomahto”
Let’s start by taking into account how the West and the U.S. perceive China. It’s easy to fall into the trap of thinking that the Trump administration invented anti-China rhetoric, anchored by the belief that trade is a zero sum game in which a dollar in China’s coffers means subtracting a dollar from the U.S. Treasury. Same goes for the media’s often negative characterization of China. A BusinessWeek cover from 2004 trumpeted the headline, “The three scariest words in U.S. industry: The China Price.” And just to be sure no one missed the point, the cover included the passage, “Cut your price at least 30% or lose your customers. Nearly every manufacturer is vulnerable. The result: A massive shift in economic power is under way.”
As for historical context around Huawei’s public profile, you might think the Congressional Report from 2012 was the first time that U.S. legislators formally went after Huawei (and ZTE) as untrustworthy, an event that triggered a “60 Minutes” exposé and further trashing of the company’s reputation. Yet, the National Counterintelligence Agency was warning the House and Senate Intelligence Committees back in 2001 that if Huawei equipment underpinned 4G networks in the U.S., every cell tower could serve as a potential listening post for the Chinese government.
What about Huawei’s ties to the People’s Liberation Army (PLA)? Ren was in the army’s engineering unit when the government decided to get out of the tech business. What you never hear about is that the PLA was in a lot of businesses where divestiture was the prudent course of action. For example, the PLA also owned one of China’s poshest hotels at the time, the Beijing Palace Hotel, and adjacent property for high-end boutiques. Things happen in China that defy Western sensibilities. Since making my first trip to China in 1999, I’ve made the trek 37 times, and it still can feel like another planet.
Back to the big picture, Huawei’s communications effort must take into account that much of how the U.S. perceives China — and Huawei — falls in the negative quadrant. It’s an art, calibrating the right level of aggressiveness to challenge an unfair characterization without hurting the cause and coming off as, “I believe the woman doth protest too much.” And yes, Huawei bears some responsibility for the negative perception. I’ll jump into this now.
Rewinding the Tape on Huawei PR
The following chart shows the number of stories that include the word “Huawei” from the U.S. Factiva database going back to 2001 when China joined the WTO.
The chart captures what I would describe as back-of-the-envelope math. We don’t know how many stories focused on Huawei and how many were a throw-away mention in agate type. We also don’t know how the sentiment of these articles breaks down. Still, the data reveals a few instructive points.
First, the modest numbers for such an extended period of time show a company that didn’t invest in communications for the longest time. In the tech sector where many CEOs and other senior executives come from the engineering ranks, there’s a tendency to view communications as squishy and unimportant, even as a waste of time. Combine this with PR being relatively new to a country like China coming up the capitalistic curve, and it’s not exactly a shocking revelation that Huawei wasn’t enthused about investing in communications. It wasn’t until 2011 that Huawei made its first hire of a senior PR executive with international experience (including the West) and who wasn’t Chinese to look after communications outside of China. Think about this for a moment. By 2011 Huawei was generating over $30B in revenue with a huge chunk coming from international markets, but communications was an afterthought on the international front.
I also think the modest numbers reflect a U.S. media that can be disinterested in Huawei and many Chinese companies unless there’s drama to be found. If we rewind the tape to 2005, Huawei had little in the way of a public profile in the U.S. at a time when the company had over $2B in revenue and was dislodging legacy players in major accounts. For context, consider that Cisco generated 40,243 hits in the same Factiva U.S. database in 2005, meaning Huawei’s U.S. media footprint was around 2 percent of Cisco’s. Lack of proactive PR from Huawei alone doesn’t explain such a massive disparity.
Not to stray too far from the topic at hand, but if an American startup in a high-profile space secured over $100M in venture funding, stories on the transaction would flood our news feeds. Yet, a Chinese startup in the self-driving car sector lands over $100M in venture funding last year, distributes a news release and there isn’t peep from the U.S. media.
Regardless of geography, journalists like a “train wreck” or the potential of “train wreck” which explains why the numbers spike in 2012 thru 2014 when the House Intelligence Committee issued its report warning everyone that Huawei and ZTE pose a threat to national security. The result was a wave of negative media coverage, including the aforementioned “60 Minutes” broadcast. Of course, 2018 featured more Huawei drama that reenergized journalists and brings us to today.
The CEO Card
When a company is navigating a crisis like the one Huawei faces — attacks from multiple flanks: the U.S., Poland, the UK, Australia, etc. — the CEO represents one of the most effective “tools” if not THE most effective way to insert the company’s voice in the discourse and diffuse the claims. As noted earlier, Huawei recognizes the power of the title and had its CEO headline several media functions last month. The problem is Ren has been virtually invisible since founding Huawei.
As best as I can piece it together, he was incognito to the media for 26 years. It wasn’t until 2013 when Huawei was under U.S. congressional attack that he decided it was time to talk to journalists. Rather than fly to the U.S. or meet with international journalists based in China, he sat down with a handful of journalists in New Zealand. I can understand the Huawei PR team wanting to give the big boss a soft landing and knowing he might be a bit rusty, but Wellington, New Zealand? Sure, they got the headline they wanted in the New Zealand Herald, “Huawei Founder Scoffs at US Rage,” and, yes, international media syndicated the story — no doubt part of the master plan — since it was the first Ren sighting in 26 years, but what did they really accomplish in terms of moving the perception needle in the U.S. and in the West?
I’d say they accomplished nothing except making sure that Ren didn’t face any tough questions from those pesky international reporters. The point is, if the only time a CEO talks with journalists is during a time of crisis, the title forfeits much of its power in shaping public perception. Journalists don’t know the exec. The public doesn’t trust the exec. And there’s definitely no equity in the karma bank.
Yet, Ren’s recent engagement with the media doesn’t have to be for naught if it’s the start of regular interactions with the media — a good segue to address how Huawei’s communications can help the company rebuild its reputation going forward.
Where Does Huawei Go from Here?
First, the company needs to think long-term. The goal isn’t to weather the current storm. The goal is to show the world outside of China that Huawei is a good global citizen and a company that you can trust. This is going to take time — years, not months.
Before going further, it’s important to understand that the foundation of this reputation management campaign is Huawei’s behavior and the actions it takes as opposed to communications. If the company isn’t behaving like a good global citizen and taking actions that show it’s trustworthy, then communications becomes nothing but spin. This seems like the right time to acknowledge that Huawei admitted to taking intellectual property from Cisco in 2003, and others have accused Huawei of what could be charitably called “dubious actions.” The point is, operating in a way that cultivates trust with the West would represent a change within Huawei.
To set about such a change and ensure that behavior aligns with aspirations, I would appoint an individual to the Huawei Board of Directors who has international communications experience and is from the West. Before you size me up as a heretic, consider that all 17 current Huawei Board members are Chinese. Given the stakes for the company in the West and the billions of dollars in revenue directly tied to reputation, having one Board member who can represent this point of view seems advantageous. Plus, it ensures there’s at least one person with a seat at the table to champion communications.
At the risk of oversimplifying, people don’t trust what they don’t know. That’s why Huawei needs to offer greater access to journalists, analysts and other influencers month after month after month, not just when the company is experiencing a rough patch. That’s how you cultivate genuine relationships in which people will give you a fair listen. I understand it takes time and money, and even after doing this, Huawei is still going to take some punches. It goes with the territory of being one of the more influential tech companies in the world. It will serve Huawei’s purposes over the long haul in helping the outside world get to know the company, the first step toward trust.
This idea of accessibility also applies to Ren. I would fly him to the U.S. twice a year to engage with the media, once to New York and once to Silicon Valley. This type of activity more than anything else would send a clear message to the market that Huawei acknowledges it’s not business as usual and it needs to provide a deeper window into the company.
I would also have Ren offer a monthly point of view published on Medium, the platform many U.S. executives have used to accentuate their perspectives — most recently, Jeff Bezos taking on the parent company of The National Enquirer for extortion. What’s critical for Huawei is that the thinking for these monthly essays needs to come from Ren himself. Collectively, they will help the outside world understand how he manages and leads Huawei. Plus, journalists aren’t starting at ground zero when they meet with him on a semi-annual basis.
Ren resurfacing in the media last week, this time with the BBC taking a defiant stance — “There’s no way the U.S. can crush us” — isn’t a bad thing. It’s just that Huawei needs him communicating to the West when the company isn’t immersed in crisis mode.
Now comes the toughest one, claims that the Chinese government can commandeer Huawei’s equipment to access private information and for spying. This issue is above my pay grade, but it seems like a third-party audit or analysis would help alleviate this concern. While it’s not exactly apples to apples, how Supermicro (disclosure, a client) responded to the Bloomberg story, “The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies,” offers a potential playbook. Supermicro hired a third-party investigations firm that conducted an audit and turned up no evidence of malicious hardware, essentially diffusing the story.
As for what happens when the Chinese government asks Huawei for information or access due to “national security concerns,” Huawei has said the right things. The Wall Street Journal reported last week that Huawei “supported tougher telecom security rules and would sign a no-spy agreement” which would seem to conflict with a Chinese law stipulating all Chinese companies must cooperate with the country’s intelligence services upon request.
Time will tell. As Junko Yoshida pointed out in her opinion piece in EE Times on Huawei last week, “…. The Chinese Communist Party’s stranglehold on Huawei makes it hard for anyone in the West to determine whether they’re dealing with a private company or an agent of Beijing.”
A Few Closing Thoughts …
A South China Morning Post story last month included this Kodak moment: “Ren admitted that he was ‘forced’ by Huawei’s public relations team to agree to the interviews as the company was in a ‘transitional stage’ of the current crisis …” If the person at the top doesn’t value communications, the rest of the management team and employee base aren’t going to value communications either. That needs to change. The company should put together an internal program that explains to its 180,000 employees why outbound communications is important, how the company’s reputation impacts business success and its approach to communications. I would also develop a module on communications for the onboarding process of new employees. This won’t change the culture and mentality overnight. It’s a long-term play.
I invented the word “Americanitis” to describe how U.S. executives often think that having a high profile in the domestic market automatically guarantees a hero’s welcome when they land on foreign shores. Such a mentality can lead to frustration and slow down the building of the company’s brand in new markets. I suspect that Huawei has suffered a version of this.
I also feel the need to say that Huawei has built a strong internal PR team with senior international pros who know their stuff. No doubt, they’ve presented some (all?) of these ideas to the executive management team. I guarantee they’ve been banging the drum for greater access to the company and its executives for years. The problem is the big bosses who don’t have communications experience have the final vote. I suspect if Huawei’s management trusted the counsel of its senior PR team and executed accordingly, that alone would advance the public profile in a meaningful way. Hopefully, it wasn’t the internal PR team’s idea for a Huawei Board member to play the fake news card last month. Bad idea.
Earlier I noted the immense impact that the CEO has on his or her company’s reputation. One way Huawei could guarantee a public image reset is to replace Ren. Of course, Huawei is private company with Ren in control, so the likelihood of this happening is miniscule. Still, given his age and if the turmoil continues for another year or two with no end in sight, the nuclear option is there. Look no further than Uber as Exhibit A. A new CEO, Dara Khosrowshahi, allowed for a reputation refresh.
Look, changing the overall trajectory of Huawei’s public image is a tough one, akin to playing three-dimensional chess right after waking up in the morning … and you enjoyed one too many margaritas the night before. So many variables to contend with and not all of them of the logical variety.
Stripping away the complexity brings us back to the point that a new era for communications at Huawei has nothing to do with communications. It has everything to do with the behavior and actions of the management team. If they don’t get this right, none of the other stuff matters.
Side note: If you’re interested in more on the topic, check out these media stories:
- Why low profile Huawei founder Ren Zhengfei has grabbed the microphone to defend telecoms giant (South China Morning Post, Feb. 18, 2019)
- Huawei launches a charm offensive — but PR execs say it may face a ‘literally impossible’ task (CNBC, Jan. 21, 2019)
- How Huawei lost its PR battle in the west (Financial Times, Feb. 20, 2018)