Those Years When I Was Forced to Top the Forbes List

Chapter 259 Mutual Support
An hour later, Chen Xuebing came out of the hotel with a bottle of mineral water. Feeling a bit thirsty, he took a sip.

Ren Zhengfei made a phone call from behind, then slowly walked out with his hands behind his back, no longer displaying the passive attitude he had at the beginning.

He now understands Spreadtrum's predicament and realizes that the power of discourse still lies with Huawei.

"How far have you progressed in reverse engineering your protocol stack?" Ren Zhengfei asked.

Upon hearing this, Chen Xuebing put down his water bottle, pondered for a moment, and said, "Spreadtrum and Chongqing University of Posts and Telecommunications together account for about 60%. The more troublesome issue now is a relay switching patent, which may involve 2G chips."

Ren Zhengfei knew that Chen Xuebing didn't know much about communications, so he shook his head and said, "It's not that simple. Datang has more than seventy patents in TD, accounting for 7.3%, which are concentrated in the physical layer and signal processing. I think our technical leaders need to sit down and reconcile the accounts."

“Sure, you decide the time and place,” Chen Xuebing said readily.

"Cooperation is possible, and we can lend you some patents, but Huawei cannot publicly take sides. Datang is a meritorious contributor, and we cannot openly oppose them," Ren Zhengfei emphasized again.

"A hero." Chen Xuebing chuckled. "You really think so?"

Ren Zhengfei remained silent.

“No way.” Chen Xuebing shook his head again: “We’ll give you the WCDMA for the Chongqing project, but you still need our support for mobile phone R&D. You won’t even show your face. Your price is too high.”

Ren Zhengfei said earnestly, "How can you not understand? Datang's TD patent pool still contains seven core patents from Huawei. If things really get really bad, who will be in a more awkward position at the Ministry of Information Industry's meeting table?"

Chen Xuebing understood, but he didn't want a vague promise.

"If things get out of hand and they take it up to the Ministry of Information Industry, you'll have to come."

Ren Zhengfei thought for a moment and said cautiously, "We should try our best not to show our faces, but we can exert pressure through international standards meetings."

Chen Xuebing frowned.

"President Ren, let's all be more sincere so that we can cooperate better in the future. I think you have too many concerns. After this, there may not be any more Datang."

Ren Zhengfei also felt that the other party's murderous aura was too strong at this moment, and said slowly, "Things are not black and white. Truth and falsehood, good and evil can also transform into each other. Some things should not be judged as good or bad. If you can't stand it and insist on pursuing a certain purity, sometimes you will have to pay a great price."

These words reminded Chen Xuebing of four words: the philosophy of grayscale.

This seemingly harmless old sheep, who smiles and opens his mouth, is ruthless when he curses people. Apart from patriotism, his other stances are wavering. He praises Lenovo's Liu Chuan, praises America's advancement, and has said countless nice things to European manufacturers. He has his own philosophy of gray areas for survival.

These are perhaps the things he should be learning most right now.

He has actually had a low bottom line since he started doing business. He can pretend to be nice to people he doesn't like, but he still can't learn to truly blend in with the world.

Chen Xuebing raised his eyebrows, but did not voice his inner thoughts.

"Mr. Ren, you should at least make an appearance once—at our phone launch event."

Ren Zhengfei then agreed: "Okay."

"Then I'll be going. I'll wait for your news." Chen Xuebing said goodbye after receiving a satisfactory reply.

Ren Zhengfei nodded, looked around, and seeing that no car had come to pick him up, asked, "Are you driving yourself?"

"No cars available, take a taxi."

Chen Xuebing waved his hand and walked towards the gate.

Ren Zhengfei was somewhat surprised. He had thought that this young Mr. Chen must be very concerned about his image, having brought a tea table to the hotel. He was sure that he would swagger around with a large entourage when he went out. But his impression of him changed drastically at this moment.

He's a simple and unpretentious person.

He nodded, then grinned mischievously as he walked toward his Jetta while still on the phone.

"Hey, have you found out yet?"

"I got the meeting minutes from the Tang Dynasty! Shall I read them to you?"

Huawei has never revealed its infiltration capabilities to the world, but it has never lacked the means. Its main competitors, especially state-owned enterprises like Datang Telecom that are vulnerable on all sides, have long had their own hidden agents.

"Ah."

As Ren Zhengfei listened, he quickly walked to the parking lot and got into his car. He wanted to say something, but stopped himself when he encountered a woman wearing sunglasses on the way.

Only after getting into the car did he burst into laughter: "Zhou Huan, that stubborn old mule, still has that fiery temper!"

The person on the other end hesitated for a moment, then said, "President Ren, if Datang and Zhanxun really go to war, what about us?"

"We? What about us? We definitely have to seize this opportunity!" Ren Zhengfei said happily, "Didn't they want to open up their patents to Huawei before? Have the legal department draft an agreement—we want to use Datang's protocol stack, but we won't pay a single penny."

Will Zhou Huan agree this week?

Ren Zhengfei sneered: "It won't be released now, it will be after we provide technical support to Spreadtrum! Spreadtrum also has the support of Shanghai leaders. Once Zhou Huan feels the pressure, he will be eager to bring in more allies. As long as we express our support for domestic technology independence, he will naturally deliver the patents to our door."

"Now that TD technology has a powerful backer, it has considerable influence, and we need to increase our R&D investment!"
"In addition, have the North American division contact Texas Instruments as soon as possible to obtain WCDMA technology and cross-licenses with them for WIFI modules, so that we can buy time for our independent research and development while ensuring three years of production."

A laugh came from the other end: "I understand."

Ren Zhengfei hung up the phone, patted the steering wheel happily, started the car, and drove away.

After a while, a furry white figure emerged from the green belt behind the parking space, dusted off the branches, and ran towards the woman in sunglasses not far away.

"Sister Ren! I heard you!"

Outside the hotel, Chen Xuebing didn't hail a taxi. Instead, he strolled leisurely along the street, phone in hand. After listening for a while, he hummed twice into the phone, his expression showing no surprise.

"understood."

Ren Ying said from the other side, "Huawei is trying to profit from both ends, and we also want to bring their mobile phone business on board?"

Chen Xuebing didn't want to say much, but Ren Ying was his deputy, someone he could consult with, and also his memorandum. After a moment's hesitation, he finally spoke:

“The road to internationalization is not easy. They are competitors with the same comprehensive R&D capabilities as us, and in some aspects they may also be teammates. Let them be our opposing team so that we can hone our skills against each other.”

Ren Ying half-understood: "Do you think they can help us in overseas markets in the future?"

Chen Xuebing shook his head.

Having a teammate, or an opponent to distract you, is always better than going it alone. Regardless of whether Huawei can provide them with technological support, Huawei's very existence is important.

"Helping... for now is not necessary. It would be good enough if they didn't rip us off. Have Qidian contact Emerson and select two skilled people with high education who understand IC and communications. Don't sign contracts. Arrange for someone to train them in smartphone design thinking, and then have them apply to Huawei's mobile phone department for two salaries. Huawei is currently lacking talent in this area. If we help them out, they might be given important responsibilities."

Ren Ying finally chuckled: "You mean by 'mutual training'? You don't mean training our intelligence gathering skills, do you?"

"Do you think all their technological expertise comes from their own research and development? They have to learn both hard skills and unorthodox methods."

Datang's state-owned enterprise nature and its leading position in the industry, where they had no worries about food and drink, meant that they did not have a habit of being cautious.

Two days later, Datang's patent lawyers personally went to Shanghai and threw a lengthy SEP (Standard Essential Patent) blocking lawyer's letter directly onto Spreadtrum's desk. They claimed that Spreadtrum had breached the "Technology Cooperation and Development Agreement" signed by both parties in 2003, demanded the termination of the licensing contract, demanded the payment of a 1% basic royalty fee and a 2% high-level protocol stack royalty fee, and required Spreadtrum to immediately stop selling chips containing infringing technology and remove related terminal products from the market.

The lawsuit involves 47 patents, including smart antenna calibration protocol (ZL2001891.7), joint testing (ZL20041435.1), and relay switching technology (CN), and explicitly targets Spreadtrum's 2G chips. It also includes relevant sales evidence and photos of Spreadtrum's "3G upgrade". The lawsuit demands an additional 3% penalty for this part on the grounds of "concealing sales", totaling 6%.

They also demanded that Chairman Wu Ping personally sign for the lawyer's letter.

They were truly majestic and imposing.

Spreadtrum executives seemed to have been prepared, stating that they were very busy with R&D and only sent a woman in her twenties to handle the matter.

"Your accusation that we failed to fulfill our patent licensing obligations is inconsistent with the facts. Upon investigation, we found that you treated us differently from other companies in the TD Alliance in terms of the method of demanding notices and the standards for limiting the scope of the licenses. Your negotiation process was not transparent, the method of calculating the royalty fee was not clearly defined, and you failed to fulfill your obligation to negotiate in good faith. You violated more than three FRAND (Fair and Non-Discriminatory Licensing) provisions issued by the ITU. We will file a complaint with the ITU."

"In addition, some of your patents highly overlap with several technologies developed by Siemens and Ericsson in the 90s. We will ask a third party to conduct a search and evaluation, and then apply to the State Intellectual Property Office for a declaration of invalidity."

Goto Miki's slightly exotic accent and the international lawyer's business card she handed over put the other party's arrogance to rest.

Before the lawyer's letter even arrived, I'm already facing two lawsuits?

No, it's a series of lawsuits.

In its early years, in order to establish its leading role in TD technology, Datang applied for more than 100 TD patents in a single year. Many of these patents were "imitated" from older international patents. If this move had been taken seriously, Datang's massive TD patent pool would have been reduced by half.

As for the ITU, it was the organization that accepted TD as a 3G standard back then.

"If you are willing to engage in friendly negotiations with us, we may temporarily refrain from filing a complaint during the negotiation period."

After finishing speaking, Miki Goto nodded politely and handed back the lawyer's letter.

The lawyer from Datang Telecom didn't sense any goodwill from this politeness, only a formulaic and calm gaze. He also didn't understand the ITU's FRAND terms, so he could only make a call for instructions with a chill down his spine.

Half an hour later, I received a reply that I had returned to where I came from.

"Hahaha"

Wu Ping laughed loudly during the phone call with Chen Xuebing.

"Mr. Chen, you've hired a really capable Japanese lawyer! Our country doesn't have an Anti-Monopoly Law, yet they've managed to find a FRAND clause! Right now, WiMAX in the US is applying to the ITU to become the fourth 3G standard. If the application is approved, TD's overseas market space will be gone, and Datang's stock price might plummet immediately!"

The WIMAX (802.16e) standard is the second standard developed by the United States, designed to compete with Europe's WCDMA dual-line standard.

The IEEE protocol number for WLAN is 802.11, which shows that the two are related. WiMAX is just a super-sized Wi-Fi, with a coverage area hundreds of times larger than Wi-Fi.

The theoretical peak network speed of this standard is several times stronger than that of WCDMA, reaching 70Mbps+. If it hadn't started late in terms of technology, had poor coverage, and hadn't been replaced by a better 4G standard soon, it might have been able to compete with WCDMA in the 3G era.

The key point is that this standard and the weakest TD both use time division duplex technology, and their spectrum resources almost overlap. If it develops, with a tenfold difference in network speed, what chance will TD have?

If the eldest brother enters the fray and fights the second brother, the fourth brother will die.

Datang currently has bank loans and is seeking financing everywhere. If its stock price collapses significantly and its valuation disappears, it will only be able to rely on government welfare on a regular basis.

So while they were announcing to the outside world that they were going to enter the WiMAX market to hedge against risks, they were also contradictorily criticizing WiMAX as garbage to the ITU.

Years later, Datang changed its tune again, calling WiMAX a technology with reference value.

Chen Xuebing knew the Tang Dynasty's weaknesses, which was one of the reasons he dared to confront the Tang Dynasty head-on from the start.

A Shanghai Stock Exchange-listed company is completely within his strongest line of fire, but now that he's involved, he doesn't want to use capital means unless absolutely necessary, lest he be criticized and displease the bigwigs above.

"The ITU can only deter them temporarily. WiMAX will eventually be adopted as a standard. MediaTek has started to lower prices again these past two days. The 2G chip has dropped to $9. Now we are using locked chips to harass them, but they don't care anymore. They only offer to compensate us 50 yuan. They are determined to start a price war with us. We cannot sit idly by. We must start a war."

Chen Xuebing sounded somewhat apologetic. He had promised Spreadtrum not to lower prices for the time being, but the market landscape was changing rapidly and had reached a point where he could no longer fully control it.

"Nine dollars?" Wu Ping gasped. "Their manufacturing costs are all over seven dollars. Although TSMC's manufacturing costs are low, there's still a 17% tariff at the port, bringing the total cost to over eight dollars. Plus labor costs, they're not planning to make a profit at this price?"

"We don't know for sure right now. Maybe someone is smuggling. Even if they are, we can't find out. But from what we've heard, they haven't lowered their prices to the big factories yet. They're probably still thinking of making a quick buck from them. Ha, no way. I'm going to send people to block both sides. If they want to lose money, let them lose it all."

"SMIC and Hua Hong don't quite trust our market capabilities yet, so we haven't finalized our price negotiations. We're lowering our prices now."

"We will only lower the price by one dollar in Huaqiangbei. In other places, we will only harass, not attack."

"Will Huaqiangbei be able to maintain its market share?"

“We won’t die. The turning point is at the Kirin phone launch event, which is why I’ve been urging you to speed up your R&D and not make me postpone the launch event again. This is a turning point for Singularity, and also for Spreadtrum.” Chen Xuebing added another wave of pressure.

".knew."

"In addition, as the chairman, you must control the voices at the shareholders' meeting."

"Hehe, don't worry, our system is different from Datang's. There is only one voice internally, and MediaTek, as the second largest shareholder, can't interfere with us."

Upon hearing this, Chen Xuebing raised his eyebrows, shook his head, and chuckled.

Policy mission, shareholder returns, and market-oriented operation seem to have become the Mundell-Fleming trilemma for state-owned enterprises.

Prioritizing policy missions and market-oriented operations requires sacrificing shareholder interests.

Emphasizing capital returns and policy missions necessitates distorting market competition through monopolies and subsidies.

The pursuit of marketization and high returns weakens the policy-driven function.

Interspersed among these issues are numerous management problems, and the classic case of Datang can be included in textbook discussions.

(End of this chapter)