Huawei to rotate CEO post among senior executives half-yearly

Friday, 30 December 2011 00:01 -     - {{hitsCtrl.values.hits}}

HONG KONG (Reuters): Huawei Technologies Co Ltd., a $ 30 billion Chinese telecoms gear maker, has initiated a system this year to allow top executives to take turns to act as the firm’s chief executive, its founder and CEO Ren Zhengfei said in a year-end message.

The rotating CEO system is apparently aimed at paving the way for a smooth management handover from 67-year-old Ren, although it is unclear when Ren intends to retire, analysts said.

“Huawei is entering a post-Ren era,” said Ji Yongqing, author of a book titled, ‘Huawei’s World’.

“Huawei hopes to realise a smooth and steady power handover from its founder and first-generation leaders to the second generation,” Ji told Reuters.

Huawei, built by media-shy Ren from scratch in 1987 into the world’s No. 2 telecommunications equipment maker, has never made public its management succession plan. The company is jointly owned by its employees and is not listed.

“The rotating system is better than sole reliance on a single person for the success of the company,” Ren wrote in a year-end message to its 130,000 employees that has also been posted on major Chinese news websites.

The new structure requires a number of top Huawei executives, including Vice Chairman Guo Ping and several executive directors of its board to act as chief executive for six months at a time, according the article by Ren and a source close to Huawei.

Ren, who revealed in the message that he twice underwent cancer surgery a few years ago, hopes the new system will help strengthen corporate governance as Huawei seeks to grow globally, analysts and the source said.

“The company is gearing up for further expansion. Under such circumstances, corporate governance has become extremely important,” said the source, who asked not to be identified as he was not authorised to speak to media. “That’s why Ren adopted such a management system.”

A Huawei spokesman was not immediately available for comment.

Huawei, based in the southern boomtown of Shenzhen, competes with Samsung Electronics Co Ltd and Apple Inc in consumer electronics and with Ericsson and Cisco Systems Inc in telecommunications network gear.

Huawei’s sales grew 11 per cent to 98.3 billion yuan ($ 15 billion) in the first half, with the company on track to hit its full-year sales target of 199 billion yuan.

Huawei has been seeking to expand in the US telecom sector, but has run into political opposition over national security concerns.

Ren’s background with the Chinese military has often been cited as hindering the company’s progress in North America, although Huawei has repeatedly denied it has links with the military.

The rotating CEO system replaced the ‘Executive Management Team’ that Huawei initiated in 2004, under which eight company executives took turns to take on duties such as drafting documents and other day-to-day operations, Ren said.

The new system provides much more authority to the acting chief executives, making them the virtual top leader during their tenures, according to Ren and the source.

“The acting CEOs pay more attention to the company’s strategy... and delegate more day-to-day decision-making authority to the company’s various business groups in different regions,” Ren said.

In a literary message titled, ‘A River of Spring Water Flowing Eastwards’ – a line from a famous ancient Chinese poem – Ren attributed Huawei’s success largely to the “solidarity” of its management and teamwork.

Ren said he chose to adopt a relatively low public profile not because he thinks highly of himself, but because he thinks the company’s success is based on collective leadership.

He expressed concern about the global economic outlook and its potential impact on the company.“The economy is becoming more and more beyond control. If the financial crisis deteriorates further... can we remain intact? Are we capable of saving ourselves?” Ren wrote.