Huawei's Winter: How Ren Zhengfei Saved a Multi-Billion Company with an 'Alarmist' Speech

Prologue: The "Crow" at the Peak of the Carnival

In the spring of 2000, the global tech industry was caught in an unprecedented frenzy. The dot-com bubble was inflated to its maximum; any company with ".com" in its name could see its stock price soar. As the infrastructure provider for the internet, the telecommunications industry was lifted to the clouds on a wave of capital.

Huawei was one of the brightest stars of this feast.

That year, Huawei's sales reached a historic ¥22 billion, with profits hitting a staggering ¥2.9 billion, ranking it first among China's top 100 electronics companies. The number of employees surged to 15,000, and they moved into the brand-new Huawei campus with high spirits. Everyone was talking about the generous bonuses and stock dividends they were about to receive. An atmosphere of extreme optimism, even a hint of complacency, permeated the entire company.

However, at the very peak of this carnival, the company's founder, Ren Zhengfei, acted like an untimely "crow," issuing a series of jarring warnings.

He began to ask the same question repeatedly, almost obsessively, in various internal meetings: "Are we becoming a bit 'complacent with our small fortune'? Is our spirit of striving still there? What will we do if the market bubble bursts?"

At the time, these questions sounded so "alarmist" that many executives thought the boss was overreacting. Some whispered among themselves, "The company is in great shape right now. Why does Mr. Ren always have to be a wet blanket?"

Ren Zhengfei's anxiety was not unfounded. He smelled danger in some inconspicuous details. He noticed that the company's costs were rising sharply, and processes were becoming increasingly bloated. Some managers began to pursue extravagance, moving into larger and larger offices and refusing to stay in anything less than five-star hotels on business trips. More seriously, after receiving their stock dividends, many employees became rich overnight, started buying luxury cars and villas, and gradually lost their motivation to strive.

He keenly sensed that the real danger came not from external competitors, but from internal corruption and slackness.

In early 2001, at a meeting of Huawei's EMT (Executive Management Team), Ren Zhengfei delivered the most important speech of his career. He didn't talk about achievements or the future. Instead, with an unprecedentedly solemn tone, he issued a deafening warning to all senior executives.

This speech would later be revered as one of Huawei's "bibles"—"Huawei's Winter is Coming."

Act I: "It's Spring Now, But Winter is Not Far Away"

"Have all employees of the company ever considered what we would do if, one day, the company's sales decline, profits fall, or it even goes bankrupt?"

Ren Zhengfei began his speech with a question that caught everyone off guard.

He continued, "Our company has been at peace for too long, and too many people have been promoted during peacetime. This may be our disaster. The Titanic also set sail to a chorus of cheers."

He mercilessly exposed the various ills lurking beneath the company's prosperous facade: departmental silos, rigid processes, overstaffing, appalling waste... He even used harsh terms like "our management is heading towards dogmatism and bureaucracy."

"It may be spring now, but winter is not far away. We must prepare for winter."

He made a groundbreaking demand: the entire company, from top to bottom, must begin a profound movement of "self-criticism." He demanded that cost management be refined down to every single screw and that all managers must have a sense of crisis, ready to face the harsh winter of the market at any time.

To spread this sense of crisis to every corner, he ordered the article to be published on the front page of the company's internal magazine, "Huawei People," and required all employees to study and discuss it.

The entire company was in an uproar. Many people didn't understand and even felt wronged. They had worked so hard to build this empire, why was the boss scolding them instead of praising them?

However, Ren Zhengfei's "winter theory" was not just to discipline employees; it was a strategic forecast based on his deep understanding of the global economic cycle. He had already seen the huge risks hidden behind the beautiful dot-com bubble.

What he had to do was to proactively "put on a winter coat" for Huawei before the real winter arrived.

Act II: The Bubble Bursts, Who is Swimming Naked?

Unfortunately, Ren Zhengfei's prophecy came true. And winter came faster and more fiercely than anyone had imagined.

In March 2001, the Nasdaq index crashed, and the dot-com bubble burst. The storm quickly spread to the entire telecommunications industry. Major telecom operators around the world were devastated, slashing or canceling equipment purchase orders. Industry giants like Lucent, Nortel, and Motorola, once seemingly invincible, saw their stock prices plummet by over 90% in just a few months, plunging them into huge losses and massive layoffs.

The entire industry was a scene of devastation.

Huawei was not spared either. The company's overseas orders vanished almost overnight, and domestic contract values also plummeted. For the first time, the company's sales revenue saw negative growth, and profits fell sharply.

This was the real winter—a biting, deadly winter.

It was only then that all Huawei employees truly understood Ren Zhengfei's good intentions from a year ago. It was because of "Huawei's Winter is Coming" that the company had begun preparing for winter a year in advance.

While other companies were still expanding wildly, Huawei had begun to strictly control costs and streamline processes. While other companies were still poaching talent with high salaries, Huawei had begun to emphasize being "striver-oriented" and squeeze out its internal human resource bubble.

When the crisis hit, the competitors who had once laughed at Huawei for being "paranoid" discovered they had been swimming naked all along. And Huawei, having put on its winter coat in advance, felt the cold but had the capital to survive.

At the company's most difficult time, Ren Zhengfei once again showed his iron fist. He personally presided over reforms for "product line president bidding" and ensuring "cadres can be promoted or demoted," decisively removing a large number of mediocre and slack managers, while exceptionally promoting young, capable, and responsible key personnel.

At the same time, under immense pressure, he insisted on no layoffs and no pay cuts, instead calling on all employees to ride out the storm with the company. He also took the lead in cutting his own salary to just one yuan.

This display of leadership greatly boosted the morale of all employees. In the dead of winter for the entire industry, the people of Huawei did not fall apart; instead, they united as one.

Epilogue: What is Seized in Winter is True Wealth

The "winter" lasted for a full two years. These two years were the most difficult and darkest period in Huawei's history. Pessimistic views that "Huawei might collapse" even appeared within the company.

But Ren Zhengfei always firmly believed that winter itself was not scary; what was scary was being unprepared.

He led Huawei to, on one hand, strengthen its internal capabilities by continuing to increase R&D investment in core technologies, stockpiling ammunition for the next technological wave. On the other hand, they continued to cultivate overseas markets, quietly sowing seeds in emerging markets in Asia, Africa, and Latin America while others were retreating.

In 2003, as the industry began a slow recovery, people were surprised to find that Huawei, the former industry follower, had quietly overtaken its rivals.

The former giants, like Nortel and Lucent, were severely wounded in the winter and never recovered. But Huawei, with the technological and market advantages it had accumulated during the winter, rose against the trend and began to compete on the global stage with top players like Ericsson and Cisco.

As Ren Zhengfei wrote at the end of "Huawei's Winter is Coming": "We are one of the few companies that will ultimately survive. Having been tested by winter, we are a company with more hope."

Looking back at that thrilling industry crisis, Ren Zhengfei's "winter theory" was not just a successful crisis warning, but a profound practice of management philosophy. It teaches all entrepreneurs a lesson: a true leader is not one who shares the sun and rain in spring, but one who reminds everyone to prepare their winter coats before winter arrives, and leads them out of the snowstorm alive.

---

Key Takeaways

1. Counter-cyclical Thinking: Great entrepreneurs possess the ability to think counter-cyclically. They can remain fearful when others are greedy and see opportunities when others are fearful. Ren Zhengfei's "winter theory" is the ultimate embodiment of this ability.
2. Proactively Create a Sense of Crisis: When an organization is comfortable, it is the leader's responsibility to proactively create a sense of crisis to prevent it from falling into the "boiling frog" trap. This kind of controlled "stress test" is the best way to improve an organization's immunity.
3. Crisis is the Best Litmus Test: A crisis is the best test of a company's culture and organizational quality. The fundamental reason Huawei was able to survive the winter was its "striver-oriented" culture, which allowed the company to maintain strong cohesion and combat effectiveness even in the most difficult times.