Huawei ZTE 15 years of melee

Huawei ZTE has been fighting for 15 years. The industry is known as "Huawei is a wolf and ZTE is a cow." The wolf wants to eat meat, and the cow wants to eat grass. It seems that there is no conflict. However, since the first confrontation in 1996, the two sides have been fiercely fighting for horns and needle tips on the wheat for 15 years.
Under the premise of not acknowledging the name, "Business" reporters conducted in-depth exchanges with Huawei ZTE insiders, and unveiled the secret war between the two sides that has been tacitly and continuously staged for more than a decade...
Huawei's strategy
At the beginning of 1985, Hou Weigui, who was in his early 40s, came to Shenzhen to start the processing business of electronic watches and electronic keyboards. He earned 350,000 yuan a year. This is the original ZTE.
The following year, Hou Weigui set up a research and development team with the money earned, specializing in the field of switches, and finally developed the first digital program-controlled switchboard with independent intellectual property rights in China, and entered the communication field and became out of control.
When Hou Weigui concentrated on developing the switch, Ren Zhengfei, a transferman, took the train to the south. In 1988, he and several people collaborated to make up 100,000 yuan. In the residential building, Huawei Technologies Co., Ltd. was established. It initially represented the user switch products of a Hong Kong company and began to embark on the path of selling telecommunications equipment.
After two years of accumulation, Huawei established its own sales network in the coastal area. Ren Zhengfei also started research and development, and launched its own digital program-controlled switch. With the established sales network, Huawei successfully entered the telecom equipment supplier. The ranks, and ZTE stood at the same starting line.
The first time you face each other, nothing happens. It is said that Hou Weigui and Ren Zhengfei were sympathetic at the time, and the two had privately discussed how the national communications industry should rise.
However, the world's general trend, the long-term must be divided. ZTE and Huawei can't escape this fate, not to mention that they are in an industry with huge potential and fierce competition.
In 1996, Hou Weigui decided to break through the singularity of the original product structure and expand into diversified fields such as exchange, transmission, access, video, power, mobile, optical communication, etc. Coincidentally, Ren Zhengfei also developed for Huawei in the same year. The plan is almost identical to ZTE in product structure, and at least 70% of the products are coincident.
The same time, the brothers of the same city had a tit-for-tat, and opened the curtain of fierce fighting between the two sides in the next 15 years.
Immediately, the two sides began to arrange intensively. Ren Zhengfei, born with "wolf", set up a group of highly aggressive sales teams, attacking and vying for the market; while Hou Weigui used price tools to capture people's hearts with low prices.
Is it to continue to fight for each other, or to directly tear the face of the sword? According to Ren Zhengfei, compared with ZTE, Huawei has certain advantages in market share, sales channels and sales scale. In 1996, Huawei’s sales were 2.6 billion yuan, while ZTE had only 680 million yuan. If it takes the initiative, Huawei has a big chance of winning. . Ren Zhengfei decided to give Hou Weigui a Mawei, which made him unprepared.
In 1998, at the tender meeting of the exchanges in Hunan and Henan provinces, Huawei submitted a special tender. In this tender, Huawei compared its products with ZTE's products in detail, and euphemistically stated that Huawei is far superior to ZTE in performance. However, what Ren Zhengfei did not expect was that on the second day of the bidding meeting, ZTE was able to make a counter-attack against Huawei and finally grab a large amount of orders.
Will Ren Zhengfei admit defeat? of course not. He quickly picked up legal weapons and sued ZTE in Henan High Court and Changsha Intermediate People's Court, suing him for misleading comparison between "Zhongxing Power" and "Huawei Power", which led to various media reports competing, not knowing the truth. The people have thought that ZTE is in a malicious competition, and Huawei has pre-emptively launched a brand maintenance war.
Hou Weigui then fought back and set up a court in Zhengzhou and Changsha. He hoped that the method of "returning his teeth" would be re-emerged. In the end, the two sides won half of each, and Huawei was required to compensate ZTE for economic losses of 1.805 million yuan. ZTE was required to compensate Huawei for economic losses of 890,000 yuan.
For the first time, Huawei lost the law and handed over the money but won the brand and the market. From 1998 to 2000, ZTE's annual sales increased from 4.1 billion yuan to 10.2 billion yuan, while Huawei's annual sales increased from 8.9 billion yuan to 22 billion yuan. Huawei has established its status as a king.
ZTE's counterattack
In the spring of 1998, due to the unresolved issue of intellectual property rights with Qualcomm, China Unicom’s first CDMA95 bidding project was abandoned, and the re-tendering time was undecided.
Is it to continue to retain the CDMA95 project, or will it shift its focus to other areas? At the same time, ZTE and Huawei, which are planning to bid, must make strategic choices.
Ren Zhengfei believes that China Unicom will not be able to launch a CDMA project in the short term. Even if it is launched in a few years, it will not choose a relatively backward CDMA95, but should directly choose a more advanced CDMA2000. Therefore, Ren Zhengfei quickly removed the original CDMA95 team and switched to CDMA2000. At the same time, the experience of many times with ZTE over the years has told Ren Zhengfei that ZTE is used to following Huawei's ass, this time is no exception.
This seemingly impeccable decision gave the opponent time to fight back.
The opportunity is fleeting! At that time, there were only about 20 million CDMA users in the world. Regardless of technological advantages or market share, all manufacturers are at the same starting point. If ZTE can successfully win the CDMA market, it will not only make up for the regret that Huawei has fallen behind in the GSM field for many years, but also give Huawei a blow.
Leave it to Hou Weigui, it is a choice question to go left or right. If you choose the right one, you will be happy. If you choose the wrong one, you may lose all.
Hou Weigui calmly analyzed the CDMA market at that time: China Unicom will definitely launch the CDMA project, and the CDMA95 standard is no worse than GSM. From the perspective of security performance, the mobile network cannot jump directly to CDMA2000 without going through the CDMA95 phase test, and even if it turns The development of CDMA2000 also requires the accumulation of the CDMA95 standard.
Finally, Hou Weigui decided not to follow Huawei, but instead continued to focus on the development of CDMA95 projects, while investing a small amount of resources to study the CDMA2000 standard.
In May 2001, China Unicom's first phase of CDMA was officially tendered again. The final standard was precisely the enhanced version of CDMA95! ZTE, which has no competitors in China, naturally won the bid and won a total of 7.5% of the 10 provinces. Then, with the advantage of the first phase, in the second phase of China Unicom's CDMA construction bidding at the end of November 2002, ZTE won a procurement contract for a total of 1.57 billion yuan in 12 provinces.
ZTE’s strong counterattack made Huawei’s two bids unsuccessful, which made Ren Zhengfei, who is always vying for everything, very depressed. However, what makes him depressed is still behind.
At that time, the Japanese PHS technology was introduced to the country by UT Starcom, and it quickly set off a boom in the country. Network operators believe that it is fast and has low investment. Users feel that it is economical and convenient. Compared with mobile phones, it can enjoy 80% of services with only 20% of the money.
At the same time, a big discussion about whether PHS technology is lagging behind is in the industry. After a period of research on PHS technology, Huawei believes that this technology is relatively outdated and will be eliminated in less than five years. At the same time, the telecommunications administration's policy toward it is not clear, so it chose to give up.
Coincidentally, just a few days after Huawei announced the abandonment of PHS business, Hou Weigui told all ZTE employees that ZTE’s future market main product is PHS. ZTE once again picked up the intensive market that Huawei left behind.
Hou Weigui made such a decision without arrogance. He believed that China Mobile's mobile business was developing rapidly at that time, and China Telecom's fixed-line business grew slowly. China Telecom has always wanted to build a mobile network, and PHS is just a good choice.
By the end of 2004, PHS users had reached 60 million, basically the world of UTStarcom and ZTE. When Huawei suddenly realized that ZTE had not only earned a considerable profit from it, but also established a strong customer relationship, Huawei wanted to insert a foot to climb the sky.
After winning the CDMA and PHS markets, ZTE has become more and more smooth on the road of market expansion. In 2003, ZTE's annual sales reached 25.1 billion yuan, while Huawei's annual sales were 31.7 billion yuan. The gap between ZTE and Huawei is getting smaller and smaller.
Both lose

Seeing that ZTE has done a good job in the domestic CDMA and PHS fields, Huawei is anxious like an ant on a hot pot. Although the two companies have great similarities in product structure, Huawei has always had an absolute leading position in any field. Now ZTE has left Huawei behind in these two areas. This is Ren Zhengfei. Can be tolerated!
At that time, the domestic CDMA market had been exhausted by ZTE and foreign giants, and Huawei still held the CDMA2000 product line that it invested heavily in. The chickens were raised, but they could only lay their hands on it. Ren Zhengfei had to I want to find a way out, this time he is targeting overseas markets.
Historically, the vast majority of the global communications market has been dominated by European and American companies, such as Ericsson, Nokia Siemens, Motorola, and Alcatel. Over the years, they have been battling in the North, making the entire European, North American, and East Asian markets devastated. Huawei has to enter overseas, and the only gap is only the developing regions such as Asia, Africa and Latin America.
In order to cope with the upcoming overseas strategy, Ren Zhengfei began to recruit a large number of troops. In 2001, a postgraduate class of more than 40 people in the telecommunications major of Chongqing University of Posts and Telecommunications, 39 people were recruited by Huawei; a graduating class of 30 people in the radio major of Southeast University, 25 people entered Huawei, this predatory recruiting of the whole class Frequently staged in various colleges and universities.
Ren Maqi, Ren Zhengfei began to prepare for his global hegemony in the second round: training a group of sales people with a sense of smell and not reaching the goal. In order to let these first-line soldiers eagerly grab the market at all costs, Ren Zhengfei formulated a series of An attractive incentive mechanism, rumored that its commission ratio is higher than the industry average of about 5 points.
Everything is ready, and with the advantages of cheap equipment, Huawei will soon set up camp in these places. In 2002, Huawei's overseas market revenue reached 1.05 billion yuan, accounting for about 5% of total revenue.
Hou Weigui, who is far away from Shenzhen, is in a hurry.
Despite the prosperity of the domestic PHS market, sales and profits have grown considerably. In 2002, it contributed 22.89% to ZTE, but the rumors that PHS may have a development crisis are also growing.
Hou Weigui knows clearly that if ZTE loses the advantage of PHS, the distance from Huawei will be farther and farther, and now Huawei has an overseas battlefield, and the situation is not optimistic.
He decided to regain his follow-up strategy for many years, keeping up with Huawei's overseas bidding and starting a new round of contests.
In 2003, in a bid for MTNL in India, Huawei and ZTE participated in the project competition through local partners in India. Huawei's bid price is Rs. 3,450 crore. The price of ZTE is slightly higher. In a few days, ZTE ranks second among all the companies that participated in the bidding. After Huawei's grandfather, ZTE won almost no suspense. Finally, MTNL unexpectedly abandoned ZTE to choose Huawei.
For this result, Hou Weigui was very unconvinced, and he quickly found a counterattack point. There is such a line in the MTNL tender: companies participating in the bidding of this project must have at least 200,000 lines of CDMA equipment supply records anywhere in the world to participate in the bidding.
Hou Weigui is ecstatic, Huawei's previous projects in the Asian and African markets are relatively small, there is no 200,000 line CDMA equipment supply record, why and ZTE grab? Immediately, Hou Weigui prepared a statistical data of the China Unicom CDMA network construction project winning company, and clearly stated that Huawei did not have the relevant conditions, intending to grab the order from Huawei.
Although Hou Weigui’s wishful thinking was finally lost, MTNL sent a survey team to ZTE for investigation after receiving the materials from ZTE, making Ren Zhengfei a big fire. This time, the two sides fought a tie and did not mean to stop.
In 2004, ZTE was determined to attack the Nepalese market. Looking at Huawei's overseas layout at the time, Nepal was the earliest, time-consuming, and most defensive market for Huawei. If ZTE can open its exports here, its strategic significance is extraordinary.
For a long time, Hou Weigui pursued the concept of technology first, resulting in ZTE not having a fierce sales force. Sales are not ZTE's strengths. Hou Weigui asked himself, what is the strength of ZTE? Technology, products! If the product has technical advantages, the price is still very low, how will the market react?
Hou Weigui is determined to break through the battle, and his bottom card is not only low-priced or low-priced. In the bidding meeting, he not only does not allow ZTE to bid higher than Huawei, but also at least double the price! It is the winner who grabs the order and the market, and it doesn't matter if you lose money.
This highly gambling market action has caused Huawei to plant several successors. Ren Zheng is not angry. He even used political means to submit an indictment to the Chinese Embassy in Nepal, suing ZTE for repeatedly taking unfair competition, but it is still difficult. Change the fact that ZTE took away the market.
This kind of war of "severing bad and then getting bigger" burned from India to Russia and finally spread to the entire overseas market. However, this cost-free price war has also swayed both sides. In 2003, Huawei's net profit margin was 14%. By 2007, this figure fell to 4%, while ZTE's net profit margin in 2007 was less than 4%.
3G battle
Around 2008, Chinese communications equipment vendors ushered in the most sensitive period - 3G eve. According to the development trend of the global communications industry, China has no suspense in the 3G era, but the headache for equipment manufacturers is that the lack of licenses issued by the Ministry of Information Industry has made standard selection a major problem.
How to choose the three major standards of WCDMA, CDMA2000 and TD-SCDMA? In the face of the unknown, many equipment manufacturers have to pedal three boats, and ZTE and Huawei are no exception.
Both parties have invested in the three major standards. Ren Zhengfei believes that WCDMA is a European standard. It is the biggest cake in the 3G market. He has invested hundreds of millions of dollars and thousands of people in the R&D team to specialize in WCDMA. If WCDMA dominates the license in the end, Huawei will undoubtedly open the distance with ZTE again.
However, Hou Weigui also has his own chips. After the successful listing of A shares in 1997, ZTE once again launched its capital strategy to enter the H-share market in 2004, and raised a large amount of overseas funds for itself. ZTE has full capital to take it easy.
In the face of Ren Zhengfei's gamble, Hou Weigui chose the middle way to deal with it: WCDMA does not give up, moderate investment; rely on CDMA95 standard large-scale commercial basis, and smoothly transition to CDMA2000; TD-SCDMA, draw the industry name of Datang Telecom, jointly draft TD -SCDMA international standards for government support.
In July 2008, China Telecom took the lead in throwing out a bid of 27 billion yuan for CDMA network bidding. This is the first action after China Telecom took over the C network. In the face of this big meal, ZTE and Huawei are arrogant. At that time, the C network industry chain pattern was about to be reshuffled. Huawei, which had missed the opportunity of C network development, hopes to re-establish its status as a king, while ZTE, which has a 30% share in the domestic C network market, hopes to be in 3G. Before the advent, make the plate bigger and don't give Huawei any chance.
At the same time as the two sides of the Chen Bing array, some "sneak attack" battles that could not get on the table were also secretly staged.
On the second day after Huawei and ZTE competed for big CDMA orders in Beijing, Guotai Junan issued a report saying that Huawei will give a large amount of equipment nationwide. “Huawei’s domestic CDMA market is close to zero share, so The behavior of making a big gift can be understood. It should be emphasized that the gift device may not be able to gain market share." It seems to be in line with this report. In the afternoon of the same day, the market began to rumor that Huawei has given a “hell price” of 690 million yuan in the equipment tender of more than 10 billion yuan, only the highest quoted Alcatel-Lucent. 1/20.
On the day of the news, ZTE fell across the board in the A-share and H-share markets. Hou Weigui is clear that Huawei's trick is to give the market a blow, forming a public opinion offensive, but Huawei's more bizarre tricks are still behind.
According to an industry insider who was involved in the bidding at the time, in the face of the fierce Huawei, ZTE had to choose to change the price of the tender, but the staff sent out to send the tender in the morning missed the bidding time. "In fact, Huawei sent people halfway." Manufacturing accidents have intercepted people."
In the first round of competition, Huawei successfully increased its share of the domestic CDMA market to 25%.
At the beginning of 2019, China Unicom, which had come to the WCDMA standard 3G license, quickly issued the tender instructions. Huawei, which has R&D and market advantages, is sure to win this sign. At the beginning of the tender, the two sides began a contest, not only to lay off the smoke bombs, but also tried to suppress each other with public opinion. ZTE also made a more shocking price butcher knife: “0” quote!
However, ZTE’s reality in the WCDMA field is realistic. In the end, it only gained 20% of the market share, while Huawei received 31% of the orders, and Huawei’s two wars were shameful.
The 3G trend has been fixed, and Hou Weigui has no intention of fighting. He once again followed Huawei to reach out to Europe and seize the data card business. Of course, Hou Weigui did not forget to bring a low-cost butcher knife, set off a price war in the European market, and reduced the original data card price of 200 euros to 17 euros, causing Huawei to lose 1 billion US dollars. Not only that, but ZTE’s high-profile behavior also led to the EU’s “three-counter” investigation of Chinese companies including Huawei, which caused Huawei to almost lose its right to remain in the European market.
From the thunder of the air, on April 28, 2019, Huawei suddenly announced that it would formally file a lawsuit against ZTE in Germany, France and Hungary in the name of infringement of company data cards, LTE patents and trademark rights.
How to deal with the confrontation of the countertop, ZTE? Twenty hours later, ZTE issued a counterclaim statement stating that ZTE also filed a lawsuit against Huawei in the name of infringing certain important patents of LTE.
In fact, in the communications industry, the replacement of patents between equipment vendors is a rule, and Huawei ZTE is so fussy, in order to compete for the more potential 4G market after 3G.

This war is whether Huawei is laughing at the end, or ZTE can successfully attack the Jedi, and everything needs to be announced. This pair of brothers who have been in the same room for 15 years still don't want to stop.