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China 2.0

Up Close At Huawei, China's Challenger To Smartphone Giants

A look inside Huawei's HQ in Shenzen, the Silicon Valley of China, where plans are being laid to overtake Apple and Samsung.

A technician at Huawei HQ in Shenzhen
A technician at Huawei HQ in Shenzhen
Bruno Ruffilli

SHENZHEN — Under the milky grey sky, Lin challenges the autumn heat in a white dress and black jacket, walking confidently in her high heels. "There are seven women for every man in Shenzhen," she says.

Continuously chatting, replying to emails, and swiftly tapping the screen of her phone — a Huawei smartphone, of course — Lin makes a point of noting that employees aren't prohibited from using competitors' phones and gadgets.

Shenzhen is home to the headquarters of Huawei, China's largest smartphone producer and third in the global market behind Apple and Samsung. Its sprawling campus is a city within a city replete with 3,200 apartments for some 50,000 resident employees, roads, parks, and even a small lake with black swans brought in from Australia. "I live here and it's a 20-minute walk to work," Lin says. "If I lived in the city it would take me at least an hour and a half."

With employees from all over the world, both English and Chinese are spoken on the Huawei campus. It also boasts its own university, offering courses recognized by state universities.

From village to metropolis

Shenzhen, a massive city in southern Guangdong province home to almost 11 million people, rose to prominence as China's Silicon Valley thanks to its role as a hub for startups eager to enter the market. Its population swells to 15 million in the autumn, when local factories hire workers from across the country to meet orders for the Christmas and New Year's season.

Just 30 years ago, it was a small fishing village.

Adjacent to the Huawei campus lies the enormous Foxconn complex, where iPhones, Playstations and a host of other gadgets are produced. Some 90% of China's more than 3,000 smartphone producers have based their factories in Shenzhen. Most of them are small and medium-sized businesses making component parts on commission for other brands, attracted by Shenzhen's abundance of qualified labor, excellent infrastructure and its port — the world's third-largest by container traffic. The city was also one of China's first Special Economic Zones (SEZs), designated as such in 1980, and its tax incentives and close proximity to Hong Kong made it an attractive investment destination.

Huawei's campus is clean and efficient, with green spaces and an infinite supply of maintenance workers, gardeners, security guards and hostesses. "We have everything, there are also two medical centers and supermarkets where we can buy everything we need," says another young employee. Of Shenzhen's population, 88% is aged 15-59.

A fake city?

The company recently moved its smartphone and tablet factories 100 kilometers from its campus, near several lakes. Even its competitor Foxconn has moved production inland, and new Shenzhens are sure being born across China, with their own futuristic airports, skyscraper hotels and worker's dormitories.

Shenzhen's futuristic new airport terminal — Photo: Livewireshock

Shenzhen's streets empty early at night and you can often spot Rolls Royces and Ferraris in front of the most prominent bars. "Worker's bikes" still exist, but they are outnumbered by mopeds. One of the city's major tourist draws is the "Window of the World," a miniature park with 130 representations of global monuments like the Eiffel Tower and the Colosseum. Then there's the "Fake Market", where you can find a copy of any original item. There are hundreds of counterfeit and imitation iPhone sellers in the city, and some of the highest quality fakes — externally identical to an iPhone, but running an Apple-like Android system — can cost as little as $75. They can even connect to a fake App Store and download imitation apps.

Huawei was founded in 1987 by Ren Zhengfei, a Chinese Army engineer, and began by producing telephone switchboards from parts of other technologies and then selling them at competitive prices. Eventually it began producing mobile phones in its own right. By 2015 it sold over 100 million units across the world, with its European market growing by 98% in one year.

"We want to become the number one smartphone producer in the world," explains a senior manager. "We are pursuing quality over quantity: we had the highest number of patents in 2014, and we have opened research centers in Europe, the U.S., China, Japan and India."

Most of Huawei's profits still come from telecommunications infrastructure, where it is the global leader in the market. After the decline of Nokia, and the Sony-Ericsson split, Huawei is the sole firm that still produces both smartphones and the infrastructure necessary for them to operate, and its supremacy in the latter sector has worried some abroad — notably in the United States.

The U.S. government is wary that Huawei products could be used by the Chinese government to monitor communications in the United States. But in Shenzhen, no one seems worried about such controversies. "Our goal is to help the world communicate," says another Huawei manager.

Shenzhen is the capital of the paradoxes of the new China: host to an innovative firm that expands thanks to free circulation of data on one side, and a prying government that censors the Internet and blocks social media websites, the New York Times, and even Google Maps, on the other.

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