He was a late bloomer. He started his own business at the age of 44 and built a company with a market value of 100 billion for the country. He was also one of the first batch of engineers trained by our country and was highly regarded by the "Godfather of Aerospace" Qian Xuesen, who appointed him to Beautiful learning.
Some people say that he was not as far-sighted as Ren Zhengfei, which caused the country to suffer a big loss. But when the company suffered an accident, he was already 76 years old, and it was he who came out again to fight for a glimmer of hope for the company.
He is Hou Weigui, the founder of ZTE. How did ZTE rise and why was it sanctioned? Is Hou Weigui really a founder without vision? What are some things about this that people don’t know?
Hou Weigui was born in Xi'an, Shaanxi Province in 1941. He has been very smart since he was a child. With his photographic memory, he can easily complete his studies and is a real academic master.
Later, he was admitted to Nanchang University as he wished. After graduating from university, he returned to his hometown of Xi'an to work as a teacher.
In the 1960s, technical secondary school teachers were a guaranteed job. Hou Weigui originally thought he would live his life peacefully. However, their school was converted into Factory 691 under the Ministry of Aerospace.
In this way, he changed from a good teacher to a skilled worker in the factory. However, good people will never be bad no matter what they do. Hou Weigui relied on his intelligence and talent to be promoted from a technical worker to the chief of the technical department, and became the first batch of engineers trained by the country.
Where did the turning point in Hou Weigui’s life begin? It was not that he became the technical section chief, but because of a request from Qian Xuesen. At that time, Qian Xuesen, then deputy minister of the Ministry of Aerospace, wanted to cultivate semiconductor talents for the country, so he asked Factory 691 to carry out research on semiconductor-related technologies.
Therefore, Hou Weigui was assigned to study in the United States and introduce relevant technologies and equipment. After going to the United States, Hou Weigui was deeply shocked by the high-tech in the United States at that time, and his heart was full of mixed feelings.
He also understood that our country must step up the construction of high-tech industries without delay.
In 1985, after returning to China, Hou Weigui was sent to Shenzhen to cooperate with Hong Kong capital to establish a semiconductor company, ZTE Semiconductor, with Hou Weigui serving as the company's general manager.
Note that this ZTE Semiconductor Company is not the current ZTE Corporation, but the predecessor of ZTE. There is another story here.
In the first year after the company was founded, ZTE, led by Hou Weigui, could only do some laborious and cheap OEM orders, and only earned 350,000 yuan in a year.
For Hou Weigui, who has seen advanced American industries, this is time-consuming and cheap work. Hou Weigui understands that independent research and development technology is the core of an enterprise. Therefore, he aimed at the rapidly developing communications industry in China and began to develop small switches.
In 1990, ZTE Semiconductor launched the first data digital switch ZX500, which was also China's first digital program-controlled switch with independent intellectual property rights.
Facts also proved that Hou Weigui’s idea was correct. As a domestic switch, the ZX500 switch started from the rural telephone market and gradually opened up the monopoly of foreign companies.
In 1992, ZTE's sales exceeded 100 million yuan. Compared with the annual revenue of 350,000 yuan six years ago, ZTE's performance had doubled.
As the company's profits increase year by year, the Hong Kong capital side of the joint venture is also making a lot of money. However, the differences between the two parties also began at this time.
Hou Weigui feels that if the company wants to achieve long-term development, it must increase investment in research and development of product technology; however, Hong Kong capital parties hope to reduce investment in research and development and maximize profits for cash. Eventually, the two sides parted ways due to disagreements.
Hou Weigui left the company with his R&D team and raised funds to establish Shenzhen Zhongxing Weixantong Equipment Co., Ltd. Later, Hou Weigui found Factory 691 and jointly invested with Shenzhen Guangyu Industrial Company to establish Zhongxing New Communications Co., Ltd.
ZTE has officially become a state-controlled enterprise. This model also created a new idea in my country of "state-owned holding, authorized (private) operation".
In fact, it can be seen from Hou Weigui's insistence on independent research and development after branching off that he does not just want to be an OEM. Before the split, ZTE's research institute was established by Hou Weigui, who transferred dozens of technical backbones from the 691 Factory and the Shaanxi Provincial Postal and Telecommunications Equipment Factory No. 1;
After establishing the new company, Hou Weigui established the ZTE Nanjing Research Institute , began to develop large-capacity office digital program-controlled switches.
In 1995, the ZXJ10 large-capacity digital office switch developed by ZTE was recognized as "the best model currently comparable to the world's first-class models." This product also allowed ZTE to rapidly expand its scale.
At the same time, the competition between ZTE and Huawei is also fierce. Hou Weigui chose a low-cost operation strategy to defeat competitors with low prices.
Indeed, this trick is very effective! In the early days, Huawei was always suppressed by ZTE, and it could not compete with ZTE in every large-scale project bidding. However, Huawei has grown tenaciously in the competition, and both companies are pressing forward with all their strength.
However, low prices have given ZTE a sweet spot, but on the other hand, they have also restricted ZTE’s long-term development. In the following years, Huawei began to gradually catch up with ZTE.
In 2000, Huawei's annual sales had increased to 22 billion yuan, while ZTE's sales were only 10.2 billion yuan.
In order to speed up ZTE's development, Hou Weigui began to think about the company's strategic transformation, which later led to the expansion of mobile phone business and international markets.
Around 2002, Skanda’s PHS wanted to enter the Chinese market. However, PHS is not favored by domestic companies, but Hou Weigui believes that this is a good opportunity to enter the mobile phone market.
This time, Hou Weigui's judgment was correct. After the spin-off of the domestic telecommunications business, PHS saw huge market demand. At that time, almost every house had a PHS, which was cheap and easy to carry.
PHS also became a pillar industry of ZTE during that period. In 2003, PHS' operating income reached 16.036 billion yuan. Relying on the PHS business, Hou Weigui successfully entered the mobile phone market. In 2004, ZTE was listed in Hong Kong.
In 2009, ZTE’s overseas revenue accounted for more than half of its total revenue, making it a global company.
In the 2018 ranking of the world's top five telecom equipment manufacturers in terms of 5G testing volume, Huawei and ZTE accounted for about half of the global market share.
However, their strength has caused discomfort in the United States. From the perspective of the United States, both ZTE and Huawei are threats to them. Moreover, our country has announced the "Made in China 2025" plan to vigorously develop high-tech manufacturing technologies such as 5G communications and artificial intelligence.
It is this plan that makes the United States very "unpleasant". They even publicly stated that "China does not need to develop its own chip industry."
In order to hinder China’s 5G process, the United States began to find various reasons to hinder it. They targeted ZTE. Why was ZTE chosen to be sanctioned?
Some people say that ZTE relies heavily on imports for its core components and does not have as many technology patents as Huawei. That's why he became the target of sanctions.
However, Hou Weigui has never stopped investing in research and development, and their number of patents ranks among the top in our country. Maybe things are not as simple as they seem.
Look at Huawei now. Isn’t it difficult to survive even with core technology patents sanctioned by the United States? In fact, the United States just doesn't want to see the rise of China. If it wants to sanction you, it will make up an excuse even if there is no reason. Think of the "washing powder incident" in Iraq.
The sanctions against ZTE and Huawei are nothing more than a simpler one and a more difficult one.
The sanctions against ZTE also gave Huawei a warning and two to three years of preparation time. But how can ZTE save itself after being sanctioned?
In 2018, at the age of 76, Hou Weigui came out again and went to the United States to negotiate in person. After several twists and turns, he finally gained a settlement with the United States at the cost of accepting a huge fine and accepting supervisors arranged by the United States to enter the company. .
ZTE, which struggled to survive, has since increased its investment in scientific research, but its current market position is no longer what it once was.