Diary of a Hedgehog: Biggs' Final Words on the Markets

The New Face of China

July 11, 2011

On my visit to China last month, we went to Huawei, which is a huge Chinese telecommunications, network, and technology company that you can think of as the Chinese version of Cisco. What is so fascinating about Huawei is that it may be the formidable face, the model, of the New Chinese company. My guide was my friend James Cheng, who runs Asia for Morgan Stanley Investment Management. James is a very erudite, wise man who studies China and Chinese companies intensely. Huawei is very impressive, and since there is no public market for its shares, it has no shareholder relations people. James arranged for us to have a long lunch session with a senior executive and a translator. The guy was inscrutable, clearly a strategic thinker, and answered our questions directly but didn’t volunteer anything. He did say business was still good despite the global soft patch, and that revenues and earnings were in line for gains comparable to the year before.

The company does publish an annual report in English full of pretty pictures, which must have been written by a public relations firm. It is long and not very informative. The company wants you to know it “Thinks Green” and is women-friendly. It does disclose that last year Huawei got two thirds of its revenues from outside of China and a third from China. Its business was two thirds telecom networks with the other 33% from global services and devices, whatever that means.

In the early spring of 2000 in ...