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Asia-Pacific Business Huawei’s ‘wolf culture’ helped it grow, but also got it into trouble

Earthquakes, terrorist attacks and low oxygen levels on Mount Everest could not hold them back.

As Chinese tech giant Huawei expanded around the globe, supplying equipment to bring mobile phone and data service to the planet’s farthest reaches, its employees were urged on by a culture that celebrated daring feats in pursuit of new business.

They worked grueling hours. They were encouraged to bend certain company rules, so long as doing so enriched the company and not employees personally, according to Huawei workers interviewed by The New York Times.

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Employees at the company and people who have studied it have a name for its hard-charging corporate spirit: “wolf culture.”

Now, the company’s aggressive ways have been cast in a new light. The United States has accused Meng Wanzhou, a top Huawei executive and daughter of its founder, of committing bank fraud to help the company’s business in Iran.

It is not clear precisely how Huawei’s culture shaped its dealings in Iran. But an intense will to get ahead, which helped propel it to the head of the global market for telecom network equipment, seems to have informed employees’ actions in previous cases that put the company under scrutiny.

Huawei workers have been accused of bribing government officials to win business in Africa, copying an American competitor’s source code and even stealing the fingertip of a robot in a T-Mobile lab in Bellevue, Washington. In 2015, Huawei’s founder and chief executive, Ren Zhengfei, said that as part of a company amnesty program, thousands of employees had admitted to violations ranging from fraudulent reporting of financial information to bribery.

In an e-mailed statement, a spokesman said Huawei requires all employees to study and sign guidelines on business conduct every year. “At the heart of the guidelines is the principle of acting in accordance with all local laws and regulations,” said the spokesman, Joe Kelly. “Where employees are found to have acted outside these guidelines, the company takes decisive action which can include immediate termination of employment.”

Ren said in 2015 that Huawei had toughened its safeguards against employee misconduct. But the following year, in a speech that was e-mailed to employees, he acknowledged that many workers did not pay attention to internal rules and controls – perhaps, he said, because Huawei used to evaluate staff solely according to how much business they won.

More recently, in remarks that were e-mailed to employees, Ren said it was important to enforce internal standards, but that this should not become a hindrance.

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“If it blocks the business from producing grain, then we all starve to death,” he said, according to a transcript of his comments on a Huawei website.

Meng’s arrest this month has darkened China’s relations with the United States, scrambling efforts by the two nations to ease a tense economic conflict. Washington has worked for years to undermine Huawei, regarding its products as potential vehicles for espionage and sabotage – something the company denies.

Security concerns about Huawei and other Chinese equipment providers are mounting among traditional allies of the United States like Canada, Australia, Britain and New Zealand. In Germany last week, Deutsche Telekom said it was taking seriously the “global discussion about the security of network elements from Chinese manufacturers.“ The Czech intelligence agency on Monday warned against the country working with Huawei and ZTE, another Chinese technology company.

Huawei was founded in the late 1980s, during the tumultuous early years of China’s capitalist revival. Ren was an engineer in the People’s Liberation Army for nearly a decade before starting Huawei, and military values – tenacity, dedication, drive – have long suffused the company.

In the early years, squads of Huawei salesmen crisscrossed China in SUVs peddling the company’s telephone switches to post offices. Employees were given mattresses so they could nap while working late nights.

Company lore, as recounted in employee publications and admiring books by business professors, is heavy on stories of dogged staffers enduring physical hardship. They worked to keep telecom services running despite a terrorist attack in Mumbai and an earthquake in Algeria. They braved cold and sleeplessness to provide mobile coverage to climbers on Mount Everest.

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Today, the working hours are still long at Huawei, although folding beds at work are more likely to be used for midday shut-eye than for all-nighters, according to three employees. Several Huawei staffers spoke to The New York Times on condition of anonymity, fearing reprisals.

New hires at Huawei take part in a boot camp-style training course that involves morning jogs and classes on the company’s culture. Employees also compose and perform skits that illustrate how they would persevere and serve their customers in difficult environs, such as war zones, according to three Huawei employees.

In a research lab in Huawei’s Shenzhen headquarters, a piece of framed calligraphy on the wall reads: “Sacrifice is a soldier’s highest cause. Victory is a soldier’s greatest contribution.”

This intense work environment isn’t universally admired in China. Internet users savaged Huawei after a 25-year-old employee died of encephalitis in 2006. A spate of employee suicides led to more outrage in the Chinese media.

When it comes to staff conduct at Huawei, there are “red lines” that cannot be crossed under any circumstances, four employees told The Times. These include disclosing company secrets, and breaking laws and sanctions.

But in company parlance, there are also “yellow lines,” employees say. They say they are encouraged to ignore certain internal rules, such as a ban on using gifts or other inducements to win customers, if it benefits the firm to do so. For some people at Huawei, these lines may have become blurred as the company grew rapidly around the globe.

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In 2002, Iraq’s government submitted to the United Nations a 12,000-page declaration on its weapons program, and Huawei was reported to have been named as one of dozens of foreign companies that broke an embargo and sold technology to Saddam Hussein’s regime. The company denied at the time that it had supplied equipment to Iraq. It said it had bid on two telecom projects in the country in 1999, but withdrew for commercial reasons.

Another test came in 2003, when Huawei was sued by Cisco Systems, an American maker of computer network equipment, for allegedly copying its software and even language from its instruction manuals. The two sides settled out of court.

A decade later, T-Mobile said that Huawei employees had photographed and stolen a piece of a smartphone-testing robot named Tappy to help Huawei produce its own robot. Huawei acknowledged the transgressions and said the employees had been fired. A jury later awarded T-Mobile US$4.8-million in damages.

Allegations of impropriety of other kinds trailed Huawei’s expansion into Africa. In Ghana, an anti-corruption group said in 2012 that the company had sponsored the governing party’s election campaign in exchange for tax breaks. That year, a Huawei executive was also convicted in Algeria of bribing an official from a state-run telecom operator.

Huawei did not comment on the accusation in Ghana at the time. After the Algerian court ruling, the company said it took the court’s decision “seriously” and was reviewing the outcome.

In a 2013 New Year’s message that was published in an employee newspaper, Guo Ping, Huawei’s chief executive at the time, acknowledged that rapid growth had created problems and risks.

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“Not long ago, high-speed growth was Huawei’s priority,” Guo said. “This helped Huawei mature quickly, but it also caused Huawei’s management to become negligent.”

Now, he said, “we must control the impulse to expand, and hold to account managers who spread themselves too thin.”

By then, Huawei had said it had halted expansion in one particularly sensitive market: Iran. Still, U.S. investigators now say the company broke the law in connection with its business there.

Huawei entered the Iranian market in 1999. Within a decade, the Chinese Embassy in Tehran was boasting that 130 cities in the country were connected to Huawei’s fiber optic network.

“The Iranian telecom market’s reliance on Huawei’s products is growing day-by-day,” a 2009 article on the embassy’s website said. “Huawei has become the Iranian telecom market’s main hardware supplier.”

Soon thereafter, the United Nations and the United States imposed new sanctions against Iran’s nuclear program. In 2011, Huawei said it would not sign new contracts in the country, citing the “complicated” situation there. It also said it would limit its business with existing customers.

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The accusations against Meng, Huawei’s chief financial officer, stem from events in 2013.

According to an affidavit that was made public during Meng’s bail hearing, Huawei used a company called Skycom as an unofficial subsidiary for doing business in Iran. The filing, which contains information provided by the United States, says that Meng concealed Skycom’s link to Huawei to reassure HSBC and other banks that Huawei was not violating U.S. sanctions against Iran.

As a result, HSBC and its U.S. subsidiary had cleared more than US$100-million in transactions with Skycom in Iran by 2014, the affidavit says.

Huawei still has a presence in Iran. At a cellphone bazaar in Tehran is a store that specializes in the company’s devices.

Inside, a shopkeeper, Hamed Hajipour, says Huawei’s phones are popular in Iran. Hajipour, 29, has even had his name tattooed in Chinese characters on his arm.

“I love everything about China,” he said. “It’s a great and powerful country.”

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