The ¥21,000 Gamble: How Ren Zhengfei Ignited Huawei's First Flame in a 'Rotten-Tail' Building

Prologue: A Middle-Aged Man on the Cliff's Edge

In 1987, the air in Shenzhen was thick with a humid, restless energy. The slogan of the Shekou Industrial Zone, "Time is Money, Efficiency is Life," was painted on the most prominent walls, a siren call to every gold-digger who flocked to the city.

For 43-year-old Ren Zhengfei, however, this heatwave felt more like a scorching ordeal.

He had just experienced a complete life "reset." A decorated technical officer in the military, he was cast ashore by the tide of nationwide demobilization. He joined an electronics company under the Nanhai Oil Group, eager to make his mark, but was swindled out of a payment of over ¥2 million, directly causing the company to go bankrupt. He not only lost his job but was also saddled with enormous debt. His wife, unable to bear the successive blows, chose to divorce him.

Overnight, his career, family, and reputation vanished into thin air. He lived with his parents and two children in a cramped ten-square-meter shack in Shenzhen. When it rained heavily outside, it drizzled inside. Every time he opened the door, the peculiar glances from his neighbors felt like needles pricking his skin.

"At that time, I truly felt I had hit a dead end," Ren later recalled, his tone calm, but the desperation of those years pierced through time. He stood on the edge of life's cliff, a bottomless abyss behind him and a vast, indifferent sea before him. Should he jump, or should he find a piece of driftwood?

He chose the latter. He decided to start his own business, to found a company and seize control of his destiny once more. The decision seemed almost insane at the time. A penniless, debt-ridden, middle-aged man—what did he possibly have to start a business with?

Act I: Birth in a "Rotten-Tail" Building

Ren began scrambling to piece together the starting capital. He exhausted a lifetime's worth of connections and credibility, finally persuading five other individuals, equally lost about their futures, to chip in. One thousand yuan from one, two thousand from another, they pooled together a total of ¥21,000.

In 1987 Shenzhen, that sum was likely not even enough to buy a decent mobile phone. But it was everything Ren Zhengfei had. It was his only bet to turn his life around.

He named the company "Huawei," a name that translates to "China is able." Behind these simple words lay the unadorned patriotism of a former military engineer and a vow he made to himself in his darkest hour.

The company was registered at an address in the "Shenzhen Development Center" building by Shenzhen Bay. It sounded grand, but in reality, it was a "rotten-tail" building—construction had been halted halfway through due to a broken capital chain. Ren rented two shabby residential units as an office, one of which also served as a warehouse and employee dormitory. There was no air conditioning, only a few creaking ceiling fans that futilely stirred the sweltering summer air.

On the day the company was founded, there were no flowers, no firecrackers, not even a proper sign. Ren Zhengfei and his few partners, right there in that unfinished building, announced the birth of Huawei. Outside the window were soaring skyscrapers and bustling construction sites; inside was the defiant silhouette of a 43-year-old man refusing to sink, and the humble beginning of a company that would one day shake the world.

Act II: The Reseller, the "Middleman"

He had a company. Now what?

Ren Zhengfei was clear-headed. He knew that with the pittance he had, attempting in-house R&D was a fool's dream. To survive—to survive like a weed—was Huawei's only mission at the time.

His gaze turned to Hong Kong. At the time, mainland China suffered a severe shortage of telecommunications equipment; getting a phone line installed could take years. Just across the river, Hong Kong boasted advanced Private Branch Exchange (PBX) technology. The quickest, most realistic way to make money was to exploit this technology and price gap by becoming a sales agent.

Thus, Huawei's first business was becoming an agent for Hongnian, a Hong Kong company, selling their user switches. In Ren Zhengfei's own words, he was just a "middleman."

For a former military tech expert, this role was a psychological blow. His daily work consisted of leading his staff on dilapidated bicycles, weaving through Shenzhen's factories and offices, bowing and scraping, and peddling products with a forced smile. He would drink until his stomach bled just to secure an order.

Once, to install and debug equipment, he and a few employees lived in a client's server room for several days, sleeping on moisture-proof mats when exhausted. The client witnessed this, was stunned by their desperate work ethic, and decided on the spot to give them all subsequent orders.

It was this primal, wolf-like fighting spirit that earned Huawei its first pot of gold. The money in the company's account began to grow, from tens of thousands to hundreds of thousands, then to over a million. The staff grew from a handful to several dozen. That office in the "rotten-tail" building became increasingly crowded, and increasingly vibrant.

Yet, deep inside, Ren Zhengfei's pride and dream as a technician never died. He knew that being an agent for others meant his fate was always in someone else's hands. He often found himself late at night, staring alone at the machines in the warehouse, all bearing another company's logo.

He was waiting for an opportunity—an opportunity to transform from a "reseller" to a "developer."

Epilogue: Survive, for the Sake of a "Capable China"

In the winter of 1987, Huawei finally had a considerable profit in its accounts. At a general staff meeting, someone suggested that after a year of hard work, the money should be distributed so everyone could have a good New Year.

The proposal was met with almost unanimous approval. However, Ren Zhengfei went against the crowd and made a decision that stunned everyone: no dividends. All profits would be invested into in-house research and development.

"If we only ever act as agents, we will always be a small company that can be kicked aside at any moment," he said in the smoke-filled conference room, his voice low but firm. "For Huawei to survive, to thrive, we must have our own products! Even if we have to start with the simplest things."

This decision was a massive risk, almost a wild gamble. But it laid the first cornerstone for Huawei's future as a technology-driven company. It was at that moment that the name "Huawei" truly began to possess the soul of its future.

Looking back at 1987, the middle-aged man standing by the window of that unfinished building could not have foreseen Huawei's monumental journey three decades later. His only thought at the time was likely the simplest of words: "Survive."

Yet, it was this primal, powerful will to live that drove him and Huawei out of that "rotten-tail" building, out of Shenzhen, and ultimately, onto the world stage. That ¥21,000 gamble ignited not just the future of a company, but the legend of an era.

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Key Takeaways

1. Desperation is the best catalyst: Ren Zhengfei's entrepreneurial journey began at his life's lowest point. The immense pressure to survive unleashed his greatest potential and determination. This shows that the greatest undertakings are often born not from comfort, but from the desire to rise from the ashes.
2. Survive first, then thrive: Facing a lack of resources, Huawei did not aim high for technological innovation but chose the most pragmatic path of sales agency to accumulate capital and market experience. This strategy of securing a foothold before expanding is a valuable lesson for all startups.
3. Vision-driven decisions: As soon as the company turned a profit, Ren dared to invest it all into uncertain R&D. This decision transcended short-term gains and was driven by the long-term vision of "a capable China." It was this kind of thinking, beyond mere money, that determined the heights Huawei would later reach.