Is corporate “wolf-culture” devouring China’s over-worked employees?

Huawei Technologies is one China’s best known telecommunications companies, employing over 60,000 people across China and worldwide. The company’s headquarters in Shenzhen has the feel of a university campus, similar to the Googleplex in California’s Silicon Valley, and is widely seen as the place to be for young and ambitious men and women hungry for success.

 

Over the last year however two events have shown Huawei in a less positive light. In October 2007, the company bribed about 7,000 long-serving employees to resign and rejoin on short-term contracts so that it would not be bound by the unlimited contract provisions of the Labour Contract Law. The move was condemned by the local government and trade unions who stated that Huawei would be bound by the terms of the new law regardless. Then on 6 March 2008, a Huawei employee jumped to his death from the third floor of the company cafeteria. He was the sixth Huawei employee to have committed suicide or die in mysterious circumstances in the previous two years.

 

Chinese bloggers and reporters focused their attention on Huawei’s aggressive and ruthless corporate culture and asked if this so–called “wolf culture” was responsible for the untimely deaths of its employees. Xinmin Zhoukan (New People’s Weekly) launched an in-depth investigation into the Huawei suicides and the corporate ethos fostered by the company’s publicity shy founder and CEO, Ren Zhengfei. The magazine talked to Huawei employees, relatives of the deceased and academics to build up a picture of the pressures many white collar workers feel just trying to keep their head above water in China’s increasingly competitive technology sector.

 

CLB has translated the Xinmin Zhoukan report and publishes three edited extracts below.

 

 

 

 

On 6 March 2008, Zhang Liguo, a 36-year-old employee at a Huawei Technologies’ plant in Shenzhen’s Bantian Industrial Park, jumped off the third floor of the company’s cafeteria; he died on the spot. Just nine days earlier, another Huawei employee, Li Dongbing, had jumped to his death from the company’s research and development centre.

 

The violent deaths of two of its employees in close succession were a public relations nightmare for Huawei. The company’s aggressive and predatory “wolf culture” and “mattress culture,” which compels overworked employees to sleep in their workplace, became the focus of heated debate. Particularly since Zhang Liguo was the sixth Huawei employee to have died of unnatural causes in recent years, and allegedly the 38^th to have died of unnatural causes since the company was founded. Is there something about Huawei that leads so many young people to end their lives prematurely?

 

Huawei Technologies is something of a legend. Nobody questions its position as a pacesetter for China’s IT industry, because it competes successfully in international markets, it is continuously expanding into new territories and it has mounted aggressive challenges to major international players such as Cisco and Ericsson. A great many people take nationalistic pride in Huawei’s strength. Under Ren Zhengfei’s militarized management, Huawei grew from a registered capital of 20,000 yuan in 1988 to an annual sales volume of more than 100 million yuan in 1992 and 2.6 billion in 1996. Since then, its annual growth rate has exceeded 50 percent. In 2007, Huawei posted global contract sales of US$16 billion, 72 percent of which were generated from international markets. It is now the world’s fifth largest telecommunications equipment manufacturer.

 

However, the series of suicides and the layoffs followed by immediate hire-backs of thousands of employees have hurt Huawei’s image and given many people the impression that the company has lost its humanity. To be fair, although Huawei is an IT company that demands hard work from its employees, it is no hell on earth either. If that were the case it would not have been able to enjoy such success and attract so much professional talent.

 

Because suicide tends to be the result of a complex interplay of factors, it is obviously unfair to single out and demonize Huawei. That being said, while a single unnatural death may be called accidental, a whole string of unnatural deaths cannot but raise troubling questions about Huawei’s corporate culture and management policies.

 

Before Huawei employee Zhang Rui committed suicide in 2007, CEO Ren Zhengfei wrote a letter to a member of the Communist Party committee which began with the following admission: “At Huawei, employees are continuously committing suicide or self-mutilation. There is also a worrying increase in the number of employees who are suffering from depression and anxiety. What can we do to help our employees have a more positive and open attitude towards life? I have thought about it over and over again, but I have been unable to come up with a solution.”

 

Because Huawei has yet to grant an interview to answer questions about the suicides, we don’t know how serious Ren Zhengfei considers this problem to be. The only time Ren has ever mentioned “wolf culture” was in the early 1990s, in a conversation with a manager from a well-known American consulting company. Ren said that if multinational corporations were elephants, Huawei was a mouse in comparison and argued that because Huawei was no fighting match for an elephant, it had to have a “wolf spirit”, a keen nose, a strong competitive instinct and a spirit of cooperation and sacrifice.

 

Huawei’s current success is widely thought to be the result of its corporate “wolf culture”. Were it not for its “wolf culture”, it is likely that if Huawei, a privately owned company that faced a fiercely competitive market from the start, would have never pulled ahead of the pack. However, as Zhang Liguo’s death has shown, it can also drive its employees to the edge of a cliff.

 

Almost half of Huawei’s employees work in the research and development division, which is the company’s biggest division as well as the one that pays the highest salaries. But the high salaries also mean higher pressure and higher performance demands on the employees. According to one employee who wishes to remain anonymous, competition has become more intense throughout the IT industry and all companies are under pressure, but Huawei employees are particularly stressed out and just about every Huawei employee thinks that his fate is closely bound up with the company’s. Consequently, no one thinks that he can relax for one moment.

 

 

Most Huawei employees who agreed to answer journalists’ questions acknowledged that they dared not lag behind their colleagues. Not that this is peculiar to Huawei employees; it is true of the IT industry in general and arguably also of contemporary society as a whole.

 

The “wolf culture” has a broad social base in today’s fiercely competitive environment, as is evident from the fact that business books about “wolf culture” sell like hot cakes. “People thrive in adversity and perish in soft living. It’s the survival of the fittest out there. It’s like rowing upstream; not to advance is to drop back”, explains one employee. 

 

Ren Zhengfei has a stated policy of weeding out five percent of the worst-performing employees. Within the company, employees have been told by managers that in practice only one to two percent of the worst performing employees are laid off. But that is small comfort to this employee, who sums up his feelings as follows: “I still feel like somebody is cracking a whip behind me.”

 

The phrase “Mattress Culture” was first coined to describe Huawei’s fighting spirit during the company’s early days. Company managers regularly put their health on the line for the company, and this policy continued and was even lionised until 28 May 2006 when Hu Xinyu, a 25-year-old employee at a Huawei plant in Shenzhen, died of viral encephalitis. Before his death, Hu had frequently worked overtime and spent nights sleeping on a mattress in his office. After Hu’s death, Huawei issued a rule stipulating that employees had to get permission from their supervisor to work overtime past 10 p.m. and forbidding employees from spending the night at the office. However, the implementation of this policy has not particularly effective. Everyone at Huawei, from top to bottom, understands that hard work is rewarded. As one employee put it, “If there’s a job to be done, you can’t drag your feet and let down your colleagues.”

 

 

Ren Zhengfei wants his employees to organize and participate in all sorts of recreational activities of their own accord and at their own cost. He argues that Huawei should not subsidize such activities because if it did employees would stop participating in them as soon as the subsidy was discontinued. Ren believes that all sorts of ways must be found to solve the problem of depression and discontentment among employees, but relying on the company to organize activities to lift their spirits is ineffective. 

 

In a letter published online, Ren urged his employees not to worry too much about their shortcomings but to build their self-confidence by developing their strong points. “I have many weak points myself and am often teased by my family as if I were still a schoolchild. If I hadn’t worked so hard to overcome my weaknesses, I would probably never have become a CEO. My main strength has always been that I focus on developing my strong points.”

 

But Ren also insists that organizational energy must be focused on developing the company’s strengths and the strong points of managers and employees; it must not be focused on employees who lag behind. In Ren’s view, “overcoming shortcomings often takes a far greater effort than strengthening strong points.”

 

Ren Zhengfei proposes that Huawei employees who are suffering from depression or anxiety disorder should go to Jingshan Park in Beijing to watch old people singing songs or go to Yunnan province to enjoy the call- and-response songs performed by ethnic minority girls in Lijiang. That, he thinks, is good therapy for their depression: “I used to suffer from serious depression and anxiety, but with the help of a doctor and my own optimism, I’ve been completely cured.”

 

Many Huawei’s employees endorse Ren’s comments “Ren Zhengfei says that organizational energy must be focused on developing the company’s strengths and the strong points of managers and employees, and that it must not be focused on employees who lag behind. To my mind, this a realistic thing to say and I can’t fault our CEO for it, but it does put me under a great deal of pressure. It means that I have to work even harder and cannot afford to fall behind.”

 

“Huawei is a company that venerates the strong”, wrote this employee. “Huawei is a very realistic company, Shenzhen is a very realistic city and we live in a very realistic society.”

 

The word “realistic” crops up again and again in interviews with Huawei employees: “If I can hold my own and be promoted at Huawei, this means that I’m strong and it also translates into a high salary.” Many employees admire Huawei’s management capacity. “Ren Zhengfei knows how to motivate you and develop your full potential.”

 

A recently hired Huawei employee expresses his regret about Zhang Guoli’s death, but adds, “Huawei is not as terrible as people outside the company imagine. There is pressure everywhere; the point is that you have to learn to adjust to it. These days the company takes the mental health of its employees very seriously. The other day I was working late and my supervisor told me to take a rest.”

 

This employee explains the series of recent suicides at Huawei as follows: “If you look at the number of people who commit suicide in society at large and consider how many tens of thousands of people work for Huawei Technologies... Outsiders just don’t understand Huawei, and one of the reasons for this is that Huawei has always maintained a low-key approach.”

 

Nearby, another employee is walking alone on a lawn. He says that he takes a short walk to relax whenever he is on break but he has no comment about Zhang Liguo’s death. “I don’t want to invite trouble. You don’t have a company badge and the company security could show up any minute”, he says, pointing to surveillance cameras on the buildings to the left and right of us.

 

 

 

In the early morning of 6 April, Zhang Liguo ran into the Bantian Industrial Park police station. According to the police and a spokesman for Huawei, Zhang was mentally deranged. One moment he claimed that people were trying to kill him and the next that he had done something wrong and wanted to turn himself in. Because Zhang was carrying his punch card, the police informed Huawei that he was at the police station. “Huawei sent two people over to take him back to the plant,” explained Zhang’s brother-in-law, Cao.

 

Around noon, Zhang and the two Huawei men who had collected him from the police station and were supposed to keep an eye on him went to the second-floor cafeteria to have lunch. According to one account, as the two men were queuing to get some soup, Zhang suddenly jumped over the railing and fell two floors to his death. “In short, the company did not do its job of keeping an eye of him”, says Cao.

 

When Zhang Liguo’s body came crashing down on a dining table and chairs, the back of a broken chair broke one of his ribs, piercing his heart and killing him on the spot. Huawei employees lost no time in spreading the news of Zhang’s death on internet bulletin boards. 

 

One eyewitnesses described what he saw:

 

 

 

Zhang Liguo’s was born in a poor village in Heilongjiang province, the fourth of seven children. “Our family was so poor that only the second oldest brother, the fourth oldest and I were able to study.” His youngest brother said. He had a great sense of responsibility. He had been the most studious member of the family and almost every member of family had supported him financially to go to university. By the time the youngest brother went to university, Zhang Guoli was already earning a salary. “I always depended on his financial support to finance my studies. Why would a man with such a great sense of responsibility abandon his wife and daughter like that?”

 

After graduating from university, Zhang Liguo worked in Heilongjiang for two years before moving to Shenzhen to work for Huawei’s rival ZTE. He quit ZTE in September 2006 because he and his wife were planning to have a child and he wanted to get a job in his hometown. “He wanted to start his own business but could not find sufficient capital. After their daughter was born, he went back to Shenzhen,” his brother-in-law said.

 

On 1 September 2007, Zhang wrote to ZTE asking for his old job back but there was no opening for him. Undeterred, he returned to Shenzhen in October 2007 and attempted to start his own business before joining Huawei on 26 October. During this period, he wrote a blog about his experiences.

 

 

 

 

That same day, Zhang wrote a blog entry entitled Emotionally Exhausted, in which he asked, “with no one to care for me or understand me, how much farther can I go?”

 

However, he seemed to have turned a corner when he got a job at Huawei. Zhang’s youngest brother explained that: “He didn’t think he could get into Huawei, so he was very happy and phoned us several times to tell us about it. We were all very happy for him, because salaries at Huawei are pretty high. He was quickly promoted to specialist-level engineer, which shows that Huawei thought highly of him.”

 

Cao says that during the three months he was employed at Huawei, Zhang Liguo told his relatives several times that he was under a lot of pressure at work: “He said that after work he still had computers in his head. We found out that that on 4 and 5 March, something happened at work.” He refused to elaborate.

 

 

In late March 2008, Professor Zhang Youde, a sociologist at the Shanghai University of Political Science and Law, talked to Xinmin Zhoukan about the suicides at Huawei Technologies.

 

Xinmin Zhoukan: What’s your take on Huawei’s corporate culture?

 

Zhang Youde: Since the reform and opening up policy was launched almost three decades ago, the majority of Chinese enterprises have become mixed ownership enterprises. A joint-stock enterprise such a Huawei is a publicly owned company and its employees’ economic status is closely related to how many shares in the company they own.

 

The context of all this is that the relationship between management and workers in traditional state-owned enterprises has become a relationship between private company owners and employees in a completely new environment. Company owners now have to see their employees as a means to and end, the end being maximization of profits. In other words, people are no longer the end but the means to the end.

 

It is worth noting that Huawei Technologies is the result of 30 years of enterprise property rights reform in China. Its managers have a stronger sense of responsibility and a stronger awareness of the profit imperative than managers in the past, and they also stay motivated longer. Ren Zhengfei’s struggle to get Huawei off the ground taught him an important lesson, namely that the law of the jungle determines every hard-won success. Ren has consequently developed a strong identification with and reliance on the corporate culture he himself created.

 

As far as Huawei is concerned, China’s market reforms and the restructuring of its economy mean that it is competing in a survival-of-the-fittest environment and that it needs a highly paid and highly skilled workforce. Huawei’s managers see their company’s success as clear evidence of the effectiveness of its corporate culture. They plan to rely on in-house training programs to strengthen the workforce’s acceptance of this culture.

 

Humanistic concern for individual employees is not part of this corporate culture. Huawei not only treats its employees as a means to maximize its profits but it also encourages a dark side of human nature, namely that everyone is competing with everyone else. The competitive spirit at Huawei is intense but there ought to be limits to it.

 

Huawei’s competitive spirit enables its employees to develop their potential to the fullest. But people are ultimately not wolves. A company that forces its employees to sacrifice their family life and their health deprives them of a fundamental human right and denies them the emotional support all human beings need. Each of Huawei’s 60,000 employees has a different personal history yet each has been forced to adapt to and accept Huawei’s corporate culture. 

 

A company can dismiss overwork, mental illness, emotional imbalance, divorce and lack of time and resources spent on children’s education as external costs or spillover effects, but not without consequences. So far, employees and their families have been forced to cope alone with these all too common burdens, but if they are ignored for much longer they are ultimately likely to cause irreparable social damage.

 

Xinmin Zhoukan: Although many employees are completely exhausted, they also feel satisfaction about the high salary they command in this company, about the fact that they have obtained a job others would love to have and about the resources their company has at its disposal.

 

Zhang Youde: Huawei’s top managers are convinced that their company is pursuing a lofty goal, that all its employees have high ambitions and that these ambitions can only be realized within this company. One of their stated goals is to motivate each employee to release his or her latent potential. Nobody in the company wants to be weak, but the problem is that many are simply unable to cope. To compete internationally, Huawei has to become a more competitive company, but it does not know what its competitors have done to get where they are. Are competition and the law of the jungle the only factors, or do they also offer their employees something else besides a salary? I am speaking about job satisfaction and emotional support.

 

In fact, if employees are to develop a strong team spirit, it’s not necessarily a good thing for them all be at daggers drawn.

 

Xinmin Zhoukan: But why do so few Huawei employees challenge their company’s corporate culture?

 

Zhang Youde: What we’ve found is that by the time they enter a Huawei training programme, employees have already assimilated this corporate culture. Before they join Huawei, employees have already undergone a process of competitive socialization. The very fact that they have been employed by Huawei means that they have been on a competitive career path, which means that they subconsciously identify with its corporate culture. A large number of employees are suffering from physical and mental exhaustion but we don’t see many of them criticising Huawei directly.

 

Xinmin Zhoukan: Why have Huawei’s employees, who are after all the elite of the IT industry, turned out to be so fragile?

 

Zhang Youde: It boils down to individual expectations. People expect to advance their careers and make the best of a variety of opportunities. Huawei employees want to climb as high as possible professionally and all of them have their own expectations for professional self-actualization. In my opinion, the majority of them think that the knowledge and experience they will acquire at Huawei will give them the foundation for professional self-actualization. They expect that once they have moved up the career ladder and acquired capital and management experience at Huawei, they will be in a position to start their own company. Some actually join Huawei to see how Ren Zhengfei succeeded in turning an unknown company into a major international player.

 

Huawei’s employees consequently refuse to take defeat lying down. When they are laid off they usually blame themselves for not having been able to adapt, and when a co-worker commits suicide, they tend to think that he must have had personal problems. An employee who has absorbed this mentality is prone to believe that he could never be as weak as Zhang Liguo and Li Dongbing, but sooner or later he too may find that his fuse has burnt down to the gunpowder keg.

 

There is also a deeper reason. Most IT people have graduated from university engineering programmes that have failed to equip them with knowledge they need as they enter the job market. Most of them lack the capacity to adjust and to come to terms with the pressures they are confronted with.

 

Xinmin Zhoukan: Ideally, the company should set up an internal mechanism that would step in and help individuals as soon as they face a crisis.

 

Zhang Youde: But Huawei does not respect the weak. Huawei has a culture of and for the strong in which those who can’t compete are weeded out. The company actually has institutional mechanisms to eliminate the weak through competition. This culture has been instilled into the workforce and has become so enshrined that just about everyone identifies with it. No one inside the company criticizes Huawei. They all believe that outsiders criticize Huawei because they don’t know it and because they misunderstand it. The reason Huawei has been so unforthcoming with the public and the media may well be that its employees actually identify with its corporate culture and feel that they are part of Huawei.

 

Xinmin Zhoukan: Huawei feels wrongly accused and says: “Those unnatural deaths weren’t directly caused by our company. You can call our corporate culture into question but you really can’t call it a murderer.”

 

Zhang Youde: That’s right. There is no relationship of cause and effect between the two. Just because a Huawei employee commits suicide, you can’t say that Huawei is the cause and the suicide is the direct result. So how should be interpret the suicide?

 

Huawei’s employment practices are, in fact, in conformity with established norms. Overtime is compensated, salaries are paid on time and the way the entire company is run is based on the premise that employees have a choice. In other words, Huawei doesn’t choose you without you having a say in the matter; you also choose Huawei.

 

But the fact remains that people are ultimately more than a means to an end and they have needs beyond money. There are also life and emotional well-being. But as far as Huawei is concerned, this is the employees’ own responsibility. It expects employees to acknowledge that this aspect of their lives is not the company’s concern and to take responsibility themselves. As I said earlier, the company regards problems in this area as external costs, when in fact it ought to play a leading role in finding solutions.

 

China has an average suicide rate of 23 per 100,000. Most of the people who commit suicide are women in rural areas and the main reasons are rural poverty and the fact that women in rural areas have a low educational level and a low capacity to overcome crises.

 

And Huawei? Its employees are the crème de la crème. Their high calibre is manifested in their ability to maximize the company’s profits, to maintain their physical and mental health and to assume considerable responsibilities to their families, their company and society. This elite is a force that propels all of society forward and that ought to be able to have a greater capacity to cope with pressure and responsibility. But the fact that suicides are occurring every year at Huawei naturally does give pause for thought.