Common Corporate Culture in

Huawei and Haier?

Can common values be found between internationally
successful young Chinese enterprises?

Author

Daniel Yasin, BA

Vienna, 2015
Index Number: 066 864
Department of East Asian Studies: Chair for East Asian Economy and Society
Seminar Paper for SE Cross-Disciplinary Approaches to Culture and Economy
in China
Lecturer: Prof. Carsten Herrmann-Pillath
Table of Contents
List of Figures .................................................................................................................... 2

1. Introduction ................................................................................................................. 3

2. What is Corporate Culture? – Definitions and Framework ......................................... 4

3. Corporate Culture – Company cases ........................................................................... 8

3.1. The Case of Huawei .............................................................................................. 8

3.2. The Case of Haier................................................................................................ 10

4. A common corporate culture? .................................................................................. 13

5. Conclusion ................................................................................................................. 13

6. References ................................................................................................................. 13

List of Figures
Figure 1 (Cameron 2009) ...................................................................................................... 6
Figure 2 (Cameron 2009) ...................................................................................................... 7

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 1. Introduction
When talking about Chinese corporate culture, it is difficult to ignore the issues that have been
brought up over the years by the media, portraying large Chinese corporations as bastions
bursting with underpaid and overworked staff, demanding ever increasing work hours and
commitment to the company. The most notorious and probably the most well-known case
among the public is Foxconn, reaching the sad record of fourteen suicides and dozens more
attempted in 2010 (Moore 2010; Pomfret a.o. 2010; Tam 2010). Further articles have been
published, often quoting the so-called “wolf culture” of Chinese companies, which seeds out
the weakest links within the employees and enforces an idea of constant pressure to keep up
and meet demand (CLB 2008). Nevertheless the current success of Chinese companies is
unquestionable, as more and more companies start not only producing large quantities, but
increasingly also high quality products for highly competitive prices. For my paper, I have
chosen to look at two of these highly successful companies, which have been creeping up on
markets dominated by Western, Japanese and Korean firms (Osawa 2015; Waldmeir 2012).
To further understand why and how these companies have become so successful, my
approach is to look deeper into the corporate culture of these companies and stack them
against each other. Should my hypothesis be correct, these companies should feature similar
corporate cultures, which, while not necessarily a cause of their success, is definitely a
remarkable correlation. In order to pursue this question, I must establish the definition of
corporate culture and its feature characteristics and establish which companies I have chosen
to analyze over the course of this paper. These companies include the telecommunications
provider Huawei and the world market leader for large home appliances Haier. I have chosen
Huawei for being featured in the Forbes “10 Chinese Companies Going Global in 2015” list and
being discussed within our seminar (Backaler 2015). Haier has been chosen for its world leader
status in the segment of large home appliances as well as being featured in our seminar as
well.

LIMITATION NO CHINESE

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 2. What is Corporate Culture? – Definitions and Framework
Corporate culture, or interchangeably organizational culture, Bright and Parkin (1997) have –
potentially half-jokingly- defined organizational culture in a poignant sentence; “This is how
we do things around here” (ibid. 13). Naturally though, we have to emphasize this point
further and establish a working definition which we then are able to use for analyzing the
companies culture themselves. On this topic, the works of Edgar Schein (1984; 1990) offer
conclusive explanations and definitions. His description begins with identifying culture itself
for which his definition is;
“[…] a pattern of basic assumptions, incented, discovered, or developed by a given group, as it
learns to cope with its problems of external adaptation and internal integration, that has
worked well enough to be considered valid and, therefore is to be taught to new members as
the correct way to perceive, think, and feel in relation to those problems.” (Schein 1990: 111).
He further goes on to define that analyzing organizational culture happens on three levels,
“observable artifacts, values and basic underlying assumptions” (ibid. 111). While Schein’s
own explanation on these three levels remains fuzzy and are, as self-described, “hard to
decipher accurately” and easily misinterpreted if “we do not know how they connect to
underlying assumptions” (ibid. 112), others have further expanded upon this base and
presented a practical approach. Tsui, Wang and Xin have identified ten different dimensions,
split between internal integration and external adaption, in regards to foreign-invested
companies;
 Internal integration values o Shared vision
o Harmony  External adaptation values
o Standardization o Results and quality
o Communication o Customer orientation
o Employee development o Innovation
o Employee contribution o Outcome orientation
o Leadership (Tsui a.o. 2006: 351)
Another approach by Hawes (2008) and Bush and Middlewood (2013) which “distinguishes
the excellent corporation from its more mediocre peers” addresses multiple factors, from
shared values, norms, beliefs, meaning, sensemaking and understanding to the use of rites
and rituals (Hawes 2008: 37). Behind shared norms and values stands the idea that interaction
between members of a group leads to behavioral norms which then progressively turn into

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cultural features (Bush and Middlewood 2013: 51). Rites and rituals are crucial in giving
meaning and a sense of belonging to work and celebrate former beliefs and norms. These rites
can exist in verbal or conceptual, in behavioral, or in material form. The conceptual or verbal
form can make itself apparent through the use of certain language and certain aims and goals.
The behavioral side uses ceremonies, rituals and rules as well as certain patterns of social
interaction to enforce the culture. Finally, the material form presents itself in mottos, uniforms
in addition to facilities and equipment. Moreover organizational culture can rely on the image
of heroes or heroines, who represent the beliefs and values of the company and act as an
example. They illustrate the desired behavior within the organization (Bush and Middlewood
2013: 52).
The question of how to effectively compare these companies poses itself at this point.
Comparing cultures, even given the above definitions and explanations, remains fickle and
elusive, since parameters like shared values and beliefs, a sense of belonging and patterns of
social interaction are not only difficult to measure, but also rely on self-reporting and vigorous
long-term assessment. For this I will try to establish two layers which I will analyze separately
to establish an answer to my research question. The first layer consists of the above
mentioned four features within an organizational culture;
1. Values and beliefs
2. Developing shared norms and meaning
3. Rites, rituals and ceremonies
4. Heroes and heroines
The second layer will consist of a framework proposed by Quinn and Rohrbaugh (1983), which
has remained a staple in organizational culture research and proved to be viable and reliable
even in the context of China (Yu and Wu 2009: 37) . They have essentially distilled their
framework down to a two-dimensional model, which allows the study of organizational
culture, leadership roles and management skills. While on one side, this model puts emphasis
on the opposition of flexibility and dynamism in contrast to stability and order, while on the
other side, the second dimension focuses on internal orientation versus an external one,
similar to Schein’s definition. Taken as a whole, these dimensions form quadrants
representing distinct forms of core values which are opposite or competing assumptions, as
seen on figure 1 (Cameron 2009).

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 To further elaborate on each quadrant, the
upper left one focuses on values as
teamwork, collaboration and inter-
personal relationships. The opposite
quadrant in blue, emphasizes
competitiveness, decisiveness and goal
achievement. Innovation and creativity,
coupled with the will to transform and
utilize entrepreneurship are represented in
the top right corner while the contrary
Figure 1 (Cameron 2009) quadrant is concerned with controlling,
measuring and structuring. Quality improvement and efficiency also fall under this dimension
(Cameron 2009). As depicted in figure 2, the four distinct types; clan, adhocracy, hierarchy and
market; have distinct value drivers and leader types. Via this model and the associated values
to each culture type, the goal is to assign the chosen companies to one of these quadrants.
In this paper though, I face various obstacles which will hinder my ability to accurately
categorize each company. First and foremost, the general way to approach this classification
would work via an Organizational Culture Assessment Instrument (OCAI) test, which would be
distributed within the company itself. Since this far exceeds the scope of this paper, I rely on
another method to adequately capture the organizational culture. For that I will rely on
alternative ways to gather this information, as in interviews conducted with the companies’
leaders and self-reported information about the company culture. Another issue is my lack of
Chinese language ability, which will also hinder me from including some sources, which may
have been helpful.

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Figure 2 (Cameron 2009)

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 3. Corporate Culture – Company cases

3.1. The Case of Huawei

 Values and beliefs
Huawei is often cited as featuring a particular ruthless wolf culture, which was described by
the founder Ren Zhengfei as “strong resilience in the face of failure, a strong willingness to
self-sacrifice, and sharp predator instincts” (Chinadaily 2010). This culture puts the needs of
the company first and foremost. Reports of employees bringing mattresses to their offices, so
they can sleep in and work more are floating around and underline this thinking (Jiang 2011).
Adding to that pressure, even Ren Zhengfei always urged caution that Huawei could crumble
at any moment, should its employees let their guard down and not give their best (Hawes
2012: 118). Huawei even went so far, as to introduce the 1998 Huawei Basic Law into the
company, a guideline presented to all employees, to encourage Huawei values and beliefs.
Ren Zhengfei himself tried to distance Huawei from this wolf culture when Huawei expanded
internationally. The focus then changed to continued customer orientation and growth also
via cooperation (Zhang and Zhang 2014: 109).
On the company’s homepage, Huawei also stresses, that the customer satisfaction are
its first and foremost goal. Other points include dedication to win trust and respect, by creating
value for the customers, continuous improvement by listening to customers and learn from
mistakes and an openness in regards to customer-centric innovations. Furthermore the official
site mentions integrity as a main value at Huawei, keeping the company honest and winning
the customers respect in that matter, concluding with teamwork as the final proposition,
which enables successful cross-cultural collaboration (Huawei CV 2015). Multiple other
sources also emphasize how Huawei and Ren Zhengfei in particular claim their customer focus
above all else, in quotes as “We exist to serve customers, whose demand is the driving force
behind our development, and we measure our work against how much value we bring to
customers, because we can only succeed through our customers' success” (ChinaDaily 2010),
or statements like; “he [Ren Zhengfei] told us that he would meet any customer in person, no
matter how small they were, but that Roach [an American investor] was not a customer” (De
Cremer and Tao 2015). Another notion expressed by Ren Zhengfei is the idea of the imminent
collapse of the firm, would it not be for Huawei’s excellent employees. They need to be
constantly on top of the game, to stay ahead of the competition and develop a culture of

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service to ensure that everything they accomplish is improving Huawei’s market position
(Hawes and Chew 2011: 12).
 Developing shared norms and meaning
In a way it can be described as a culture of crisis consciousness, which Ren Zhengfei
fosters within his company, in spite of Huawei’s continuing success (Hawes 2012: 118).
Another way he influences and develops the norms and values, is through the strict
atmosphere he expects, which some argue stems from the military background Ren Zhengfei
has. The openness for new ideas and research is in contrast to the strict rules and authoritarian
structure at the company. He said to draw inspiration from Japanese and German work
culture; “[…] learn from the Japanese down-to-earth attitude and the German’s spirit of being
scrupulous about every detail” (Andersen and Poulfelt 2014: 106). Huawei also produces a
regular magazine called Huawei People that employees are highly encouraged to read and
considered a frontline for spreading Huawei culture (Hawes and Chew 2011: 15).
 Rites, rituals and ceremonies
Common occurrences are award ceremonies which celebrate managers and
employees who have performed extraordinarily well, sometimes even called heroes of the
company. On the opposite side, Huawei also features reject awards, where people would
engage in self-criticism and managers would have to criticize themselves in front of their
employees (Hawes and Chew: 15). Ren Zhengfei also frequently cites Mao Zedong thought in
his speeches and in internal publications and uses words like market guerillas for his sales
teams (Andersen and Poulfelt 2014: 106).
 Heroes and heroines
Ren Zhengei himself was a very media-shy person, giving his first interview to journalists in
2013, even though he is one of China’s most influential and famous entrepreneurs. Being part
of the People’s Liberation Army and starting Huawei with his own saving after his engineering
corps was disbanded certainly adds to the myth behind the man. He underscores his
convictions with quotes as “Huawei people, especially the leaders, are destined to work hard
for a lifetime and to devote more and suffer more than others” (Jiang 2011).While looking to
expand his business, also used techniques similar to those of Chairman Mao, as Huawei was
struggling to find market share in the major cities, he focused on the countryside, where it
was easier to persuade local operators to buy their products (Economist 2011). Famous events
orchestrated by Ren Zhengfei include two instances, first in 1996 where he required all sales
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and marketing staff needed to reapply for their jobs, which led to a 30% reduction in
workforce because of those who failed to be rehired. He underlined this event in the upcoming
years repeating how important it was to remove underperforming staff. He repeated this
event in 2007 (Hawes and Chew 2011: 14).
Trying to analyze Huawei in regards to the competing values framework makes the
customer orientation take a clear pole position in Huawei’s direction. Furthermore the strict
and hard course taken by Ren Zhengfei certainly adheres to the hard-driver and competitor
leader type, not to ignore his focus on gaining market share aggressively by appealing to the
countryside first and the cities later. We have certainly also established that Huawei now seeks
innovation in turning from a latecomer in the telecommunications business to one of the
global leaders. Furthermore Ren Zhengfei has stated that he wishes to leave the early wolf
culture behind and refocus his company. All these statements let me preemptively conclude
that Huawei is featured on the competing value framework firmly within the Market culture
type, while there are certainly tendencies towards new change.

3.2. The Case of Haier

 Values and beliefs
Zhang Ruimin, now CEO of Haier, took over the company at a time, when demand for home
appliances like refrigerators was still soaring in China but the then called Qingdao Home
Appliance Company was barely able to cope with demand and the quality of the products was
varying highly. Unsatisfied with the current situation, Zhang Ruimin sought out to improve the
quality drastically and teamed up with German Liebherr to form Qingdao-Liebherr (later Haier
adapted from the German “Herr” in Liebherr) (Fischer a.o. 2015). The proposition was that
Haier would be a company where substandard products would not be tolerated and a “zero
defects” policy would be enacted (Wang 2010: 150). According to its own homepage, Haier’s
core values are threefold; rights and wrongs, as in the consumer is always right, while the
company needs to improve constantly; development concept, as in constant innovation and
entrepreneurship; and finally interests-concept, described as a win-win mode of individual-
goal combination. The first value states that Haier employees always strife to meet the user’s
demands and create choices for customers. Employees themselves need to constantly
challenge themselves to establish innovation and change. Also sustainable development falls
into this category, looking for sustainable development in a changing world, to keep pace with

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social revolutions. The development concept is another aspect by which Haier establishes its
focus on innovation. They encourage every employee to become an entrepreneur and create
new value. The last concept addresses the model by which employees and users both get the
most value. They state that users, employees and stockholders form Communities of Interest
(COI) and to fulfill this common interest employees create value in ZZJYTs (Zi Zhu Jing Ying Ti,
which can be translated as “independent operating unit”) where they can operate
independently and contract with users without further management. This independence
gained by the employees expresses the win-win mode mentioned above (Haier 2015).
 Developing shared norms and meaning
Haier uses a strict employee performance evaluation system called OEC; Overall, as in the
whole firm – Every Task, every day, every employee – Control and Clear. Employees have daily
targets that they have to meet or exceed, while maintaining 18 levels of quality and order in
order to gain full salary. Those who exceed those targets are eligible for promotions, while
those who fall short have pay either removed or are degraded. This system works on a daily
schedule by which employees gain immediate access to their performance. In addition,
employees are expected to increase their performance by one percent a day, giving them the
incentive to constantly look for possible improvements in personal efficiency. When the
company grew larger though, producing quality products in mass was not the sole parameter
anymore. Demand stagnated as the market was saturated, so employees needed to be
rewarded not based on quantity, but how efficient they could cater to the market. By splitting
up the workers into ZZJYTs based on products and function, the customer often becomes the
next people down the production chain. If the employees in such a ZZJYTs do not fulfill their
requirements, the production further down the line can claim compensation, which would
deducted from the pay of the higher link in the chain. A software was designed specifically to
show each employee’s contribution in this chain and provides a profit and loss statement
every day. This system even stretches to other divisions of the company, such as HR. They
then train and hire employees which will operate in other divisions and scrutinized. If they are
deemed underperforming, compensation of the HR division may be demanded. This
procedure is designed to give all employees a business wide incentive to improve their
processes and encourage lean manufacturing and zero inventories (Hawes and Chew 2011:
17-19).

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 Similar to Huawei mentioned before, Haier also features a regular magazine which
showcases employees that have benefitted from Haier’s culture in life and work matters
Ceremonies for employees and managers who have performed exceptionally are frequently
celebrated in the magazine and are asked to do public speeches on their ideas how to increase
efficiency or profits and reduce cost.
 Rites, rituals and ceremonies
Further evaluation is being given to employees as at the start of every shift, supervisors must
stand on large footprints painted on the floor and brief their work group. At the end of these
shifts employees who have underperformed must then stand inside these footprint and bear
the criticism of their peers. The best performing employees also stand in footprints and
explain how they have achieved their feats. (Hawes and Chew 2011: 15-16).
 Heroes and heroines
A story famously retold at Haier is the incident in 1985, where Zhang Ruimin found
around 80 refrigerators in the warehouse, which were not up to his quality standards. Even
though they still could have been sold at a discount or to unsuspecting customers, he was
adamant about the quality the company should produce under his leadership. He ordered his
employees to take up sledgehammers and participated himself in the smashing of these
defective fridges in broad daylight. The containing retelling of this story is designed to show
the importance of this invent for Haier, demonstrating the wish for continuous high quality
product (Hawes and Chew 2011: 14). Zhang Ruimin also put great effort into shaping the
employees work discipline and ethos. In his own words;
“Once I had won some goodwill, I started demanding good work. There was very little
discipline in the factory up to that point; people tended to do things as they saw fit. Rules and
regulations existed in writing but had never been seriously upheld. I spelled out the terms for
people: I would guarantee payment of their salaries every month, but only on the condition
that they strictly obeyed the working disciplines I established. Then I set forth my new rules,
beginning with ‘Urinating or defecating in workshops is prohibited’ and ‘Stealing company
property is prohibited.’ These were actual habits to be combated.” (Ruimin 2007).
In the case of Haier analyzing the corporate culture according to the competing values
framework is more difficult. Zhang Ruimin certainly fulfills the leader type of entrepreneur
and innovator, but the value drivers seem contrary to that. One could easily take the Hierarchy
aspects and notice the same aspects in early-day Haier. Considering the company today
though, it certainly fits with the innovative outputs and agility that so often is demanded from
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its employees. Today all of Haier’s processes are designed to make the company leaner and
more effective. To adapt to customers constant changing needs, work groups are designed to
continuously adapt to new demands. Considering all this, Haier would easily fit into the
Adhocracy sphere of the competing values framework.

4. A common corporate culture?

5. Conclusion

6. References

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Osawa Juro
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