'When a Pig Gets Too Fat, It Can't Even Squeal': Why Ren Zhengfei Adamantly Refuses to Take Huawei Public

Prologue: The "Temptation" of a Trillion-Dollar Market Cap

"If Huawei were to go public, what would its market capitalization be?"

This is a question that almost every financial journalist and investor has discussed repeatedly over the past two decades. The answers range from hundreds of billions to over a trillion U.S. dollars.

One thing is certain: if Huawei were listed, it would instantly become a "behemoth" in the global capital markets, creating tens of thousands of multimillionaires or even billionaires in a flash. And as the founder, Ren Zhengfei's personal wealth would grow exponentially, easily placing him among the ranks of the world's richest people.

For any entrepreneur, this is an irresistible temptation, a symbol of ultimate success.

However, faced with this readily available "capital myth," Ren Zhengfei's choice has, time and again, stunned everyone. He has not only publicly stated on numerous occasions that "Huawei will never go public," but has even written this rule into the company's "constitution"—the "Huawei Basic Law."

Why is he such an "outlier"? Why does he have such a deep-seated aversion to the capital market that can turn stone into gold?

Act I: "We Are Not Striving for Money"

As early as the 1990s, when Huawei was still struggling for survival, investment firms came knocking, hoping to invest in Huawei and help it go public.

At an internal discussion, almost everyone agreed that this was a fantastic opportunity for the cash-strapped Huawei. But Ren Zhengfei poured cold water on the idea.

He said something profound: "Why did we start this business with just ¥20,000? Was it just to sell the company for a good price one day, split the money, and walk away? If so, what's the difference between us and those speculators?"

He continued: "The reason Huawei has survived to this day is not because of money, but because of a fire in our bellies, a desire to create world-class products. If we let outside capital in today for the sake of money, that fire will be extinguished. Everyone's focus will no longer be on serving customers, but on how to drive up the stock price and cash out. A Huawei like that would not be far from death."

In Ren Zhengfei's view, capital is a greedy, short-sighted beast. Once it enters the company, it will use shackles like "profit maximization" and "quarterly reports" to bind the hands of management, forcing the company to engage in various short-term, shareholder-pleasing behaviors while abandoning the difficult, strategic investments that truly determine the company's long-term fate.

He used a vivid analogy: "When a pig gets too fat, it can't even squeal. Taking a company public is the process of fattening the pig. Everyone becomes a pig farmer, staring at how many pounds the pig has gained each day, and no one cares about improving the breed anymore."

This natural wariness of capital stems from Ren Zhengfei's deep understanding of the essence of business. He firmly believes that the ultimate goal of a business should be to create value for customers. As long as you can continuously create value for customers, profit and success are just natural consequences.

And going public, in many cases, puts the cart before the horse, turning the company into a machine that serves shareholders and chases profits, thereby losing its fundamental soul.

Act II: What Was Won by Not Going Public?

Refusing to go public meant Huawei lost a channel for quickly obtaining massive amounts of capital. But on the other side of the coin, it won Huawei three things that ultimately proved to be more valuable strategic assets than money.

First, it won strategic freedom.

Because it doesn't have to answer to external shareholders or worry about quarterly stock price fluctuations, Huawei can set its strategic vision ten, twenty, or even more years into the future.

The most typical example is its investment in R&D. Over the past decade, Huawei's cumulative R&D investment has exceeded ¥840 billion. In many years, its R&D spending has accounted for more than 15% of its sales revenue, a ratio far higher than that of any publicly listed tech company.

It is this long-term, at-all-costs investment, like "sharpening a sword for ten years," that has allowed Huawei to build a leading, unshakeable technological barrier in core areas like 5G. This is something no public company accountable to Wall Street's financial reports could ever achieve.

Second, it protected the company's culture.

Huawei's core culture is to be "striver-oriented." And not going public is the best firewall to defend this culture.

Imagine if Huawei went public, creating tens of thousands of financially independent multimillionaires overnight. How many people would still be willing to leave their homes and travel to difficult, remote regions overseas to expand the market? How many people would be willing to work day and night in the lab to overcome a technical challenge?

Human nature cannot withstand such a test. The "overnight wealth" effect of an IPO would almost certainly dilute or even destroy the striver culture that Huawei prides itself on.

By not going public, and through the "virtual stock" mechanism, Huawei has deeply and dynamically tied employee benefits to the company's long-term value creation. It ensures that only active strivers who continuously contribute to the company can share the fruits of its growth, thus institutionally preventing the emergence of a "rentier" class.

Third, it guarded core secrets.

As a company in the highly sensitive telecommunications industry, information security is its lifeline. The disclosure requirements for public companies would force Huawei to reveal a large amount of financial and operational data to the public and its competitors.

This is unacceptable for a company that needs to maintain a high degree of confidentiality. Remaining a private entity allows Huawei to better protect its core technology secrets, customer information, and strategic intentions, giving it an "information asymmetry" advantage in the fierce global competition.

Epilogue: A Harder Road

Of course, not going public also means that Huawei chose a harder road.

It cannot use the capital market for mergers and acquisitions like other companies, nor can it issue more stock to "stay alive" during a financial crisis. Every penny it needs must be earned through its own main business, fighting for it in the market with blood and sweat.

This is a form of "self-inflicted hardship," but it is also a sign of confidence.

With over thirty years of persistence, Ren Zhengfei has shown the world that there is another way for businesses to live, besides embracing capital. This way may be harder and lonelier, but it allows a company to maintain its purest original intention, its strongest soul, and its longest-lasting vitality.

In today's era where capital is infinitely deified, Huawei's story undoubtedly provides us with a profound reflection: for a truly great enterprise, what is most important? Is it a constantly rising stock price, or the ability to continuously create value for customers?

Ren Zhengfei's choice has already given his answer.

Key Takeaways

1. Capital is a Tool, Not the Goal: Capital should be a tool that serves a company's strategy, not the goal that hijacks it. Entrepreneurs must maintain a clear understanding of and control over capital, rather than being consumed by it.
2. Long-termism is the Ultimate Moat: In a world full of uncertainty, the only certainty is to persist in doing the right things. By giving up short-term temptations and insisting on long-term investment in core technology and customer value, Huawei ultimately built a moat that no competitor can easily cross.
3. Ownership Structure Determines the Underlying Logic of Corporate Governance: Huawei's unique employee ownership model dictates that its governance logic must be "customers first, employees second, shareholders third." This seemingly "unconventional" structure is precisely the fundamental reason why it has been able to traverse multiple business cycles and achieve enduring success.