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Huawei snaps up engineering talent from Japan's heavyweights

Fresh graduates are finding the allure of fat checks and rewarding merit too much to pass up

Ren Zhengfei, Founder and Chief Executive Officer, Huawei Technologies talks during the session in Davos in January 2015. (Courtesy of Huawei Japan)

TOKYO When Chinese technology giant Huawei Technologies was looking for a new site for its Japan research lab, it found a lot to like near Shinagawa Station, smack in the center of Tokyo.

"It chose Shinagawa to target engineers at Sony, Canon and Toshiba, which also have offices there," the president of a headhunting agency said.

Since Huawei relocated this summer, around five engineers have been poached from these and other companies, lured by annual salaries topping out at 30 million yen, or $267,000. Pay runs "even higher at Huawei's China headquarters, but no Japanese engineers earn that much," said the headhunting agency chief.

The company is also offering eye-popping salaries to snag new graduates. A posting by Huawei Technologies Japan on the recruiting website Rikunabi seeks science and engineering majors graduating from September to next March. Monthly salaries start at 401,000 yen for those with bachelor's degrees and 430,000 yen for those with master's degrees. For similar positions last year, Sony was offering 218,000 yen and 251,000 yen.

A public relations representative at Huawei Japan said the posted salaries are not unusual, that they are "the global standard for attracting exceptional people" and in line with pay at Western companies. Gradual increases since 2015 have helped bring in top talent, the spokesperson said.

Huawei showed off its wireless technology at a Japanese exhibition in November 2016.

MORE MOTIVATION Huawei Japan has hired about 10 graduates a year since 2012. But it is also looking for more experienced candidates.

Hideko Takahashi joined Huawei Japan after majoring in biotechnology at a Chinese university. She considered only one job offer from a Japanese business -- a second-tier manufacturer -- before opting for Huawei, where she thought the working environment might be highly competitive, like at her school. She is in her second year at the company, and already her input is sought on her department's budget for the year and other important matters.

"Honestly, the incentives are big," said Mitsuharu Senda, who drums up new business for Huawei Japan. Successfully completing projects can in some cases boost annual salaries to several times those seen at Japanese companies. But Senda stressed that the company's appeal goes beyond pay.

Like nearly all of his Japanese colleagues, the 38-year-old joined Huawei midcareer. He had been working as a wireless engineer at a Japanese manufacturer. There, the standard seniority-based pay scale made him feel as though he had only limited potential. Now, Senda said, Huawei's meritocracy is boosting his motivation -- and allowing him to excel.

"Our human resources department is on edge worrying about whether we'll lose talent" to Huawei, a midlevel representative at Japanese rival NEC said.

Huawei is converting a former DMG Mori plant in Chiba Prefecture, near Tokyo, into a research lab and test site. Huawei's existing Japan research center opened in 2013. The test site will employ Japanese engineers with years of experience.

Huawei posted revenue of 521.57 billion yuan ($78.6 billion) last year -- more than Fujitsu and NEC combined. Just three decades after its founding, the company has already overtaken Sony and is catching up to Hitachi.

Though Huawei is known for its smartphones, its bread and butter actually consists of such products as telecommunications equipment for cellular base stations. CEO Ren Zhengfei started the company as a seller of telephone switchboards, expanding from rural areas to the rest of China and from there to emerging markets.

Ren's mantra is "spend money and then people will come." Huawei has taken it to heart, spending at least 10% of its annual revenue on research and development. R&D expenditures last year totaled 76.39 billion yuan, equivalent to four times Hitachi's tally and close to that of Toyota Motor. This investment has helped attract talented engineers from around the world.

Canon and some major Japanese companies have headquarters in Shinagawa, Tokyo, the site of Huawei's new research lab.

45 AND OUT Huawei's Shenzhen headquarters is like a test bed for meritocratic management and compensation systems.

Each April sees a flurry of comments on Xinsheng Community, Huawei's internal social media site, speculating about the size of that year's dividend. Huawei is neither state-run nor publicly listed -- the 98.6% of its shares not owned by Ren are distributed among some 80,000 Chinese employees.

But competition can be cutthroat. Rumors began to circulate around the Lunar New Year holiday in February that Huawei was starting to lay off employees aged 34 or older. This came just as the company switched to quarterly performance reviews.

These reviews place employees in one of four tiers. Those ranked A or B enjoy bonuses and can be fast-tracked to managerial positions at age 30. C-ranked staffers are pressured to leave voluntarily, and a D grade means the termination of the employee's contract.

Huawei cuts around 5% of its staff each year, with not even management safe from the ax. Though the company quickly dismissed the talk of age-based layoffs as groundless, Ren later warned in an internal memo that Huawei would not pay for employees who do not work hard.

The average age for employees at Huawei's headquarters is early 30s. The view persists inside and outside the company that departing at 45 is the norm.

The company's talent drive extends beyond Japan as well. In a fall 2016 speech, Chief Financial Officer Sabrina Meng boasted that some 700 top scientists were recruited from around the world over the previous three years.

Huawei established a microwave-focused R&D center in Milan, Italy, plucking researchers from Siemens and elsewhere. Similarly, the company located an algorithm development lab in Russia, and a software development center in Bangalore, India.

Each of these R&D centers employs around 100 people. Huawei is using these economies of scale to achieve high quality and low prices that Japanese rivals like Fujitsu and NEC cannot match.

"Huawei products cost half as much as those from manufacturers here," the head of a wireless company said. "We may have no choice but to use them."

Huawei's Xinsheng Community employee chat site is open to the public. It was established as a way for employees to make their frustrations known to management, something that is a rare sight even in Japan, let alone China.

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