The crux of the difficulty at understanding Huawei's ownership system is because Ren Zhengfei modeled it as a Maoist collective ownership mechanism, an alien concept prone to misreading from a private ownership premise, and at the same time it is facilitated by existing private ownership laws.
Employees do indeed not own the company nor shares of the company in a private ownership sense because they cannot liquidate their shares if they wish to quit the company. But it is the very same design that makes the company immune to pressure from outside investors and the financial drive to capitalization, and enables it to fully reinvest all profits back to R&D and employee dividends, which is also a major reason for its explosive growth. It is reported some early employees got paid so much from their shares that they just stopped working and went on vacation indefinitely.
If all profits of the production activities of a collective go back to its members and the continuation of growth of the collective, can you meaningfully claim the members of the collective do not own the assets of the collective and not control it?
This profit returning scheme is legally possible only by being facilitated by the Company Law of the PRC. And the way the company ownership is structured by a "trade union committee" is also legally facilitated by the Trade Union Law of the PRC. It is a fatal error for the paper to claim the company is state-owned because the controlling trade union committee of Huawei operates under the aegis of the All-China Federation of Trade Unions. In fact, all SOEs in China are governed by the State-owned Assets Supervision and Administration Commission of the State Council, and the All-China Federation of Trade Unions is not legally sanctioned nor capable to manage private companies. Then the best reading of all the contradictions would be that Ren Zhengfei managed to carve out of a space for communist collective ownership by "hacking" the existing legal system of private companies.
Employees do indeed not own the company nor shares of the company in a private ownership sense because they cannot liquidate their shares if they wish to quit the company. But it is the very same design that makes the company immune to pressure from outside investors and the financial drive to capitalization, and enables it to fully reinvest all profits back to R&D and employee dividends, which is also a major reason for its explosive growth. It is reported some early employees got paid so much from their shares that they just stopped working and went on vacation indefinitely.
If all profits of the production activities of a collective go back to its members and the continuation of growth of the collective, can you meaningfully claim the members of the collective do not own the assets of the collective and not control it?
This profit returning scheme is legally possible only by being facilitated by the Company Law of the PRC. And the way the company ownership is structured by a "trade union committee" is also legally facilitated by the Trade Union Law of the PRC. It is a fatal error for the paper to claim the company is state-owned because the controlling trade union committee of Huawei operates under the aegis of the All-China Federation of Trade Unions. In fact, all SOEs in China are governed by the State-owned Assets Supervision and Administration Commission of the State Council, and the All-China Federation of Trade Unions is not legally sanctioned nor capable to manage private companies. Then the best reading of all the contradictions would be that Ren Zhengfei managed to carve out of a space for communist collective ownership by "hacking" the existing legal system of private companies.