Ren Zhengfei’s black swans prove prescient

The newswires are full of analysis today of President Xi Jinping’s visit to a Rare Earths plant and his extolling of “Long March spirit”. We won’t add to it. Better to focus on Ren Zhengfei, enigmatic leader of Huawei, who gave another interview this week at the company’s Shenzhen HQ that demonstrates what the president is talking about. 

This is a man who had black swans placed in the artificial lake outside his windows years ago. If US President Donald Trump’s team thought they were going to catch Ren unawares by putting Huawei on a blacklist last Friday, they clearly haven’t been reading Nassim Nicholas Taleb like he obviously has.

Ren listed a number of measures the company had taken in recent years to prepare for what happened last Friday and which was acted upon yesterday by various US firms such as Google, Intel, Qualcomm and others. If Ren is concerned about Huawei’s ability to survive the depths of the China-US trade war, he isn’t showing it. He had the gumption not only to hit back at the Trump administration, but also to not-so-subtly hint to Chinese policymakers – at least, those that might have been entertaining the thought of intervening – to stand back and let him manage this crisis with his team.

We don’t yet know how much any of this will mean, given the uncertain reaction of consumers to product changes, as well as the extent to which Huawei is exposed to the US ban. That will take time to ascertain. We do admire Ren’s coolness, however, and believe it will come as reassuring not only to Huawei staff, but to many others in the company’s supply chain, and many others who call the Greater Bay Area home.

As we have written previously, Huawei is not any company. It is a symbol of China’s emergence as a tech power every bit as much as it is a tech innovator. If Huawei is able to make good on Ren’s promises in the coming weeks and months, many participants in the GBA economy will have less to worry about, not just all those gazing out at the black swans.

Where the China-US trade war goes next is anyone’s guess. We are still on the side of the cautious optimists who believe that reason will prevail, in time, and the worst-case scenarios being reflected in recent waves of stock-market selling will not be realized. In the meantime, it’s best to stay tuned to SupChina, Sinocism and Trivium for detailed daily analysis at the national level, and stay tuned to GBA Today at the regional level.