(Chinese Version)

　　Recently, Huawei Technologies, the Chinese telecom equipment and now the world’s no.3 smartphone maker behind Apple and Samsung announced its 2016 annual report, which shows the company’s global revenue had climbed 32% to ￥521.574 billion, slightly slower than the 35% last year. Its net profit hit￥37.052 billion, a merely 0.38% year on year growth. It’s the company’s slowest annual growth since 2011.

　　It’s also worth noting that the annual report shows the employee salary and benefit cost grew by 17.4% to ￥94.179 billion in 2016, as the average salary at Huawei reaching ￥600,000. Additionally, the company’s consumer business had jumped by 43.6% and its R&D budget was increased by 28.2% to ￥76.391 billion. Huawei’s sales and management cost also surged by 38.8%.

　　The three telecom carriers in China have also recently announced their annual report:

　　In 2016, China Mobile’s revenue hit ￥708.4 billion, a year-on-year growth of 6%. The company’s net profit increased by 0.2% to ￥108.7 billion.

　　Chinese Telecom’s revenue in 2016 was ￥352.3 billion, a year-on-year growth of 6.4%. Its net profit slumped by 10.2% to ￥18 billion. If we exclude China Telecom’s income from selling its towers in 2015, then the net profit in 2016 did grow by 11.7%.

　　China Unicom on the other hand garnered a revenue of ￥274.2 billion in 2016, a 1% year-on-year drop. The company’s net profit slumped by 94.1% to ￥625 million. Compared with the second half of 2015, China Unicom was actually making its comeback.

　　Overall, China Telecom and China Unicom’s total net profit combined in 2016 is only 17% of China Mobile’s. Despite the companies’ efforts to strike a balance, the situation is in fact getting worse.

　　China Mobile is now the best telecom carrier in China. However, the telecom carrier has been facing growing challenges in recent years while its global and Internet strategy are making little progress. Huawei on the other hand is surging. Many telecom industry insiders have expressed their confusion on the prospect of this industry to me.

　　When I was working in the telecom industry, technicians from telecom carriers always tended to act as if they were more superior than those from telecom equipment companies. At present, Huawei’s revenue has long exceeded that of China Unicom and China Telecom. This can be attributed to the matthew effect in the telecom equipment sector. Huawei becomes the lone survivor in the arena as many telecom equipment providers started to decline. Compared with that, telecom carriers are still struggling with their globalization strategy while Huawei has grown into one of China’s most international enterprises.

　　Huawei is making more money than China Telecom and China Unicom. From the perspective of reputation, Huawei’s drive comes from its clear incentive. I can personally feel that Huawei’s employees are proud of their globalization business. But when look at the staff at telecom carriers, they don’t seem to know what they are fight for.

　　Telecom carriers’ employees lack both material and mental drive to pursue their course. This makes me wonder just how telecom carriers have come down to this road, becoming one of the little people from elites.

　　Why there isn’t any leader like Ren Zhengfei in telecom carriers?

　　Ren Zhengfei is considered as one of China’s most successful and achieved enterprise leaders. Ren had been a low-profile figure but in recent years he has started to show up on national-level tech conferences, giving many impressive speeches.

　　In comparison, the leaders of telecom carriers lack such influence. Wang Jianyu is a relatively high-key telecom carrier leader with foresight and sharp mind. However, he eventually retired. Wang Xiaochu is another leader that is thought highly of by the industry, but still he is unable to lead China Telecom out of its pit. In contrast to that, Huawei’s international and technological influence is unstoppable in its realm.

　　But that’s just one side of the story. An enterprise leader’s management style affects the corporate culture. It’s undeniable that Ren Zhengfei has tremendous influence on Huawei and that private company’s leaders tend to be more influential. How come telecom carriers never have these leaders?

　　First of all, telecom carriers have strategies different from telecom equipment companies. Telecom carriers are state-owned and therefore have a relatively fixed appointing mechanism and cycle. Private companies on the other hand sometimes are dictated by people. This results in the fact that many private companies don’t have standard procedures to follow through and are controlled by one side. However, private companies are maturing and can make long-term investment on strategies, which will improve the company’s management.