I recently sat down with Simon Lin Baifeng, President of Huawei Asia Pacific and had a fascinating discussion about the future of digital infrastructure in Asia.
Now I admit I’m a bit jealous of Simon. If there is one place to be building digital infrastructure, it’s Asia. Things are moving fast in infrastructure (5G, data centers, etc.). But also in ecosystems, digital talent, and overall economic development. Asia is rising fast, and Huawei is at the center of a lot of fascinating stuff. I keep a close eye on what they are doing in the region.
APAC is an interesting mix of countries and McKinsey & Co has a lot of good reports on the Future of Asia. It’s a combination of advanced developed economies (South Korea, China, and Japan) and countries in the early stages of development (Sri Lanka, parts of Indonesia). It’s a combination are big (Indonesia) and small (Sri Lanka) countries. And ultimately Asia (depending on what you include) has about half the human race.
Another Interesting Career Path at Huawei
I’ve written a ton about Huawei (going back to 2014). And its most interesting aspect is its culture. The company has such a unique and effective way of training and organizing its +194,000 people. This really is its greatest strengths. It is normal in China for people to switch jobs every 1-2 years. But everyone at Huawei seems to stay for life, which is a huge advantage for the company. And, sure enough, Simon is a Huawei “lifer” with a really interesting career path.
Simon’s career began at the Beijing University of Posts and Telecommunications. This is arguably China’s top telecommunications university, although Simon says +90% of the graduates go into business. After graduation, he went to Wuhan University and received a Master of Economics and Management. After a short stint doing IT at a bank, he joined Huawei.
I’ve written a lot about Huawei in the 1990’s. This was really a fascinating time for the company in terms of strategy and development. The company was still relatively small and was facing huge domestic and international competitors, such as Ericsson and Nokia. At the time, Huawei was a small, scrappy competitor and its strategy reflected this.
Huawei began as an importer of PBX machines in an office in Shenzhen. See below.
Founder Ren Zhengfei famously lost his import contract early on and he began creating his own products (including PBX machines). So, the company has always had one foot in sales and one foot in research and development. And there has always been a lot of talk about long-term survival and not being too dependent on suppliers. Note: In these early years, Huawei also started its research projects in semiconductors, largely to reduce dependence on foreign suppliers. These initial projects eventually became HiSilicon, which is now China’s leading company in semiconductors.
However, research and development has always been secondary to sales at Huawei. The engineer-managers at Huawei (and their teams) are the battalions the company deploys around the world. These teams are known for their willingness to go anywhere and to do anything to make a client happy. And the sales teams are always first at Huawei in terms of the creation of value for its customers.
You can see this strategy and mindset in Huawei’s earliest days, when they would go and do what the big companies wouldn’t. Young Huawei was known for going into more remote areas of China. For going after smaller clients. And for doing the harder projects that other companies avoided. We still see this ethos in the company today.
Simon began at Huawei in the late 1990’s and had direct experience in these earlier days. He talked about he began as a delivery engineer (i.e., Chief Engineer) in Shandong. This meant traveling a sales route week after week and meeting with customers. It meant selling telecommunications devices to all types of businesses. And it meant installing and manually configuring lots of machines, which he says he figured out as he went (“there was no manual”). China is a massive country, and it literally took decades to lay the fixed telecommunications lines and equipment that now exists.
Over time, Simon was moved to Inner Mongolia, Beijing, and Xiamen. That meant doing sales to a mix of rich and poor cities. He eventually became the CEO of Huawei Guizhou, where he spent 4 years. From there, he became CEO of Huawei Zhejiang. For those not familiar, Zhejiang is a very important province, home to a lot of manufacturing and technology companies (such as Alibaba).
Listening to Simon’s career path, I actually thought it sounded a bit unusual for Huawei. Huawei likes to identify top performers early and then puts them in difficult situations early on. I’ve always assumed this was to toughen them up and help them develop the “we can take what others can’t” attitude so prevalent in company. Whenever I hear about someone joining Huawei from a top university, I always ask where they got sent to first. Usually, they get deployed to somewhere like the Congo. Simon’s career was surprisingly domestic.
But sure enough, he eventually got sent overseas, which are referred to as the “frontier” for the company. Simon was sent to Hugo Chavez’s Venezuela, where he would spend 2-3 years. He later became Senior Vice President of Latin America. Next it was 5 years as head of the Deutsche Telekom account in Germany (apparently 60% of Germany’s 5G is Huawei). And from there he came back to China, to global sales and ultimately to his current role as President of Huawei Asia Pacific.
Now compare that career path to the typical tech worker in China who stays domestic, and switches jobs every 2-3 years. Which brings me back to the topic of digital infrastructure in Asia.
5G Is Moving Faster Than You Think in China / Asia
5G is the big topic in digital infrastructure these days. And according to Simon, 5G now has +700M users globally (2021), up from 220M in 2020. The number of 5G sites has grown from 1.4M to 2M in this same time period. Simon says 5G is advancing at about 3x the rate of the 4G roll-out. And South Korea and China are currently the leaders (reaching 40% user penetration).
But when looking at Asia versus other parts of the world for 5G roll-out, we’re really looking for three things to happen.
- Good spectrum policies and frameworks.
- Lots of infrastructure investment.
- Good ecosystem collaboration.
You need all three. And the leaders (China, South Korea, Japan, Thailand, Indonesia?) are very effective at these.
Simon recently gave a presentation at the Thailand 5G Summit. And I thought he crystalized a lot of the benefits of 5G – specifically:
- Improved user experience. 5G means faster speed, greater data capabilities and lower latency, which really means other far greater experiences for users. More video and greater interactivity in experiences, which (in theory) lets the user go from observer to participant. Huawei calls this a new “digital life”. I’ll talk about this below specifically about Thailand. But this is AR, virtual tours, and pervasive video.
- Potential revenue growth for mobile operators. Mobile operators are always struggling with increasing customer expectations but flat revenue. 5G could enable new services and revenue sources.
- Accelerated digitization of industry. 5G capabilities will be key for advancement in many businesses. Simon cited two examples.
- In 5G powered coal mines, miners can now work from their offices, instead of from the mine. They can remotely control the machines and do the mining. This should be cheaper and should dramatically increase safety.
- In 5G powered ports, a single crane operator can operate 4 cranes remotely at the same time. And they no longer have to sit up on the top of a crane.
As for Thailand, this is one of the countries to watch for 5G. There is a National Level 5G Strategy led by the Prime Minister’s 5G committee. The country is already well into its 5G Master Plan Phase 1 (2020-2022) and has achieved 13% user penetration for 5G. There are +7M users and speed tests are showing 300Mbps. Next for Thailand is Phase 2 (2023-2027), which aims to grow the digital economy to 30% of GDP (by 2027).
How 5G and Digital Infrastructure Creates Value for Countries
The above is a pretty solid summary of the benefits of 5G. But there is the bigger question of the value of 5G and digital infrastructure, which is far more than just economic. Simon had an interesting framework for this. He talked about 3 types of value.
- “Digital Life” Value
This is the value to the users. As mentioned, it is about combining 5G with applications to create far more immersive experiences. Think about how 5G can be combined with content. With AR/VR. With video (4k, 8k). And ultimately with the metaverse (cloud gaming, NFT marketplaces and so on). That can all go under “digital life”.
- Economic Value
This is about combing 5G with the cloud to accelerate digitization. Thailand has an economic target of 2.3-5 trillion THB added value by 2032. So, we are talking about creating or transforming a fairly large part of the economy. And there are really two targets for this right now:
- Industrial: In Thailand, there are pilot projects in mines, ports, hospitals, power grids, and factories. But we can see this across Asia.
- Smart cities: In Thailand, there are pilot projects in Pattaya, Bangkok, and Chiang Mai.
- Social Value
This is about combing 5G with the broader societal ecosystem. This includes public health and is a lot about education and training. And ultimately it is about creating new jobs. Thailand is aiming for 13,000 new jobs by 2027.
Huawei’s Plan for APAC
I have detailed what Huawei is doing in SE Asia and Thailand in previous articles. They have a pretty clear focus. Basically, the company is focusing on four things right now (among others).
- Connectivity (i.e., infrastructure). SEA is rolling out 5G. But it still has only about 50% at 4G mobile coverage. And only 20% of SEA enterprises are on the cloud. So, there is a long way to go.
- Open ecosystems. This is enterprise, cloud, data centers and so on. We see lots of initiatives aimed at fostering an ecosystem of enterprises, developers, SMEs, and startups. Huawei’s open lab in Singapore is an example. So is the 5g Ecosystem Innovation Center in Thailand.
- Green development plan. This is their smart energy management system. Huawei is integrating digital and power electronics technologies.
- Digital talent. This is arguably the most difficult part of the strategy. Or at least the slowest. This is lots and lots of training and building a workforce capable of digital innovation and operations. For Huawei, it’s the ASEAN Academy. It’s supporting startups. It’s helping enterprises go digital. And these activities are very different when you go from Singapore to Bangladesh. Note: Huawei has buses in Bangladesh that go around the country and do digital training for women.
I asked Simon where he thought things were moving the fastest in APAC and he mentioned banking and internet companies. After that its ports, transportation, and hospitals. With manufacturing is behind that. That is consistent with what I have been seeing.
Final Point: Simon’s Advice to Young Graduates
Those are my take-aways from the interview. Simon is an interesting guy and very engaging. His rise to the head of APAC is not surprising.
For my last questions, I always like to ask executives what advice they have for young graduates. And what is their favorite book or podcast.
Simon’s advice was you really need both technical and management skills. Digitization has a huge future, and you need to have both skill sets.
His recommended book was How Google Works (Eric Schmidt), which discusses management and governance.
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That’s it. Cheers, Jeff
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