Huawei's headquarters in Shenzhen, a designated special economic zone that was the laboratory for China's experiments in economic liberalization.
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Much of the suspicion Huawei attracts can be traced to its founder, Ren Zhengfei, 68, who rarely appears in public. "People in the industry often say Ren Zhengfei is as mysterious as he is great," said a 2011 note to Huawei employees written by Ren himself. "I keep a low profile not because I attempt to build myself up but because I am scared." The businessman "has no hobbies, and most of his [private] time he spends on reading," says longtime friend Tian Tao. When he's not consuming books on everything from Western history to Taoist philosophy, Ren keeps a firm hand on his company, retaining veto power over decisions taken by a board made up mostly of close associates, including his daughter Cathy Meng, who is also Huawei's CFO.
Born in the southern province of Guizhou to schoolteachers, Ren graduated from the Chongqing Institute of Civil Engineering and Architecture in 1963. In 1974, according to Huawei's latest annual report, he joined the engineering corps of the PLA and was assigned to build a chemical-fiber factory. He retired from the PLA in 1983, but security analysts suspect that Huawei maintains a relationship with the army to this day. Cheng Li, a senior fellow at the Brookings Institution, says telecom and military interests are too entwined in China for one to believe otherwise. "The telecom industry is part of a national defense industry in China," he says. "Because of the nature of the company, how can you think there is no relationship [with the PLA]?" Huawei counters that it manufactures equipment solely for commercial use and conducts no research activities with the PLA. Ken Hu, a top Huawei executive, pointed out in a 2011 statement that "Mr. Ren is just one of the many CEOs around the world who have served in the military."
After leaving the PLA, Ren relocated to Shenzhen, a special economic zone and the centerpiece of China's early experiment in economic liberalization. He worked briefly at a state oil company and launched Huawei in 1987 with $3,400 from his savings and other investors. The company was a tiny start-up in a Chinese market dominated by big foreign firms and state-owned enterprises. "We were considering something that was a bit unimaginable, almost like a toad trying to catch a swan for its meat," Ren wrote in his 2011 note.
Huawei initially resold telecom switches in China from a firm in nearby Hong Kong, but in four years it had developed its own switch. By 1993, Ren's team had designed a much larger switch that allowed the firm to enter the mainstream telecom market. Critics are suspicious of the company's meteoric rise. Chinese press reports and academics who have studied the company claim, for instance, that Ren did some kind of telecom-related work while he was in the PLA and that Huawei got help from state banks or an outside infusion of technology--claims Huawei denies or won't discuss. Other analysts believe that Huawei was not on the government's radar in its early years. What is clear is that Huawei's hardware quickly grabbed market share from powerful Chinese state enterprises and foreign firms. Huawei landed its first contract outside China in 1997 in Hong Kong and then targeted emerging markets in Africa, Southeast Asia and Latin America. The company undercut its Western competitors by as much as 20% and made an early move into the U.S. market in 2001, opening its American headquarters in Plano, Texas.