The $7.5 Billion 'Jilting': Why Ren Zhengfei Abruptly Halted the Deal of the Century with Motorola

Prologue: "Selling Off" Huawei's Handset Business

The Spring Festival of 2003 was still shrouded in the shadow of "winter" for Huawei.

Although the company had survived the prehistoric winter of the telecom industry through sheer willpower, it was still severely weakened. Its cash flow was extremely tight, various business lines were crying out for investment, and Ren Zhengfei himself was under the greatest physical and mental pressure since founding the company. He had been diagnosed with cancer and was also suffering from severe depression, often lying awake at night pondering the company's future.

It was at this moment of internal and external turmoil that a "manna from heaven" opportunity came knocking.

Motorola, the global mobile phone hegemon at the time, extended an olive branch to Huawei. They were interested in Huawei's accumulation in 3G technology and its strong R&D team, and proposed to acquire Huawei's handset business for a whopping $7.5 billion.

$7.5 billion! In 2003, this was an absolutely staggering figure. It was more than twice Huawei's annual sales at the time. If the deal went through, Huawei would instantly transform from a cash-strapped "poor kid" into a "super-rich tycoon" with enormous cash reserves. The company could not only completely escape its financial predicament but also invest this money into its core network equipment business to compete head-on with giants like Cisco and Ericsson.

The proposal caused a huge shock within Huawei. The vast majority of senior executives, including Chairwoman Sun Yafang, voted in favor. The reason was simple: at that time, the mobile phone business was an "ugly duckling" for Huawei—its technology was unstable, the market was immature, and it was losing money every year, making it a real "burden." To be able to shed this burden at such a high price in exchange for ample ammunition for the company's main business was undoubtedly an extremely good deal.

Ren Zhengfei himself was initially inclined to "sell." He was too tired. The dual torment of body and mind made him eager to shed a heavy load, focus on fighting the "lawsuit of the century" with Cisco, and establish a firm foothold in the core network field.

Thus, Huawei set up a large project team composed of the company's top elite and began months of arduous negotiations with Motorola. From technology transfer to personnel arrangements, from contract details to payment methods, everything proceeded in an orderly manner.

By the end of 2003, all negotiations were completed, and a contract several hundred pages thick lay on the table for both parties. The date for the signing ceremony had been set. All that was left was for the top leaders to sign, and this deal of the century would officially take effect.

However, just when everyone thought the matter was settled, something completely unexpected happened.

Act I: The "Sleepless Man" on the Eve of Signing

The night before the signing ceremony, Ren Zhengfei couldn't sleep.

He locked himself in his office, alone with a cup of tea and a pack of cigarettes, and sat staring into the night outside his window for the entire night.

For months, although he had agreed to the sale, a vague sense of entanglement and unease had been lurking deep in his heart. During the day, he was surrounded by countless meetings, reports, and negotiation details, leaving him no time to think. But in the silence of this night, that uneasy voice in his head grew louder and clearer.

He asked himself repeatedly: Are we really going to sell our own "flesh and blood"?

The handset business, though still an "ugly duckling," represented the future. The future world of communications would be a synergy of "cloud-pipe-device," where the network (pipe) and the device (handset) were an inseparable whole. If they gave up the handset business today, it would mean giving up half of the future battlefield. They would be forever reduced to a mere pipeline provider, at the mercy of others.

He also thought about Motorola. Although it was a giant, it was already showing signs of fatigue, with severe internal bureaucracy and a lack of innovation. If he handed over this group of vibrant "wild wolves" from Huawei to a group of "drowsy" professional managers, would they be treated well? Would their spirit of striving and their value system be eroded?

More importantly, he wondered if Huawei, flush with $7.5 billion in cash after the deal, would lose its motivation to strive. Would everyone become lazy, complacent, and eventually consumed by comfort?

These questions tormented him like sharp knives. As dawn approached, he stubbed out his cigarette and picked up the phone to call Sun Yafang.

He said only one sentence, but that sentence changed history.

He said, "Yafang, we're not selling anymore."

Act II: "Why Should We Sell Our Future?"

Sun Yafang was stunned by the call and immediately rushed to Ren Zhengfei's office. She couldn't understand why her boss would make such a major reversal at the last minute.

"Boss, are you crazy? All the contracts have been negotiated, and we're signing tomorrow! How can we explain this if we back out now? What about our credibility?" Sun Yafang's voice was filled with urgency and bewilderment.

Ren Zhengfei didn't answer directly. Instead, he asked her a question: "Yafang, tell me, what should our core competitiveness be in ten, twenty years? Is it just that $7.5 billion?"

He stood up and paced around the office, his tone becoming exceptionally agitated. "If we sell the handset business today, we might sell the network business tomorrow, and the day after tomorrow, we might sell ourselves! Why should we sell our future for the sake of these immediate difficulties?!"

"We can earn the money ourselves! We can bear the hardships ourselves! But the future, once sold, can never be bought back!"

These words struck Sun Yafang like a thunderbolt. In Ren Zhengfei's eyes, she saw a grand ambition and a sense of responsibility for the future that transcended short-term interests. She understood that her boss was seeing the endgame of the industry ten or even twenty years down the line.

However, calling off the deal was easier said than done. Huawei paid a huge price. The months of hard work by a team of dozens went down the drain. More seriously, Huawei lost its credibility with Motorola, almost alienating the entire American business community.

But Ren Zhengfei withstood all the pressure. He personally explained the situation to the other party, frankly admitting his mistake and strategic considerations, and eventually gained their understanding.

This thrilling "jilting" became a major turning point in Huawei's history.

Epilogue: From "Ugly Duckling" to "White Swan"

The "rescued" Huawei handset business did not immediately turn into a swan. For several years afterward, it remained a "burden" that constantly needed blood transfusions from the main business.

But Ren Zhengfei's determination gave the handset team immense confidence. They began to re-examine their strategy, shifting from low-end OEM manufacturing to building their own brand.

And we all know the rest of the story.

From an unknown "knockoff," Huawei's mobile phones made a stunning comeback. Through the success of the P series and Mate series, they successfully established a foothold in the high-end market, and in 2020, they surpassed Samsung to become the world's top smartphone manufacturer.

And Motorola, the giant that almost bought them, has long been forgotten in the dust of history.

Today, looking back at that thrilling night of the "jilting" in 2003, we have to admire Ren Zhengfei's foresight and courage. With a decision that seemed "irrational" and "untimely," he saved the most important ticket to the future for Huawei.

This story tells us that the ultimate value of an entrepreneur lies not in how many immediate opportunities he can seize, but in his ability to see the direction of the future at critical historical junctures, and to have the courage to bet everything on it.

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Key Takeaways

1. Strategic Focus Over Short-Term Gain: When faced with major decisions, one must proceed from the company's long-term strategic core, rather than being tempted by short-term financial difficulties or benefits. Ren Zhengfei gave up $7.5 billion to save Huawei's future.
2. The Leader's Non-Consensus Decision: True leaders often make decisions that are different from the consensus but ultimately prove to be correct, at a time when most people cannot see or understand the situation clearly. This requires great insight, courage, and a sense of responsibility.
3. Core Businesses are Not for Sale: Any business that could potentially become the company's future main track and core competency should not be easily sold. Destiny must be held in one's own hands; relying on others will ultimately lead to being eliminated by history.