Is Huawei an Employee-owned?

An illustration of a cube

The legally registered owner of Huawei is a labor union, but who actually pulls the strings at the company?

“Huawei is owned by employees and controlled by employees,” the chief secretary of Huawei’s board of directors Jiang Xisheng told a group of reporters according to the Wall Street Journal. “That is the reason why we have been able to stay independent for the last three decades.”

Jiang said Huawei adopts a virtual stock plan, by which employees are eligible to buy stocks using their own money once they meet certain performance targets. Now about 97,000 current and former Huawei employees hold shares of the company.

Different from traditional shares, Huawei’s virtual shares cannot be transferred to others. The company buys back the shares once an employee leaves the company.

Huawei allows its shareholders to elect members of the company’s Representatives’ Commission, which then elects members of the board of directors. Jiang says holders of the virtual share the company’s success or losses depending on the value of their shares, and they are qualified for a portion of the company’s asset if it goes bankrupt – that’s why he said the company is employee-owned.

However, I don’t believe that Huawei is an employee-owned company.

According to a recent report, researchers Christopher Balding and Donald C. Clarke argued that the plan “has nothing to do with financing or control”. They believe that the “employee shares” play their role mainly in a “profit-sharing scheme.”

Also, as current and past employees told the Wall Street Journal, these shares didn’t give them much say in company affairs. “We still think of the shares as an incentive system instead of giving voting or ownership rights,” a past employee said.