Watch CNBC's full interview with Huawei founder and CEO Ren Zhengfei

mr. Ven yesterday President Trump tweeted that he had a conversation with your President Xi Jinping the u.s. sees Huawei as being at the center of the trade war how do you see it Huawei does not have sales in the US market so Huawei has nothing to do with the trade relations between the two countries both China and the US are like big falls in hallway is caught in between as more of a sesame and we have no influence over the relationship of the two countries but believe the u.s. is a country ruled by law the issue between Huawei and the US government will we believe will leave that to the court and we will have every confidence in the courts conclusions you may not get a big part of your business from the US and you may not want to be part of the trade war but you as you said have been caught in the middle so do you have any hopes that one president Trump at the g20 potentially meets with President Xi Jinping do you believe that Huawei will be a topic of conversation I don't think we are that great those two great people talk spots I don't think we will be a topic when those two great men todd's I don't think that's likely that hasn't been the case though President Trump spends a lot of time talking about Huawei as do other US officials they're in good health so they're not tired excuse me I'm not sure I understood that because they are full of energy they must have a lot of things they are concerned about and they are in good shape so they have the energy to focus on a lot of issues I think our role is exaggerated by them and I don't think we deserve such a high attention on us you may not think you deserve high attention but the fact is that in the US a lot of politicians president Trump included spent a lot of time talking about Huawei your company do you pay attention to what he says maybe it's because no matter how hard they attack us they still cannot take us down and if they go on for many years they must feel very tired while we the communication with the US side are carrying out on different channels for example by filing the suits in the court cases it is also one way of communicating with them in the court case the US should present their evidence and let the court does whether there is any wrongdoing for huawei and the court should make the verdict and that is the crucial thing here talking about being a chip in the trade talks I I don't know about that and we are not willing to be that you're not willing to be a bargaining chip you may not be willing but it doesn't change the fact that President Trump has said that you are a bargaining chip and the so-called attacks have already affected your business you said earlier this week that they would hit your revenue by thirty billion dollars well just 30 billion US dollars has little impact on us this is not a big number and this year we are aiming to achieve more than 100 billion u.s. dollars so it does not change our basically fundamentals of the company we will streamline non strategic business so the measures taken by the US side does not have material impact on the business I think many people would call thirty billion dollars material impact it's nearly a third of your revenue last year this affects your employees who are shareholders does it not this year's budgeted revenue is around a hundred and thirty billion US dollars if 30 billion is impacted then we can reach around a hundred billion US dollars and the financial statement by May I saw that we're still growing at around twenty percent we expect to see some slowing of the growth but we haven't seen that yet but we are making adjustments internally so we've projected there might be a slowdown but until yesterday's report I didn't see any slowdown and we don't know what will be the growth by the end of the year but we believe the 30 billion US dollars will be a very small thing and we can withstand that we are not a public company we don't attach importance to high numbers we focus on the performance the quality of the performance okay let's talk about the quality of the performance and your fastest growing business unit which is the consumer business your smartphone business you said earlier this week that smartphone shipments have declined by 40 percent how does your business continue to grow if this fastest-growing unit is taking a hit from what's happening between China and the US and the us as you call them attacks on quali for consumer business because of the changes in the market the 40% maximized decline was the number was the highest number we had at one time and the growth is picking up and the decline is down to around 20% we in overseas markets so profit margin quickly recovering was climbing up so once again the impact on the consumer business is not a big one it may not be a big one yet although I think 40 percent decline in one month is significant you are facing some pushback from international your countries abroad where you saw them Europe the Americas if this continues where do you make up that growth I don't see that problem because in the Chinese market CBG business has not seen a decline it's just that there might be declines in overseas in the worst case 40% but now it's less than 20% and that kind of decline is also shrinking if you look at the declines in the CBG you that would be about 10% roughly so it's not that big and I would also like to say the profit growth is faster than imagined before and I also criticize our financial department because the overseas carriers might not be able to buy from us and they don't want to negotiate the prices or just buy directly so that's my job the profit growth I don't want that to grow too quickly and I think that when the finance department talked to me they would have reported for several minutes only and because it's much better than I thought so I stopped them in their presentation you may not think that 30 billion dollars is a lot of money for all of huawei when you have revenues above a hundred billion dollars and you say that profit isn't the most important thing to you but what about your employees who are shareholders and are paid through dividends that are based on the profit that Huawei makes how are they feeling are you talking to them yeah it's 130 billion to draw to 100 billion US dollars our employees are actually more hard-working and they are motivated they don't want to lose and they definitely want to win and we want to win in this balance of bandwidth and everybody all the departments are confident if you have a chance you can also talk with our employees are you saying that your employees don't mind if profit decreases and their pay decreases I don't see a decline we won't change their salary and the salary structure will not be changed we are capable enough to pay them and many excellent employees can be fast-tracked at this moment too if you look at long term pay we need to look at the financial statements at the end it might be slightly lower but it's one more than one time higher than I expected so I stopped their presentation and said that you've earned enough and I can care more about other departments for example the technical department how can you be confident that it's only thirty billion dollars that hallway is going to be hit by because of the sanctions against you by the US how do you know that it's not going to be more what happens if you lose access to Google's Android operating system Google is a great company we respect them highly and we would not randomly replace the operating system provided by them but if the time period is too long we also have our own system that can replace it and we will come back to normal well your customers accept that already in the Philippines probably has said that it would offer a full refund if the device cannot run Google and Facebook apps what if more customers demand this I think in international markets there has been some impact but it's not that big because there are many functions in our smartphone that are independent from Google systems for example photography and other core functions are independent of Android system and Google has provided to us an excellent ecosystem which they have been bidding a real wall it will influence us but not too big how can you be certain if customers are already saying that they don't want to use Huawei phones if it does not have the Android operating system how can you be certain of this you can see that us is the greatest country in the world it has the strongest stage power and now us is attacking us in many places and the customers are more and more buying from us so you can see from the financial results of the different divisions of us we don't have a big pressure that comes from this crisis I'm sorry mr. and my question was how can you be certain that consumers will want to use the huawei operating system versus the Android operating system what makes you confident that this will not hurt your business more than it already has I think if you say things are worsening I think it it's already worse and if you talk about the future I think things will improve think about this we have more than 80 thousand R&D staff and every year invest about 15 billion to 20 billion US dollars into R&D and don't you think we have our ability to address the issue of survival and development this is the foundation of our confidence mr. I'm sorry I'm just gonna say one more time what makes you confident though that customers will be willing to use your operating system is it ready to roll out and what happens if in mid-august Google is no longer able to supply the Android operating system I don't think anything will happen some might not choose us but others we do one strategy that you are pursuing in the US is stepping up licensing of patents even that though is threatened now Senator Marco Rubio is filing legislation that would prevent that what do you think of what's going on in terms of your patent business and your ability to make up for some of the shortfall you're seeing right now through that means first of all u.s. is ruled by law and it's also the country that has the largest amount of patents if his recommendation can get passed through Congress then will the image of the US as a country ruled by laws will it be damaged it will be proved by history I'm not going to have the say on whether it can be damaged I know that you have a lot of admiration for the US you have talked about it in the past yet you're also a student of history and you know that empires countries they can decline over time what makes you have so much trust in the US right now and so much conviction that they will treat you fairly 200 years ago us was not as prosperous as today and why US can become the strongest country in the world is because of its openness and all of the best talents moved to the u.s. it has a robust ecosystem and it protects innovations in personal wealth and these are all reasons behind the rise of the US and we do need to learn from the US if we want to develop - history is long this kind of event does not represent us in full and we will also not change our belief because of some minor setbacks but when we were children our parents also hit us when we were naughty spanked us for example it was just more than like a dozen seconds we will not change our relationship with our parents because of these minor incidents and this kind of attack is just a minor incident in the long history of the u.s. we don't know what the next u.s. president would think you've said in the past though that number one breeds complacency us as the number one economy in the world does it risk becoming complacent as a complacent it's possible if it's not complacent then it would not lag behind the metaphor that you just used that hallway similar to a child being spanked by their parent in terms of its relationship with the United States is there a worry that the child could be hit too hard are you worried about hallways survival no I'm not worried because adding us onto the entity list will cause us to streamline a long strategic business we might have to cut or close some minor business and non strategic business but for the mainstream business will not be impacted you said that Huawei will see new life in 2021 that the pain from the youth attacks will be over how do you get there does that assume that the US export ban is lifted well to use a analogy we think Huawei is like an airplane riddled by bullet holes and there are a lot of bullet holes on the airplane but the engine is still intact so while we are flying so we are repairing those holes the plane is still flying I'm not talking about us lifting the sanctions instead just we will prepare this plane so the plane can keep flying what does that look like how are you preparing we stand prepared any time they don't at all times I asked how are you preparing I know you're developing your own chips is the ultimate goal to not rely on us suppliers yes I'm sorry may not be understood how are you preparing to repair that airplane that you talked about well we have to look at which hole on the plane is the biggest and we will patch the biggest hole after patching the biggest hole then we'll come to deal with the smaller ones once they're all patched we can fly two years from now are you still buying the same amount of components from the u.s. maybe even more they can't for all these years American suppliers have contributed to hallway if we do not buy from them when we can then that will be a blame on our conscience but however we are not to blame now there is a restriction on us to buy from them actually until today we're still placing orders to American suppliers they just those suppliers have to ask approval from Washington if they get approval you can still buy from them if I don't get approval then we have to find other ways are you able to find those other ways have you already put preparations in place sure yes we are making preparations what are those a lot think about all those holes we have this patch of all those holes the plane is riddled by bullet holes thousands of holes we have to patch each one of them you're telling me that you will repair the plane but you're not telling me how can you give me any kind of indication and surely you have thought of this and put plans in place can I show you the picture of the plane some on July 50 this is the broken airplane page riddled by bullet holes we have hundreds thousands of measures to patch those holes we adopt different approaches to patch different holes so it will be very difficult for me to explain however if you are interested in this question you can go interview our grass through employees and spend more time with them they will tell you how we plan to patch those holes because I do not specialized on patching those holes and I do welcome you once again interview us after two years to see if we are able to grow I would love to see that but I'm very curious and I still haven't received an answer or any strategy really in how you get there do you depend on other overseas suppliers do you start making the components yourself which I know you already are but to a greater degree how does it happen well both measures you mentioned are possible but the most important things is we have to enhance our capability okay are you hopeful that the trade talks between China and the US are resolved I don't know what CEO mentioned or discussed in those trade talks and we're not interested we only focus on what's going on inside the company and since the trade talk is a very wide-ranging topic we don't know what's in the trade talks even if you focus solely on what you do what Huawei does you have been brought into the trade talks according to the President as a potential bargaining chip and certainly America sees you as being in the middle so if you do everything right ultimately this comes this could come down to politics are you saying that you don't care if the trade talks are resolved I think that is that sentiment only goes one way maybe they have us on their mind but the feeling is not both ways have you spoken to President Trump or any US officials we don't need you because they are such great men how would they talk to a trivial man like us in the Eastern District Court of New York and also in a District Court of Dallas which we filed suits in those courts so we are communicating in the courts it's better to leave those cases to the court if President Trump wanted to call you and he did would you pick up the phone he would probably tweet first and the White House spokesperson will speak first what if some guy miss guys I'm self as president Trump because I've never talked to him how could I know this is President Trump I was talking to let's imagine that it really was president Trump would you be willing to take a phone call from him of course I would like to pick it up we can communicate and achieve corporations to achieve win-win because information market is very big and we don't know how big can it be let's work together to build and inform the society we can all contribute because u.s. is still very leading and advanced and Huawei will only be able to be leading in a very focused area however on the wider scope the United States is still the leading one so we should work together to build and contribute all the information in society have you spoken to the Chinese president or any senior Chinese officials about hallways role in the trade war and the so called attacks that the business is facing how would I have the chance to be able to meet with them and talk such a specific matter and China is a very small issue and on the table of the US side it is not even as big so it is not worthwhile to talk about our issues and you will counter ourselves to address the issue we still do trust the judicial system in the u.s. the judicial system will address the issue mr. Wrenn how can you say this you have a hundred and eighty thousand employees you were one of the biggest companies not only in China but in the world why would it be strange to talk to Chinese government officials when you are such an important company to China and in the world because we are fully capable to deal with those issues on our own why should I ask help that we have full confidence and we have full capability to address the issues on ourselves the sanctions and also the entity lists that have been published for quite some time and if you go around the campus they wanted to invite you to go around the campus so you can see business as usual and maybe you can go to our product line and see the production line everything is in order since we have the full capability to address this by ourselves why should I ask help I didn't ask if you would ask for help I asked if you would speak to Chinese officials what happens to hallway will affect the Chinese economy will it not maybe not now but if your business continues to decline your revenue is more than that of Alibaba and Tencent combined then we should ask Alibaba and 10 cent to work harder so they can step in to make more contributions to the country we don't have pressure on our shoulder and I think this time this issue is a test for us if we weather the storm then we will get stronger so what doesn't kill you will get you stronger in China we say the Phoenix will rise from the fire and the bird that doesn't get killed by the fire is a Phoenix and we believe this big fire will address this issue at our hand and we can get stronger during this process I want to move on but I just want to make sure that I'm very clear you're saying that you do not talk to Chinese officials about Huawei's business imagine in a family there are two kids one is the favorite kid loved by both parents but this kid will not grow into a very competent person however the ignored one will grow up into a very good person because with too much love the kid might use capability on himself and for the past 30 years this is the path we've walked through so we have very hard bones and we have strong will we should despite all the difficulties so once again you will get back on our despite all this pressure and will be honored we'll take measures at our own hands and for those for a lot of employees as I mentioned we have 180,000 employees they are all doing the patching on the holes of the plane if always a child though and the Chinese government is the parent the child would be talking to the parent would it not I find it hard to believe that you don't discuss business with officials and the US companies regularly talk to lawmakers this is because American companies are children who behave and when the US government orders them to do or stop supplying to us and we have been like naughty kids so we are different from American companies they are maintaining consistency with the US government so they are actually aligned with the US government we are different we are more diversified it's possible for us to overcome our difficulties by ourselves without help are you saying Chinese companies don't behave no this is not what I mean I don't know why an American company reports to the US government all the time just pay the taxes the export ban against Huawei is already having an effect on American companies that sell to you we're seeing it in their forecasts for revenue profits in the year ahead are they talking to US officials on hallways behalf are they trying to lift the export ban or at least win some exemptions I think are they able to actually lift this kind of ban I don't know attacking Huawei is painful for both sides so it's revenue jobs here and so it is also jobs on the American company side they are a list of companies it's a bigger impact we are not a lesser company so we don't need to show them the same kind of responsibility it's also a benefit of not being listed do you or your executives talk to executives at American companies your suppliers our executives have consensus are they advocating on hallways behalf for that I do not know what is how would you characterize and characterize your relationship with Google Google and US are standing in the same line of interest if Google systems are not installed in our devices there would be billions of users Glaus for google and they would also see loss in many aspects and if we don't have their systems our revenue would drop too so there would be things we'd have to shoulder - so this is an issue shared interest who has more to lose than a trade war China or the US the trade war has nothing to do with me so how can I know who will lose more we don't have sales in the US so even if you have 3,000 percent tariffs added to our sales volumes it has nothing to do with us because we do not have any sales operations in the US so I do not care about the trade war between the two powers if they're energetic enough they can work on it but we have not participated in any of it mr. an you are CEO of a global company you have business all over the world are you saying that you don't care about the outcome of the trade war and you have no thoughts on it I don't the trade war is about granite cetera and for me I can eat less of that grain I don't need to care about that much do you care about your ability to do business in the United States I think in a relatively long duration of time it's not possible for us to conduct business operations in the US so I actually don't care whether they allow us to go if the u.s. is open to us for business operations we might not be able to conduct business I should say that building a system like that means a long time so mr. an for many years you didn't speak to media in the last six months you've spoken to many why are you here sitting down with me a journalist at an American organization if you don't care about the trade warn you don't care about doing business in the u.s. first of all last year after December global media had almost 90 percent of coverage of us that was negative and I don't think it was 100 percent but if it's less than a hundred percent it would have reached 90% so our PR department needs to help us tell the world who way is so in the media because I do not meet with the media so the media is curious and you as we talk we have less negative coverage I think we have about 20% to 30% of the positive coverage and so people know us better we do know we need to do that I will talk a lot in the next six months I will continue to amplify these positive forces and I kind of like this interview today because you've been asking sharp questions you are not avoiding any questions I also answer all the questions sincerely I have not avoided anything I'm telling the truth and I'm sincere so it can show the American people the true Huawei because they don't know us well enough and many Americans have never been to China and when they watch movies they still see China a hundred years ago they see that we're still in the Ching dynasty very conservative still wearing the big braided hair that's not why I'm here to counter any stereotypes I'm here to ask questions of you you said that you have avoided any of my questions with all due respect I disagree you have avoided many of my questions such as what is your strategy to make up for the expert band that is hurting already hurting your business I did answer the question is it because we don't have to expand on the chipsets we have our own chipsets as to the OS the OS will become mature you didn't tell me what makes you optimistic that your customers around the world will accept your operating system and not the Android operating system if you look at the actual situations we have not seen any shrinking of the orders placed major orders are in the network connectivity product our major products we have not seen actually almost none no shrinking of orders and there was news that everybody was saying that we've provisioned our 5g system you can still see news of that so it's not impacting us some impact on the consumer business but the CBG business is not the most major business area so it has some impact but it does not really matter consumer business is not the most major business of huawei I've seen your financial results it is the fastest growing and now the biggest part of huawei why does the u.s. attack r5g why not devices it's because we are very advanced in 5g + 5 g is not consumer devices 5g is the network connectivity equipment so the most important part in defense would be the connectivity devices and equipment and the position we have in the world mr. Ahn I know that transparency is very important to you that's why you're sitting down with me and other members of the media why is Huawei does it continue to be a private company have you considered becoming a public company if we weren't an illicit comeback do you think we'd still be able to survive fluctuation and stock market might be huge then a big drop of the stock price was incurring great loss we still have our dream we'd still like to realize our dreams and being a part of the company is much more usable and better than illicit company and illicit company needs to focus on the short term financial statement not invest in too long we do not care that much about the short term financial statements so we can invest for 10 years 20 years time and so we can keep our advance in leading position and we continue to be leading companies much bigger than yours have not only survived hard times but thrived as public companies and Huawei has a transparency issue in the u.s. so I'm not sure I'm understanding your argument as to why you wouldn't become a public company and talking about research and development there are also companies bigger than yours that are public that spend just as much if not more on Rd then why do they attack 5g if they are better they're probably on five genes so you won why do they care as much about Huawei's 5g let me give you an example face but in the United States is under attack their share price has continued to grow as they adjust their business so why would being a public company prevent Huawei survival but we are dedicated to achieve our ideal if we are listed as a company then a lot of our employees would have sold the prices and they would choose to leave the company but now we are fully united and we have the foundation to whether to tide us over so that's why we choose not to be public and in terms of R&D investment indeed the public companies they are very rich and maybe we are the poorest tech company however in terms of R&D investment we ranked number five around the world in the future we will continue to invest more in R&D maybe today we might have some financial issues but we are not cutting our investment in R&D the R&D investment is still around 15 billion to 20 billion u.s. dollars and we will not cut the Rd expense a lot of hallways problems at the moment stem from trust issues and transparency and skepticism that Huawei operates separately from the Chinese government have you considered creating an autonomous subsidiary outside of China that would be beyond the reach of Chinese law no if not how can you change the perception that hallway is an extension of the Chinese state if you think about it how can 6.5 billion people all be aligned so as long as we get the recognition from customers that will be enough for us so we're not trying to get the recognition of 6.5 billion people around the world history will tell what kind of company hua Way is in the past 30 years of track record have already proven that and in the next 30 years if we are able to survive history will tell why do you have to prove a company by being listed there are a lot of sham companies and a lot of companies that collapse or are corrupt am I not asking about being listed I'm talking about creating an autonomous subsidiary outside of China if that would help your business if your business continues to suffer around the world and it doesn't stop at a thirty billion dollar hit to revenue would you consider creating an autonomous subsidiary outside of China if it were to help your business and ensure hallway survival once again 30 billion u.s. dollars is none a big number it doesn't matter and we don't have to change the way we operate the way to prove that huawei is a good company is through delivering high quality services to our customers we don't want to get the politicians to understand if they really cannot understand us why not be a scientist so if the politicians cannot understand us fully we don't need to do things to change their perception so under no circumstance would you consider creating an autonomous subsidiary outside of China under no circumstance whatsoever we have plenty of subsidiaries outside China in every country we abide by local laws and regulations we have subsidiaries across 170 countries around the world and they are independent subsidiaries but setting up those subsidiaries is not trying to prove to politicians instead it's to fully comply with laws regulations and the laws of the UN and international laws so those subsidiaries abide by local laws and regulations I do not have any intention to prove to politicians we have to wrap up soon but I want to ask you about your daughter among 1jo being held in her own home in Canada waiting her extradition trial and well certainly it's an undesirable position she has access to her homes to visitors to her lawyers the Canadians being detained in China are not getting the same treatment and from Canada's point of view they're being treated unfairly do you think that's appropriate so yeah they would first of all my daughter did not commit any crime there's no fact to suggest that she has any wrongdoing and the bank had the full knowledge about the nature of the business and they had full knowledge of all those business activities and my daughter was in a cafe and said something to the bank officials and that was used as some kind of proof if those evidence and facts were made public if our lawyers can appear in the court and the prosecution can ask questions get our lawyers can also ask questions then the case will be very clear so once again the bank had full knowledge of the nature of the issues at hand and my daughter's just said something to the banking officials at a cafe how could that be used as proof that is not fair and we believe the judicial system in the US and Canada are open and transparent and we believe the case will be resolved so we'll be patient the legal proceedings you believe the system is open and transparent in Canada but what I asked you is do you think it's appropriate that she is in her own home with access to visitors and lawyers while the Canadians detained in China are not receiving the same treatment do you think that's a bit well it's an issue with the countries and I don't care about the country level issue which I'm focused on catching the holes on the airplane I don't even have time to attend to my daughter well how would I have time to care about other things at the country level the government's will deal with those issues at their level and how would my daughter be related to the issue at the country level my daughter just said something on the cafe so I have to talk to the cafe to the country we have to talk to the person who had the coffee with Miss Ming well in the Eastern District Court of New York they should ask people who were there when do you think that it's appropriate for us companies like Google Facebook and Twitter to be banned in China while you advocate for access to the US market may you or no means restricting our way into the US market well that is the action taken by sovereign states what does that have to do with always you're not advocating for access to the US market no that will be a waste of our effort would it be a waste of your resources because you are putting a lot of resources into it again you're sitting here with me you've hired Americans you've hired lobbyists you're your executives speak to American media on a regular basis well we invest those resources not to get access to US markets instead we're trying to dispel the misunderstandings in the u.s. why bother if you don't want access because the actions are not just taken within the US the US government has been lobbying a lot of other countries you see Mike Pompeo is really tired going to all these places and to President Trump mentioned Huawei and a lot of places so I think they're so tired that they're doing all these things so we have to say something or make our voice heard in the US do you care about your access to other markets like Europe and Australia that are now considering their relationships with you we've been collaborating with customers in European markets for around 20-30 years until so far we have been welcomed in European markets so we have to contribute more by providing services to the European customers before launching how important is it for you to keep that access and doesn't that depend on what the US does as they put pressure on their allies to stop doing business with Huawei well I want to ask you I mean how much impact is the pressure from the US have on others we still have a lot of customers who choose Huawei despite the heavy pressure they still trust Huawei once this pressure is lifted then there will be a huge significant amount of the request of demands coming from customers and by that time our question will be can we have the sufficient capability to answer to all these demands mr. n you're already losing customers across the world Australia has banned Huawei equipment Australia in terms of our business is relatively a small market it's not even as big as the neighbouring city even if they welcomed us we might not go there Europe is the big market and one of your most important they are considering the same measures no no I don't think so Europe still welcomes us ok mr. an thank you very much for being candid and taking this interview I hope that we can meet again here I hope that time the plane has been fixed yes why and will not choppy if in the plane is still flying at that time I will invite you again you you

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Id: nSbfbKIiFb0

Length: 41min 5sec (2465 seconds)

Published: Fri Jun 21 2019