Interview Peter Gill with Richard Spaans on Huawei’s transformation and the tech company’s contribution to the energy transition.
On May 24, 2024 Richard Spaans, Head of Corporate and Public Affairs gave an interview about his background and Huawei’s role in the energy transition.
The talk, held in Rijswijk, home to Huawei Netherlands since 2020, covered several key aspects of the energy transition, how Richard got to Huawei, Huawei’s strategic direction in the energy transition and what it is like to work there as a Dutchman.
Richard’s trip to Huawei
How did you end up at Huawei Rijswijk?
“I studied business economics at Erasmus University, with a specialization in marketing. Many of my fellow students became Junior brand manager Becel at Unilever, for example, somehow that didn’t attract me very much. I thought it would be fun to start at a PR agency to get to know different clients, which is where I started doing media relations and investor relations. This first role was very diverse and allowed me to work with a variety of clients from different industries. After working in PR for five years, I made the switch to the energy market by joining Oxxio, a player in the energy market. At Oxxio, I went on to do corporate communications with all facets covered such as PR, internal communications, social media and reputation management. When Oxxio was acquired by Eneco, I moved with the transition.
After this, I joined Huawei, twelve years ago.
I am married to a born and raised Dutchman, with grandparents from China. As a result, I became interested in China, started learning some Mandarin Chinese and wanted to do something with China in my work as well. Huawei was about the only Chinese company of any size in the Netherlands twelve years ago.”
How many people work at Huawei Netherlands?
“Huawei Rijswijk is the Dutch headquarters and also the headquarters for Benelux and Ireland. We have another R&D office in Amsterdam and a logistics center in Waalwijk for the entire European market. In total, Huawei employs about 500 people in the Netherlands.”
Ren Zhengfei’s vision:
Think long term and invest in Research and Development (R&D).
How did founder Ren Zhengfei establish 任正非 founded Huawei in 1987?
“Founder Ren came from a large family that was not well off and had a tough childhood. Like many men in Mao’s time, he entered the army as a civilian. After his time in the army, the Special Economic Zones arose in China, and Ren then started importing telephone exchanges from Hong Kong. He went more and more into the telecom side, which was very difficult because of the many parties in that market, such as the semi-state-owned ZTE and German Siemens and other players. He then chose a strategy of focusing on difficult rural areas where there was hardly any competition.”
What is Huawei’s vision?
“Huawei wants to use technology to contribute to society and people. We believe we can use technology to enrich people’s lives and make them better. We strive to bridge the digital divide and make technology accessible to everyone.”
‘West meets East’ describes China’s largest companies, it was noticed that Huawei has an unusual ownership structure, who are the owners of Huawei?
“It’s a fairly unique model, the company is owned by the staff. Almost 143,000 employees have shares in the company that they purchased, which they use to fund the company. This gives Huawei a more long-term view than a typical publicly traded company, because it is not driven by the short-term desires of outside shareholders and is less dependent on the capital market. We have had very difficult times, when otherwise it would have been difficult to raise any more capital.
The governance structure at Huawei is also unique, with employees having a say in the selection of the board of directors through a special committee. It is somewhat of a cooperative-like model, like Friesland Campina, for example.
We have frequently been asked whether we should not go public to address the story with the link to the Chinese government. There is something to be said for that, but Ren Zhengfei thinks the importance of the long-term vision and being able to continue to invest in research and development is very important.”
West meets East describes how Huawei spends nearly a quarter of revenue, $20-25 billion a year, on R&D and ranks fifth worldwide. Why does Huawei spend so much on R&D?
“From the beginning, Huawei thought R&D was hugely important. Founder Ren had the vision that money should always be invested back into the organization. For a very long time that has been in the area of applications, but we are now seeing shifts where there is more and more investment in basic research. The focus on R&D is also evident in Huawei’s collaborations with academic institutions and research organizations. These collaborations are designed to foster innovation and accelerate the development of new technologies. The company believes that continuous innovation is important to maintain its competitive advantage and ensure sustainable growth.”
Huawei products and services
What does Huawei’s product portfolio look like?
“We have a tremendously broad portfolio, which makes us an important player in the technology transition. We are in a lot of different domains, and therefore can Provide so-called end-to-end solutions.
From way back we had the Carrier branch (telecom equipment), the Enterprise branch and the Consumer branch. Without the geopolitical discussion, we would probably still have these three branches. But because of the measures that were taken and the impact it had on the Consumer branch for Huawei, in 2019 our revenue dropped from about US$130 billion to US$100 billion. Those were tough times and then we started looking at how we could diversify and create new opportunities. From that, the new branches emerged Digital Power (the energy transition branch), Cloud and Automotive.
The Carrier branch is the oldest business unit within Huawei. For example, we supply antennas, masts, which ensure that consumers can use well-functioning 4G and 5G.
In 2004, Telfort was the first company in Europe to sign a major telecom contract with us. This division was overtaken at some point by our Consumer business, which was established later. This branch is best known for smartphones, sports watches, tablets, you name it. That branch grew tremendously until smartphone sales in Europe were hit by U.S. sanctions. Two problems for Huawei were that we could not install Android on smartphones, and we could no longer obtain advanced 5G chips in China and could not produce them initially. Until September 2023 when our Mate60 was launched containing advanced 5G chips. This problem seems to be solved with this. Sales of that new device in China are skyrocketing. Outside China, smartphone sales are also doing well, especially in the Middle East and countries like Colombia. In Europe it remains difficult, although I do expect us to try again here with our smartphones. We have our own operating system, but it takes time for people to get used to it.
The Enterprise branch offers IT products and services for the business market. Think of organizations that want to set up their own business network. Our products include computing, routers, modems and storage solutions. We also have a Cloud department. We started that fairly late, but we are growing rapidly in that area, especially in China.
Then we also have Automotive, where we are not yet active in the Netherlands. We can supply just about everything that is technology in the car, such as lighting and lane warning systems. Especially for electric cars, we supply many systems and we also work together with Western manufacturers, such as Audi and Mercedes.”
Huawei and the energy transition
What products and services does Huawei have in the energy transition?
“Under the Digital Power banner, Huawei offers various products and services critical to the energy transition. These include batteries, inverters and charging stations. This branch has grown tremendously in the Netherlands and has taken on an important role. Digital Power was launched as a separate division about five years ago in China and has since come to Europe as well. In the field of energy transition, everyone has to do their part; you can’t do it alone. That is where there are opportunities for cooperation between the Netherlands and China.
We have great expertise in battery technology, which plays a major role in telecom equipment. Our knowledge has allowed us to quickly apply this technology to batteries for energy storage. Consequently, this branch emerged from the Carrier division. I expect Huawei to play a much continued strong role in battery technology.
We are already a serious player in inverters, transforming, for example, low voltage direct current from solar energy into 220 Volt alternating current. We do this for households, for companies and for solar parks. We are also entering the market with charging stations; this is potentially a huge growth market for us.
We also offer solutions for data centers, which play an important role in the energy transition. Consider the large and increasing power requirements of data centers, driven by artificial intelligence, among other things. There are demands on data centers to become more energy efficient.”
What will the removal of the balancing rule as of 2027 mean for Huawei?
“In Belgium and Germany we don’t see a balancing rule, there the acceptance of home batteries is much faster. Research shows that many people would like a home battery, but it costs too much money, it’s a big investment. Home batteries will therefore provide a lot of opportunities for Huawei.”
What are the three biggest applications that Huawei’s R&D spends contribute to the energy transition?
Our portfolio is too large to give an unequivocal answer. Indeed, in addition to products deployed for the energy transition, we also focus on making existing products much more energy efficient, such as our antennas. These are generally about 30% more energy efficient than those of the competition. We are also looking, for example, at the design of the energy grid and the role of technology in it. With the current grid congestion, this is obviously a very hot topic.
Partners of Huawei
What partners and collaborations does Huawei have in Europe in the energy transition?
“We rarely deliver our products to the end customer; there are always parties in between. We use distributors and generic partners. For batteries, charging stations and inverters, we use a party that markets it as a whole and then sells it back to consumers or businesses as a service, including service and installation. An example of such a party is Kronenburg Techniek. We are purely the supplier of the hardware, business to business.
Regulations and grant programs
According to business bank Goldman Sachs, the USA -driven by the Inflation Reduction Act- wants to spend 1,200 billion on clean energy technology through 2032. Looking at Europe, what regulations are important to Huawei?
“The most important thing is stable policies. Battery subsidies and the net-metering scheme would be very desirable both for us and for consumers. On a global scale, we see Europe increasingly pursuing industrial policy, protecting and stimulating its own market. Now investments are disappearing towards the United States. I think Europe needs to do something in return to remain competitive.”
Is there a European equivalent of the Inflation Reduction Act of the USA?
“There’s the Green Deal, but it doesn’t put enough of an impact yet. There is no equivalent like the Inflation Reduction Act. The signals I get are that people and businesses are very concerned about it. There are many wishes, there is a lot of talk about what we all want, but not enough investment is being put in.”
Challenges for Huawei in the Power Sector
Yoyo effect
“The government’s yoyo policy poses a challenge not only for us, but for the entire market. For example, consumers see that the solar panel market collapses one time and is booming the next. The whole industry benefits from stable policies.”
Geopolitics
“In Europe there is a strong desire for strategic autonomy to do everything ourselves. But in practice you see that developments in the United States and China are much faster than here. Take for example the discussion about Chinese solar panels. It has been talked about for a long time, but it is difficult to change it.
There are signs of a possible trade war, which would not be good for anyone, especially consumers. The Chinese are not likely to let this happen overnight, and if there are then countermeasures, we are going in a direction that will not make us happy.”
Vision for the Future
“I expect that our cell phones will come back to Europe, the that consumer business will grow again. I also expect the Digital Power energy branch to continue to grow. For the Automotive branch, it is difficult to predict how it will develop. Ultimately, we are in Europe for the long term. However, it remains a challenge because of the geopolitical impact on our business and many other Chinese companies. I don’t expect this to improve dramatically within the next few years. We already see Huawei growing strongly in emerging markets such as the Middle East, Africa and Latin America.
Founder Ren has always seen Europe as our second home market. Although the focus has shifted somewhat, he is a big fan of Europe. At our new headquarters in Dongguan, he has created a kind of mini-Europe, with replicas of various European cities.
What it’s like as a Dutchman at Huawei
“There are more than 20 different nationalities working in this office. Although you can tell it’s a company with Chinese origins, it really feels like an international company.
I find this diversity enormously fascinating; it enriches my job and provides a broader perspective. It’s interesting to see the differences and adapt to them. When you work here, you have to be able to see those differences as different and not as strange or good or bad.”
What are Huawei’s core values?
Our core values reflect a strong Chinese influence. It is typically Chinese not to give up easily. Perserverence is also one of our core values: to persevere and go for the long haul. Dedication, really going for it, is also deeply embedded in our culture. Customer Centricity is number one with us; we go through fire for our customers, which I have never experienced anywhere else like here. If a customer needs something, we get straight to work on it. This often leads to new R&D projects, where we find solutions that strengthen our competitive position.
A final core value is Development, Continuous growth and reflection, rooted in Chinese culture. We are constantly self-reflecting and evaluating whether our actions are the right ones and can be improved.
How do you personally experience the “headwind” when you tell people you work at Huawei?
“I definitely experience that, maybe more bullying, than friends really mean it. Sometimes you’re having dinner with them and then they say something and it’s in the sense of ‘or can’t I say this now?’
When you tell people that you work for Huawei, they generally find it a bit exciting, you can tell. To be honest, I haven’t had any really negative reactions anyway.”
As a Dutchman, you are used to giving your opinion immediately, is there room for reflection?
“That is definitely there, it is important how you do it. Sometimes the Dutch can be quite boorish and also blunt. That doesn’t work. How you say things is important. You can still give a clear message in friendly language, then it just comes across better. The setting is also important. Sometimes it’s not convenient to speak your mind in public, in a large setting with a lot of people around, then give your opinion. Sometimes it’s better to wait a while and then give your opinion afterwards by walking with the CEO. You learn that as you go along.”
