---
title: "The Full Text of Huawei's Basic Law! All of Huawei's Secrets Are Here"
description: "The Huawei Basic Law is a systematic summary of Ren Zhengfei's thinking and causality, using unified language. It is the first complete and systematic summary of values by a Chinese enterprise, which greatly promoted the construction of corporate culture in China. In November 1994, Huawei leaped from an obscure small company to a hot enterprise. Leaders who inspected the company praised Huawei's culture. However, no one could clearly define what corporate culture was. Therefore, Ren Zhengfei assigned a deputy director to contact several professors from Renmin University of China to sort out Huawei's culture and summarize its successful experience."
author: "New Distribution"
publisher: "New Distribution"
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published: "2016-05-08"
language: "en"
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# The Full Text of Huawei's Basic Law! All of Huawei's Secrets Are Here

> The Huawei Basic Law is a systematic summary of Ren Zhengfei's thinking and causality, using unified language. It is the first complete and systematic summary of values by a Chinese enterprise, which greatly promoted the construction of corporate culture in China. In November 1994, Huawei leaped from an obscure small company to a hot enterprise. Leaders who inspected the company praised Huawei's culture. However, no one could clearly define what corporate culture was. Therefore, Ren Zhengfei assigned a deputy director to contact several professors from Renmin University of China to sort out Huawei's culture and summarize its successful experience.

**The Huawei Basic Law is a systematic summary of Ren Zhengfei's thinking and causality, using unified language. It is the first complete and systematic summary of values by a Chinese enterprise, which greatly promoted the construction of corporate culture in China.**
In November 1994, Huawei leaped from an obscure small company to a hot enterprise. Leaders who inspected the company praised Huawei's culture. Cadres and employees often talked about corporate culture, but what exactly was corporate culture? No one could say clearly. So Ren Zhengfei assigned a deputy director to contact several professors from Renmin University of China, with the aim of sorting out Huawei's culture and summarizing its successful experience.
The Huawei Basic Law sprouted in 1995, was officially positioned as a "management outline" in 1996, and was reviewed and approved in March 1998, spanning several years. During this period, Huawei also underwent tremendous changes, from sales of 1.4 billion yuan in 1995, to 2.6 billion yuan in 1996, and then to 4.1 billion yuan in 1997... By the end of 2014, Huawei's annual sales reached 289 billion yuan, with overseas business accounting for 70%.
**The Huawei Basic Law summarized and enhanced the company's successful management experience, determined Huawei's concepts, strategies, guidelines, and basic policies for its second venture, and built a grand framework for the company's future development. With the Huawei Basic Law as a milestone, Huawei absorbed management tools from companies including IBM, formed a balanced management ideology, completed its transformation, and became one of China's best internationalized enterprises.**
**The Huawei Basic Law**
**Chapter 1: The Company's Purpose**
**I. Core Values**
(Pursuit)
**[Article 1]** Huawei's pursuit is to realize customers' dreams in the field of electronic information, and through painstaking, unremitting efforts, to become a world-class leading enterprise.
In order to make Huawei a world-class equipment supplier, we will never enter the information service industry. Through the transmission of market pressure without dependence, the internal mechanism will always remain activated.
(Employees)
**[Article 2]** Responsible and effectively managed employees are Huawei's greatest asset. Respecting knowledge, respecting individuality, collective struggle, and not accommodating meritorious employees are the internal requirements for our sustainable growth.
(Technology)
**[Article 3]** We extensively absorb the latest research results in the world's electronic information field, humbly learn from excellent domestic and foreign enterprises, and on the basis of independence, develop leading core technology systems through open cooperation, and stand among the world's communication powers with our excellent products.
(Spirit)
**[Article 4]** Loving the motherland, loving the people, loving the cause, and loving life are the source of our cohesion. Responsibility awareness, innovative spirit, professionalism, and teamwork spirit are the essence of our corporate culture. Seeking truth from facts is our code of conduct.
(Interests)
**[Article 5]** Huawei advocates forming a community of interests among customers, employees, and partners. We strive to explore the internal dynamic mechanism of distribution according to production factors. We will never let Lei Feng suffer; those who contribute will surely receive reasonable returns.
(Culture)
**[Article 6]** Resources will be exhausted, but only culture will thrive. All industrial products are created by human wisdom. Huawei has no natural resources to rely on; we must mine big oil fields, big forests, big coal mines... from people's minds. Spirit can be transformed into material, and material civilization is conducive to consolidating spiritual civilization. We adhere to the policy of promoting material civilization through spiritual civilization.
Culture here includes not only knowledge, technology, management, and sentiment... but also all intangible factors that promote the development of productive forces.
(Social Responsibility)
**[Article 7]** Huawei takes industrial service to the country and rejuvenating the country through science and education as its mission, and contributes to the community through the company's development. We strive unremittingly for the prosperity of the great motherland, the rejuvenation of the Chinese nation, and the happiness of ourselves and our families.
**II. Basic Goals**
(Quality)
**[Article 8]** Our goal is to meet the growing needs of customers with excellent products, reliable quality, superior lifetime cost-effectiveness, and effective service.
Quality is our self-respect.
(Human Capital)
**[Article 9]** We emphasize that the goal of continuous appreciation of human capital takes precedence over the goal of financial capital appreciation.
(Core Technology)
**[Article 10]** Our goal is to develop a world-leading electronic and information technology support system with independent intellectual property rights.
(Profit)
**[Article 11]** We will set reasonable profit rates and profit targets for each period according to the requirements of our sustainable growth, rather than simply pursuing profit maximization.
**III. Company Growth**
(Growth Areas)
**[Article 12]** When we enter new growth areas, it should be conducive to enhancing the company's core technology level, leveraging the comprehensive advantages of the company's resources, and driving the overall expansion of the company. Following the general trend of technological development, market changes, and social development can help us avoid major risks.
Only when we have identified the opportunity and have new ideas, and are confident that we can make unique contributions to customers in that field, do we enter related new fields with broad markets.
(Growth Drivers)
**[Article 13]** Opportunities, talents, technology, and products are the main driving forces for company growth. There is interaction among these four forces. Opportunities drive talents, talents drive technology, technology drives products, and products drive more and greater opportunities. Increasing the traction of these four forces and promoting their virtuous cycle will accelerate the company's growth.
(Growth Rate)
**[Article 14]** We pursue the maximization of growth at a certain level of profit margin. We must achieve and maintain a growth rate higher than the industry average and that of major competitors in the industry, to enhance the company's vitality, attract the best talents, and achieve the optimal allocation of the company's various operating resources. In the electronic information industry, either become a leader or be eliminated; there is no third way.
(Growth Management)
**[Article 15]** We do not simply pursue scale expansion, but rather make ourselves better. Therefore, senior leaders must be vigilant about the fragility and hidden shortcomings that long-term rapid growth may cause to the company's organization, and must effectively manage growth. While promoting the company to quickly become a large-scale enterprise, we must make greater management efforts to make the company more flexible and more effective. Always maintain the coordinated development of momentum and solid work.
**IV. Distribution of Value**
(Value Creation)
**[Article 16]** We believe that labor, knowledge, entrepreneurs, and capital create all the value of the company.
(Knowledge Capitalization)
**[Article 17]** We use the form of converting into capital to reflect and reward the accumulated contributions of labor, knowledge, and entrepreneurs' management and risk; through equity arrangements, we form the company's backbone and maintain effective control over the company, enabling sustainable growth. Knowledge capitalization and a dynamic property rights system that adapts to technological and social changes are the directions we continuously explore.
We implement an employee stock ownership system. On the one hand, we benefit model employees who identify with Huawei, forming a community of interests and destiny between the company and employees. On the other hand, we continuously bring the most responsible and talented people into the company's backbone.
(Forms of Value Distribution)
**[Article 18]** The distributable value of Huawei mainly includes organizational power and economic benefits; its distribution forms are: opportunities, authority, wages, bonuses, safety retirement pensions, medical insurance, equity, dividends, and other personnel treatment. We implement a distribution method that combines distribution according to work and distribution according to capital.
(Principles of Value Distribution)
**[Article 19]** Efficiency first, fairness with consideration, and sustainable development are the basic principles of our value distribution.
The basis for distribution according to work is: ability, responsibility, contribution, and work attitude. Distribution according to work should fully widen the gap, and the distribution curve should remain continuous without inflection points. The basis for equity distribution is: sustainable contribution, outstanding talent, moral character, and risk undertaken. Equity distribution should favor the core and backbone layers, and the equity structure should maintain dynamic rationality. The proportion of distribution according to work and distribution according to capital should be appropriate, and the increase or decrease of distribution quantity and proportion should be based on the principle of sustainable development.
(Rationality of Value Distribution)
**[Article 20]** We follow the law of value, adhere to seeking truth from facts, introduce external market pressure and fair competition mechanisms within the company, establish a fair and objective value evaluation system and continuously improve it, so that the value distribution system is basically reasonable. The ultimate standard for measuring the rationality of value distribution is the company's competitiveness and achievements, as well as the morale of all employees and their sense of belonging to the company.
**Chapter 2: Basic Business Policies**
**I. Business Focus**
(Business Direction)
**[Article 21]** Our short- and medium-term business direction focuses on the technology and quality of communication products, with key breakthroughs and systematic leadership, getting rid of the passive situation of competing in low-level markets, while developing related information products. The company prioritizes projects with shared resources. Diversification of products or business areas closely revolves around resource sharing, and we do not engage in other tempting projects to avoid dispersing limited strength and funds.
Our past success shows that only large markets can incubate large enterprises. Choosing large markets remains the basic principle for our future industry selection. However, success is not always a reliable guide to the future. We must strictly control entry into new fields.
For small projects outside the plan, we encourage employees' internal entrepreneurship activities and will allocate certain resources to support employees in turning excellent ideas into products that customers need.
(Business Model)
**[Article 22]** Our business model is to seize opportunities, rely on high investment in research and development to gain leading advantages in product technology and performance-price ratio, through large-scale sweeping marketing, form a positive feedback virtuous cycle in the shortest time, and fully obtain the excess profits of the "opportunity window." Continuously optimize mature products, manage price competition in the market, and expand and consolidate the leading position in strategic markets. We will establish our organizational structure and talent team according to the requirements of this business model, and continuously improve the company's overall operational capability.
Building technology, quality, cost, and service advantages in design is the foundation of our competitiveness. The low cost of Japanese products, the stability of German products, and the advancement of American products are the benchmarks we strive to surpass.
(Resource Allocation)
**[Article 23]** We adhere to the "pressure principle," allocating resources with intensity exceeding that of major competitors on key success factors and selected strategic growth points. Either do not do it, or if we do, concentrate human, material, and financial resources to achieve key breakthroughs.
In resource allocation, we should strive to eliminate obstacles to rational allocation and effective utilization of resources. We recognize that the allocation of the three key resources of people, finance, and materials is first the allocation of excellent talents. Our policy is to enable the best people to have full authority and necessary resources to accomplish the tasks assigned to them.
(Strategic Alliances)
**[Article 24]** We value extensive peer cooperation and the establishment of strategic partnerships, and actively explore various forms of external cooperation on a mutually beneficial basis.
(Service Network)
**[Article 25]** Huawei promises lifelong service to customers for its products.
We must establish a comprehensive service network to provide customers with professional and standardized services. The interests of customers are the most fundamental interests for our survival and development.
We must use service to define the purpose of team building, and use customer satisfaction as the criterion for measuring all work.
**II. Research and Development**
(R&D Policy)
**[Article 26]** The evolution trend of customer values guides our product direction.
Our product development follows the principle of extensive open cooperation on the basis of independent development. When selecting R&D projects, we dare to break conventions and take paths others have not taken. We must be good at using controlled chaos to seek breakthroughs in unknown fields; we must improve the competitive rational selection process to ensure the success of the development process.
We guarantee to allocate 10% of sales revenue for R&D expenses, and will increase the proportion when necessary and possible.
(R&D System)
**[Article 27]** We must establish three parallel research systems that conform to the strategy of a large company: the product development strategy planning research system, the product research and development system, and the product pilot test system. As the company develops, we will also establish branch research institutions in regions with talent and resource advantages at home and abroad.
In related basic technology fields, we continuously cultivate a group of basic technology experts according to the requirements of "narrow bandwidth, high amplitude." In product development, we cultivate a group of system integration leaders across fields. Basic technology research is a link in the circular process of R&D personnel.
Without the depth of basic technology research, there is no high level of system integration; without the traction of market and system integration, basic technology research will deviate from the correct direction.
(Pilot Testing)
**[Article 28]** We attach great importance to the quality verification and testing method research of new products, new components, and new processes. We must establish a product pilot test center equipped with sophisticated equipment, advanced testing methods, and composed of many excellent engineering experts with "broad bandwidth, high amplitude." To make our pilot test talents and equipment level world-leading, we only establish one such large center worldwide. We must strictly screen and filter new products and components through centralized testing, improve product reliability through continuous quality verification, continuously conduct tolerance design tests and improve processes to reduce product costs, and accelerate the commercialization of technology development results.
**III. Marketing**
(Market Position)
**[Article 29]** Huawei's market positioning is the industry's best equipment supplier.
Market position is the core goal of marketing. We are not satisfied with the growth of overall sales; we must clearly know the market share of each of the company's leading products and what it should be. Especially the market share and sales share of new products and emerging markets are more important. Brand, marketing network, service, and market share are key elements supporting market position.
(Market Expansion)
**[Article 30]** The competition for strategic markets and the development of markets with huge potential are the focus of marketing. We must seize the rapid penetration and expansion of new product markets, and also vigorously promote the expansion of mature products in traditional and emerging markets, forming an absolute advantage in market position.
As a network equipment supplier, the key point of market strategy is to gain competitive advantage and control market dominance. Market expansion is a company-wide operation. We must transmit market pressure by affecting the vital interests of every employee and continuously improve the company's overall response capability.
(Marketing Network)
**[Article 31]** The marketing system is structured by establishing sales systems by object and marketing systems by product, forming a matrix-covered marketing network.
(Marketing Team Building)
**[Article 32]** We value the cultivation of a high-quality, team-spirited sales engineer and marketing management team, and value the discovery and cultivation of strategic marketing management talents and international marketing talents.
We must build the marketing team with long-term goals, and motivate and drive them with common cause, responsibility, and honor.
(Resource Sharing)
**[Article 33]** The randomness of market changes, the dispersion of market layout, and the diversity of company products require that the front-line marketing team must receive timely and strong comprehensive support, and require us to be able to quickly dispatch and organize a large number of resources to seize market opportunities and form local advantages. Therefore, the marketing department must adopt flexible operating methods, through prior planning and on-site assistance, to achieve dynamic optimal allocation and sharing of resources.
**IV. Production Methods**
(Production Strategy)
**[Article 34]** Our production strategy is to establish an agile production system on the basis of ultra-large-scale sales. We adopt world-advanced manufacturing technology and management methods according to local conditions, adhere to endless improvement, continuously improve quality, reduce costs, shorten delivery times, and enhance manufacturing flexibility, so that the company's manufacturing level and production management level reach the benchmark of world-class large companies.
(Production Layout)
**[Article 35]** In line with the trend of diversification of the company's business areas and internationalization of business regions, we will follow the principles of economies of scale, comparative cost, and proximity to customers, concentrate the manufacturing of key basic components and disperse the assembly of final products, rationally plan production layout nationwide and worldwide, and optimize the supply chain.
**V. Financial Management and Investment**
(Financing Strategy)
**[Article 36]** We strive to diversify financing methods and continue to steadily implement debt management. We open up funding sources, control capital costs, accelerate capital turnover, gradually form financing cooperation relationships that support the company's long-term development needs, and ensure the realization of the company's strategic plans.
(Investment Strategy)
**[Article 37]** Our short- and medium-term investment strategy still adheres to product investment as the main focus, in order to maximize the concentration of resources and rapidly enhance the company's technical strength, market position, and management capability. When making major investment decisions, we do not necessarily chase today's high-profit projects, but also pay attention to emerging markets with huge potential and growth opportunities for new products. We do not engage in any unrelated diversification that disperses company resources and senior management energy.
(Capital Management)
**[Article 38]** On the basis of successful operations in the product field, we explore capital management and use property rights mechanisms to mobilize resources on a larger scale. Practice shows that achieving this transformation depends on our technical strength, marketing strength, management strength, and timing. External expansion depends on internal solid work, and the capture of opportunities depends on prior preparation.
Capital knowledge is the key to accelerating the virtuous cycle of capital management. When expanding capital, we should focus on selecting strategic partners with technology, market, and complementarity with us, and only then financial capital.
Capital management and external expansion should be conducive to the growth of potential, the growth of benefits, and the unity of the company's organization and culture. The company's listing should be conducive to consolidating the foundation of our established value distribution system.
**Chapter 3: Basic Organizational Policies**
**I. Basic Principles**
(Policy for Establishing Organizations)
**[Article 39]** The establishment and improvement of Huawei's organization must:
1. Be conducive to strengthening responsibility and ensuring the realization of company goals and strategies.
2. Be conducive to simplifying processes and quickly responding to customer needs and market changes.
3. Be conducive to improving collaboration efficiency and reducing management costs.
4. Be conducive to information exchange, promoting innovation and the emergence of outstanding talents.
5. Be conducive to cultivating future leaders and enabling the company's sustainable growth.
(Principles for Establishing Organizational Structure)
**[Article 40]** Huawei will always be a whole. This requires us to maintain control in any form of cooperation involving the Huawei logo.
Strategy determines structure is our basic principle for establishing the company's organization. Strategically significant key businesses and new business growth points should have a clear responsible unit in the organization, and these departments are the basic components of the company's organization.
The evolution of organizational structure should not be a spontaneous process; its development is staged. The relative stability of organizational structure over a certain period is a condition for stabilizing policies, stabilizing the cadre team, and improving management level, and is a guarantee for improving efficiency and effectiveness.
(Principles for Establishing Positions)
**[Article 41]** The basis for establishing management positions is the rational division of functions and business processes, based on a regular job that must be performed to achieve organizational goals. The scope of positions should be designed large enough to strengthen responsibility, reduce coordination, and increase the challenge and sense of achievement of the incumbent.
The authority to establish positions should be centralized. The purpose, scope of work, affiliation, responsibilities and authority, and qualifications for the position should be clearly defined.
(Responsibilities of Managers)
**[Article 42]** The basic responsibility of managers is to work proactively and responsibly in accordance with the company's purpose, making the company promising, work effective, and employees accomplished. The degree to which managers fulfill these three basic responsibilities determines the degree to which their authority and legitimacy are accepted by subordinates.
(Organizational Expansion)
**[Article 43]** The growth of the organization and the diversification of operations inevitably require external expansion. The expansion of the organization must seize opportunities, and whether we can seize opportunities and the extent to which the organization can expand depend on the quality of the company's cadre team and management control capability. When relying on organizational expansion cannot effectively improve the efficiency and effectiveness of the organization, the company will slow down the pace of external expansion and focus on improving organizational management capability.
**II. Organizational Structure**
(Basic Organizational Structure)
**[Article 44]** The company's basic organizational structure will be a two-dimensional structure: business divisions divided by strategic business and regional companies divided by region. Business divisions are responsible for development, production, sales, and customer service within the business scope stipulated by the company; regional companies effectively utilize the company's resources to conduct business within the regional market stipulated by the company. Both business divisions and regional companies are profit centers and bear actual profit responsibility.
(Main Structure)
**[Article 45]** The principle of functional specialization is the basic principle for establishing management departments. For business activity areas whose main goals are to improve efficiency and strengthen control, departments should generally also be divided according to this principle.
The company's management resources, research resources, pilot test resources, certification resources, production management resources, market resources, financial resources, human resources, and information resources... are the company's public resources. To improve the efficiency of public resources, audits must be conducted. Organize corresponding departments according to the principle of functional specialization to form the main body of the company's organizational structure.
(Business Divisions)
**[Article 46]** The principle of object specialization is the basic principle for establishing new business departments.
The division of business divisions can be one of the following two principles: the product field principle and the process principle. Business divisions established according to the product field principle are expansionary business divisions, and business divisions established according to the process principle are service-oriented business divisions.
Expansionary business divisions are profit centers, implementing centralized policies and decentralized operations. Under the principle of effective control, they should be equipped with the necessary functions for independent operation, with full authorization and strengthened supervision.
For products or business areas with relatively independent markets, operations that have reached a certain scale, and where relatively independent operation is more conducive to expansion and strengthening the responsibility for final results, a form of organization more conducive to its development should be selected in a timely manner.
(Regional Companies)
**[Article 47]** Regional companies are subsidiaries with legal personality, divided by region, wholly owned or controlled by the head office. Regional companies fully utilize the resources allocated by the company and try to mobilize the company's public resources to seek development within the specified regional market and business areas, and bear full responsibility for profits. In the regional market for which a regional company is responsible, the head office and various business divisions do not compete with it in the same business. If a business division has the need to expand business, it can do so in a manner that cooperates with or supports the regional company.
(Evolution of Matrix Structure)
**[Article 48]** When departments divided according to the principle of functional specialization and departments divided according to the principle of object specialization operate crosswise, a matrix structure is formed in the organization.
The matrix structure of the company's organization is a dynamic evolution process that continuously adapts to strategic and environmental changes, from original balance to imbalance, and then to new balance. If the original balance is not broken, opportunities cannot be seized and rapid development cannot be achieved; if a new balance is not established, it will cause long-term uncertainty in the company's organizational operations and weaken the foundation for establishing responsibility.
In order to maintain the principle of unified command and the principle of equal responsibility and authority under the matrix structure, reduce organizational uncertainty, and improve organizational efficiency, we must strengthen management in the following aspects:
1. Establish an effective senior management organization.
2. Implement full authorization and strengthen supervision.
3. Strengthen the unity and authority of plans.
4. Improve the assessment system.
5. Cultivate team spirit.
(Help Network)
**[Article 49]** We must appropriately introduce horizontal and reverse network action methods into the company's vertical hierarchical structure to activate the entire organization and maximize the use and sharing of resources. We must ensure the smooth flow of orders in the forward line function system for formulating and implementing decisions, and also respond promptly and flexibly to the reverse and horizontal help systems, so that the highly responsible grassroots supervisors and employees closest to customers, who first perceive changes and opportunities, can receive organizational support in a timely manner and make unique contributions to organizational goals.
(Organizational Levels)
**[Article 50]** Our basic policy is to reduce organizational levels to improve organizational flexibility. Reducing organizational levels means reducing departmental levels on the one hand, and reducing position levels on the other.
**III. Senior Management Organization**
(Senior Management Organization)
**[Article 51]** The basic structure of the senior management organization consists of three parts: the Company Executive Committee, the Senior Management Committees, and the Company Functional Departments.
The company's senior management committees include: the Strategic Planning Committee, the Human Resources Committee, and the Financial Management Committee.
(Senior Management Responsibilities)
**[Article 52]** The Company Executive Committee is responsible for determining the company's future mission, strategy, and goals, making decisions on major company issues, and ensuring the company's sustainable growth.
The Senior Management Committees are advisory bodies composed of senior personnel. They are responsible for drafting strategic plans and basic policies, reviewing budgets and major investment projects, and reviewing the implementation results of plans, basic policies, and budgets. The review results are approved by the President's Office Meeting for implementation.
The company's functional departments represent the company president in managing the company's public resources, guiding and monitoring various business divisions, subsidiaries, and business departments. Functional departments should be established under centralized management to avoid multiple leadership as much as possible.
Senior management tasks should be implemented in the form of projects. After the completion of senior management projects, specific work and systems are formed and incorporated into the responsibilities of a functional department.
(Decision-Making System)
**[Article 53]** We follow the principle of democratic decision-making and authoritative management.
Major decisions at the senior level require full discussion by the Senior Management Committees. The basis for decisions is the company's purpose, goals, and basic policies; the principle of decision-making is to follow the wise, not the majority. Truth is often in the hands of a few. We must create an environment where different opinions can exist and be expressed. Once a resolution is formed, authoritative management must be implemented.
The collective decision-making of senior committees and the office meeting system under the responsibility of department heads are important measures for implementing senior democratic decision-making. Our policy is to open up senior democracy to fully utilize wisdom; strengthen grassroots execution to put responsibility into practice.
Department heads belong to various professional committees. These committees discuss matters but do not manage them, and have supervisory power over the resolutions formed, to prevent one-sidedness in the one-head system. The daily management decisions of department heads should follow the principles determined by the department head office meeting and bear personal responsibility for the consequences of decisions. The discussion results of office meetings at all levels are reported to superiors in the form of meeting minutes. The report must be signed by more than two-thirds of the formal members, and the report must specifically note different opinions during the discussion.
The company president has the final decision-making power, and when exercising this power, must fully listen to opinions.
(Code of Conduct for Senior Managers)
**[Article 54]** Senior managers should:
1. Maintain a strong enterprising spirit and sense of urgency. Bear personal risk for the company's future and major business decisions.
2. Insist that company interests are higher than departmental and personal interests.
3. Listen to different opinions and unite with all those who can be united.
4. Strengthen the training of political character and the cultivation of moral quality, be honest and self-disciplined.
5. Continuously learn.
**Chapter 4: Basic Human Resources Policies**
**I. Human Resource Management Guidelines**
(Basic Purpose)
**[Article 55]** Huawei's sustainable growth fundamentally relies on organizational building and cultural building. Therefore, the basic purpose of human resource management is to establish a large team with high quality, high realm, and high unity, and to create a mechanism for self-motivation, self-discipline, and the emergence of outstanding talents, providing guarantees for the company's rapid growth and efficient operation.
(Basic Guidelines)
**[Article 56]** All Huawei employees, regardless of position, are equal in personality. The basic guidelines for human resource management are fairness, justice, and openness.
(Fairness)
**[Article 57]** Common values are the criteria for our fair evaluation of employees; setting clear challenging goals and tasks for each employee is the basis for our fair evaluation of employees' performance improvement; the ability and potential demonstrated by employees in completing their work is a fair standard for evaluating ability that is more important than education.
(Justice)
**[Article 58]** Huawei pursues the principle of efficiency first, fairness with consideration. We encourage every employee to compete on the basis of sincere cooperation and commitment to responsibility; and provide fair opportunities and conditions for employee development. Each employee should rely on their own efforts and talents to strive for opportunities provided by the company; rely on work and self-study to improve their own quality and ability; rely on creatively completing and improving their work to satisfy their achievement desires. We fundamentally negate short-sightedness, comparison, and egalitarianism in evaluation and value distribution.
(Openness)
**[Article 59]** We believe that following the principle of openness is a necessary condition for ensuring the fairness and justice of human resource management. The formulation of important company policies and systems must fully solicit opinions and consultations. Suppress flukes, clarify praise and blame, and improve the transparency of system implementation. We fundamentally negate anarchic, unorganized, and undisciplined individualistic behavior.
(Human Resource Management System)
**[Article 60]** We do not implement a lifetime employment system, but this does not mean that one cannot work at Huawei for life. We advocate a free employment system, but it does not depart from China's reality.
(Internal Labor Market)
**[Article 61]** By establishing an internal labor market, we introduce competition and selection mechanisms into human resource management. Through the exchange of internal and external labor markets, we promote the emergence of outstanding talents, achieve rational allocation of human resources, and activate the sediment layer. And make people suitable for positions, and positions suitable for people.
(Human Resource Management Responsibility)
**[Article 62]** Human resource management is not only the work of the human resources department, but also the responsibility of all managers. Managers at all levels have the responsibility to record, guide, support, motivate, and reasonably evaluate the work of subordinates, and have the responsibility to help subordinates grow. The display of subordinates' talents and the recommendation of outstanding talents are important factors determining the promotion and personnel treatment of managers.
**II. Employee Obligations and Rights**
(Employee Obligations)
**[Article 63]** We encourage employees to have a sense of ownership and behavior towards company goals and their own work.
Each employee mainly contributes to company goals by doing their own job well. Employees should strive to expand their job horizons, deeply understand the requirements of company goals for themselves, cultivate a way of thinking that contributes to others, and improve collaboration level and skills. On the other hand, employees should abide by the constraints between responsibilities, avoid overstepping, and moderately expose management loopholes and problems hidden by unclear responsibilities.
Employees have the obligation to report concealed management shortcomings and errors to higher levels in a factual manner. Employees are allowed to act expediently in emergency situations to contribute to the company's seizing opportunities, avoiding risks, and mitigating disasters. However, in such cases, the person who reports to higher levels or acts expediently must bear responsibility for their actions and consequences.
Employees must keep company secrets.
(Employee Rights)
**[Article 64]** Every employee has the following basic rights: the right to consult, the right to suggest, the right to appeal, and the right to retain opinions.
Employees have the right to consult their superiors on the premise of ensuring the smooth progress of work or business, and superiors have the responsibility to provide reasonable explanations and clarifications.
Employees have the right to make rationalization suggestions for improving operations and management.
Employees have the right to appeal to the superior of their direct superior for treatment they consider unfair. Appeals must be factual, submitted in writing, and must not affect their own work or interfere with the normal operation of the organization. Supervisors at all levels must provide clear responses to subordinate appeals as soon as possible.
Employees have the right to retain their opinions, but this must not affect their work. Superiors must not discriminate against subordinates for retaining different opinions.
**III. Assessment and Evaluation**
(Basic Assumptions)
**[Article 65]** The establishment of Huawei's employee evaluation system is based on the following assumptions:
1. The vast majority of Huawei employees are willing to take responsibility and cooperate, are highly self-respecting and have strong achievement desires.
2. Gold is not pure, and no one is perfect; people with outstanding strengths often have obvious weaknesses.
3. Work attitude and work ability should be reflected in the improvement of work performance.
4. Failure paves the way for success, but repeating the same mistakes is not acceptable.
5. If employees fail to meet the evaluation standards, managers also have responsibility. The achievements of employees are the achievements of managers.
(Evaluation Methods)
**[Article 66]** Establishing an objective and fair value evaluation system is a long-term task of Huawei's human resource management.
The evaluation of employees and cadres is a routine assessment and evaluation of each employee's and cadre's work performance, work attitude, and work ability according to clear goals and requirements. The evaluation of work performance focuses on performance improvement, and should be detailed rather than rough; the evaluation of work attitude and work ability focuses on long-term performance, and should be rough rather than detailed. Records should be established for evaluation results, and evaluation elements should be focused according to the company's growth requirements in different periods.
A regular reporting system should be established between superiors and subordinates at all levels. Good communication must be achieved between supervisors at all levels and their subordinates to strengthen mutual understanding and trust. Communication will be included in the evaluation of supervisors at all levels.
The evaluation of employees and cadres implements a comprehensive evaluation with vertical and horizontal interaction. At the same time, the evaluated have the right to appeal.
**IV. Main Norms of Human Resource Management**
(Recruitment and Employment)
**[Article 67]** Huawei relies on its own purpose and culture, achievements and opportunities, as well as policies and treatment, to attract and recruit first-class talents from all over the world. In recruitment and employment, we pay attention to people's quality, potential, character, education, and experience. According to the principle of two-way selection, we provide objective and reciprocal commitments in talent use, training, and development.
We will determine a reasonable talent structure according to the company's strategy and goals in different periods.
(Dismissal and Termination)
**[Article 68]** We use the competition and elimination mechanism of the internal labor market to establish routine employee dismissal and termination procedures. Employees who violate company discipline or cause serious damage to the company due to seeking personal gain will be forcibly dismissed according to relevant systems.
(Compensation and Treatment)
**[Article 69]** In compensation and treatment, we unswervingly favor outstanding employees.
Wage distribution implements a functional wage system based on ability; bonus distribution is linked to departmental and individual performance improvement; the distribution of benefits such as safety retirement pensions is based on the evaluation results of work attitude; medical insurance is differentiated according to contribution, with senior management and senior professionals enjoying different treatment from general employees. In addition to medical insurance, senior management and senior professionals also enjoy health care and other health benefits.
We will not sacrifice the company's long-term interests to satisfy the maximization of employees' short-term interest distribution, but the company guarantees that during economic prosperity and good business development stages, the average annual income of employees will be higher than the corresponding highest level in the regional industry.
(Automatic Salary Reduction)
**[Article 70]** During economic downturns, temporary setbacks in business growth, or according to business development needs, the company activates the automatic salary reduction system to avoid excessive layoffs and talent loss, ensuring the company overcomes difficulties.
(Promotion and Demotion)
**[Article 71]** Every employee may obtain promotion in position or qualification through hard work and the growth of talents in work. Correspondingly, we maintain a fair competition mechanism for positions and resolutely implement a cadre system that can go up and down. The company follows the law of talent growth, based on objective and fair evaluation results, and lets the most responsible and clear-minded people take on important responsibilities. We are not bound by seniority and rank, and according to the requirements of the company's organizational goals and career opportunities, and through institutional screening procedures, we implement exceptional promotions for those with outstanding talents and contributions. However, we advocate gradual progress.
(Position Rotation and Specialty Development)
**[Article 72]** We implement a position rotation policy for middle and senior managers. Those without peripheral work experience cannot serve as department heads. Those without grassroots work experience cannot serve as cadres above the section level. We implement a relatively fixed position policy for grassroots supervisors, professionals, and operators, advocating love one line, do one line; do one line, specialize in one line. The basis for loving one line is to pass the recruitment exam, and the condition for employees already on the job to continue loving one line is to pass the screening of job assessment.
(Human Resource Development and Training)
**[Article 73]** We regard continuous human resource development as an important condition for achieving the goal of human capital appreciation. We implement a development form that combines on-the-job training with off-the-job training, and self-development with educational development.
To evaluate the effect of human resource development, an input-output evaluation system for human resource development should be established.
**Chapter 5: Basic Control Policies**
**I. Management Control Policy**
(Policy)
**[Article 74]** By establishing and improving management control systems and necessary institutions, ensure the unity of the company's strategy, policies, and culture. On this basis, fully authorize supervisors at all levels, creating a lively, efficient, and stable situation with both goal traction and interest drive, and with procedures and institutional guarantees.
(Goals)
**[Article 75]** The short- and medium-term goals for further improving the company's management control system are: establish and improve the budget control system, cost control system, quality management and assurance system, business process system, audit monitoring system, document system, and project management system, implement effective control over important areas related to the company's survival and development, and establish a standardized operation model for a large company.
(Principles)
**[Article 76]** The company's management control follows the following principles:
Layering principle. Management control must be implemented at different levels; over-level and over-authority control will destroy the responsibility foundation on which management control is built.
Exception principle. All routine work with repetitive nature should formulate rules and procedures and authorize subordinates to handle. Superiors mainly control exceptional events.
Classification control principle. Implement classified control according to the nature of departments and tasks. Implement target responsibility assessment control for high- and middle-level operation management departments; implement measurement responsibility quota control for grassroots operation departments; implement task responsibility assessment control for functional and administrative management departments.
Results-oriented principle. The management control system's assessment of departmental performance should prompt department heads to make decisions according to the requirements of maximizing the company's overall interests.
The company firmly advocates strengthening management control. At the same time, it recognizes that actions deviating from the budget (or standards) are not necessarily wrong; simply rewarding cost-saving measures is not necessarily a good method. The company encourages employees and department heads to take proactive and responsible actions according to the company's purpose and goals in places where the management control system is imperfect and when the environment and conditions change.
After careful planning and joint research, setbacks during implementation should be encouraged, and failures should not be blamed.
(Continuous Improvement)
**[Article 77]** The focus of departmental and employee performance assessment is performance improvement.
The company's strategic goals and customer satisfaction are the two basic starting points for establishing a performance improvement assessment indicator system. On the basis of decomposing strategic goals layer by layer, determine the goals of each department; on the basis of expanding customer satisfaction step by step, determine the goals of each link and position in the process. The performance improvement assessment indicator system should play a traction role, making the improvement efforts of each department and each employee face the same direction.
Performance improvement assessment indicators must be measurable and focused. The indicator level should be progressive and challenging. As long as we continuously improve, we will infinitely approach the ideal goals of high quality, low cost, and high efficiency.
**II. Quality Management and Quality Assurance System**
(Quality Formation)
**[Article 78]** Superior performance and reliable quality are the key to product competitiveness. We believe that quality is formed in the entire process of the product life cycle, including research and design, pilot testing, manufacturing, distribution, service, and use. Therefore, all factors affecting product quality in the entire product life cycle must always be under control; comprehensive quality management with full process and full participation must be implemented, so that the company has the ability to continuously provide products that meet quality standards and customer satisfaction.
Our quality policy is:
1. Establish a corporate image of superior quality and serve customers wholeheartedly.
2. Build quality into product design.
3. Produce according to contract specifications.
4. Use qualified suppliers.
5. Provide a safe working environment.
6. The quality system meets the requirements of ISO-9001.
(Quality Goals)
**[Article 79]** Our quality goals are:
1. Maintain synchronization with world trends in technology.
2. Creatively design and produce products with the best performance-price ratio.
3. Product operation achieves an average of 2000 days without failure.
4. Start from the smallest details to fully ensure that customers' various requirements are met.
5. Accurate delivery; perfect after-sales service; meticulous user training; sincere and enthusiastic ordering and returns.
By implementing ISO-9001 and regularly passing international certification reviews, we establish and improve the company's quality management system and quality assurance system, making our quality management and quality assurance system in line with international standards.
**III. Comprehensive Budget Control**
(Nature and Tasks)
**[Article 80]** The comprehensive budget is the basis for all annual operating activities of the company, and is an important way for us to control the uncertainty of the external environment, reduce the blindness and arbitrariness of decision-making, and improve the company's overall performance and management level.
The main tasks of the comprehensive budget are:
1. Coordinate the goals and activities of various departments.
2. Estimate the financial effects of the annual operating plan and the impact on cash flow.
3. Optimize resource allocation.
4. Determine the operating responsibilities of each responsibility center.
5. Provide a basis for controlling the expenses of each department and evaluating the performance of each department.
The company establishes a multi-level budget control system. All income and expenditure of each responsibility center should be included in the budget.
(Management Responsibilities)
**[Article 81]** The company-level budget and final accounts are reviewed by the Financial Management Committee and approved by the company president. The company-level budget is prepared by the Finance Department and supervised and evaluated for implementation effects. The preparation and modification of budgets at all levels must follow the prescribed procedures. The preparation of budgets for revenue centers and profit centers should reasonably determine various expenditure levels according to the principles conducive to the growth of potential and benefits; the preparation of budgets for cost or expense centers should implement the policy of living within means and practicing strict economy.
The finance departments of the company, business divisions, and subsidiaries should regularly submit analysis reports on budget implementation to the Financial Management Committee. According to the degree of achievement of budget goals and the degree of deviation from budget implementation, assess the budget preparation and budget control effects of the Finance Department.
**IV. Cost Control**
(Control Focus)
**[Article 82]** Cost is a key factor in market competition. Cost control should weigh the comprehensive benefits of input and output from the perspective of the product value chain and reasonably determine control strategies.
The main cost drivers that should be controlled include:
1. Design costs.
2. Procurement costs and outsourcing costs.
3. Quality costs, especially maintenance costs caused by product quality and work quality problems.
4. Inventory costs, especially dead stock and dead materials caused by version upgrades.
5. Waste in period expenses.
(Control Mechanism)
**[Article 83]** The premise of cost control is to correctly calculate the costs and expenses of products and projects. Expenses should be reasonably allocated according to the characteristics of the company's operating activities.
The company implements target cost control for product costs and implements cost veto in product approval and design. The basis for determining target costs is the competitive market price of the product.
Performance improvement indicators for cost reduction must be incorporated into the performance assessment system of each department, linked to the vital interests of department heads and employees, and establish a mechanism for consciously reducing costs.
**V. Business Process Reengineering**
(Guiding Ideology)
**[Article 84]** The purpose of implementing business process reengineering is to respond more agilely to customer needs, expand routine management, reduce exception management, improve efficiency, and plug loopholes.
The basic idea of business process reengineering is to combine the implementation of ISO-9001 standards with business process reengineering and management information system construction, establish effective and simple procedures and operating standards for key businesses in all operating areas of the company; around basic business processes, straighten out the relationships of various auxiliary business processes; on this basis, accurately position the responsibilities of various departments and positions, continuously reduce the number of approvals, continuously optimize and shorten processes, systematically improve the company's various management, and make the management system portable.
(Process Management)
**[Article 85]** Process management is a horizontal routine management under the authorization of the vertical line and functional management system according to business process standards, and is a responsible person-driven management oriented by goals and customers. Responsible persons at various positions in the business process, regardless of position, exercise the authority stipulated by the process, bear the responsibilities stipulated by the process, abide by the constraints of the process, and treat the next process as the user, ensuring the high quality and efficiency of process operation.
Establishing and improving a process-oriented statistics and assessment indicator system is the key to implementing the responsibility for final results and strengthening process management. Customer satisfaction is the core of establishing assessment indicator systems for each link of the business process.
Improving the procedural, automated, and information integration level of process management, continuously adapting to market changes and the requirements of the company's business expansion, and simplifying and improving the original business process system are our long-term tasks.
(Management Information System)
**[Article 86]** The management information system is the support platform and tool for the company's business operations and management control, aiming to improve the efficiency of process operation and functional control, enhance the enterprise's competitiveness, develop and utilize information resources, and effectively support management decisions.
The construction of the management information system adheres to the use of advanced and mature technologies and products, and the principle of minimizing independent system development.
**VI. Project Management**
(Necessity)
**[Article 87]** The company's high-speed growth goals and the nature of high-tech enterprises determine that new projects must be continuously proposed in new technologies, new products, new markets, and new fields. These projects related to the company's survival and development, with one-time cross-departmental characteristics, are difficult to complete by the existing functional management system in a routine manner. Cross-departmental team operations and project management must be implemented. Therefore, project management and functional management should jointly constitute the company's basic management methods.
(Management Focus)
**[Article 88]** Project management is the management of the entire process of the project life cycle and is a systematic project. Project management should refer to international advanced management models and establish a complete set of standardized project management systems. The focus of further improvement of project management is to improve project approval and project change approval, budget control, schedule control, and document construction.
For project management, implement sunset law control. Control the number of projects to achieve effective use of resources and improve the overall operation system of the organization. After project completion and acceptance, transfer to the routine organizational management system according to established procedures.
**VII. Audit System**
(Functions)
**[Article 89]** The company's internal audit is a monitoring activity that reviews, verifies, and evaluates the authenticity, legality, effectiveness of the operating activities of various departments, business divisions, and subsidiaries, as well as the scientificity and effectiveness of various internal control systems.
In addition to performing basic internal audit functions such as financial audit, project audit, contract audit, and departure audit, the company's audit department should also audit important work related to company goals such as plans, key business processes, and major management systems, combining internal audit with the progress of business management.
(System)
**[Article 90]** The company implements a management audit system with processes as the core. Set up several monitoring and audit points in the process, clarify the monitoring responsibilities of management cadres at all levels, and realize automatic audit.
We insist on promoting and continuously improving the optimization and regeneration system in which planning, statistics, and auditing operate independently and also form an overall closed loop. This triangular cycle runs through every department, every link, and every matter. On the basis of these many small cycles, medium cycles are formed, and with enough medium cycles, large cycles are formed. Only when the management process is closed can the company form a feedback and restriction mechanism for management, continuously self-optimize and self-purify.
Through the flow of auditors across the company, promote the dissemination of audit methods and the improvement of audit levels. Form a more open and transparent audit system to provide services and guarantees for the effective implementation of the company's various operation and management work.
(Authority)
**[Article 91]** The basic authority of the company's audit institution includes:
1. Directly responsible to the president and reporting work, without interference from other departments and individuals.
2. Have all necessary authority to perform audit functions.
**VIII. Control of Business Divisions**
(Policy)
**[Article 92]** The management policy for business divisions is:
1. Conducive to the growth of potential.
2. Conducive to the growth of benefits.
3. Conducive to the unity of the company's organization and culture.
(Performance Assessment)
**[Article 93]** Business divisions are profit centers, operating independently within the business scope stipulated by the company, bearing expansion responsibility, profit responsibility, and asset responsibility.
The main assessment indicators for business divisions are sales revenue, sales revenue growth rate, market share, and management profit. The purpose of assessing sales indicators is to encourage business division expansion; the purpose of assessing management profit is to balance expansion, benefits, and asset responsibility. The company will influence the operating behavior of business divisions by adjusting the interest distribution coefficients linked to sales revenue, sales revenue growth rate, and management profit of each business division according to different development requirements.
All profits of business divisions are distributed uniformly by the company according to strategy and goals.
(Autonomy)
**[Article 94]** Our policy is that as long as the "three conducive" principles of business division control are met, full authorization is granted.
The autonomy of the general manager of a business division mainly includes: the right to decide expenditures within the budget and the right to dispose of operating resources under its jurisdiction, as well as the right to make business decisions, personnel decisions, and interest distribution under the unified policy guidance of the company.
(Control and Audit)
**[Article 95]** The company's control and audit of business divisions mainly include:
1. The general manager, financial director, human resources director, and audit director of the business division are appointed and removed by the company.
2. Total control of the business division's income and expenditure based on the approved budget.
3. The company unifies financing, and business divisions pay for the use of funds.
4. Centralized management of cash, with business divisions responsible for their own cash flow balance.
5. Business divisions regularly submit financial performance reports to the company's Financial Management Committee.
6. The company's audit department performs audit functions for business divisions.
(Service-Oriented Business Divisions)
**[Article 96]** The function of service-oriented business divisions is to provide internal services at low profit to promote overall expansion strength. Internal operations implement a simulated market mechanism.
(Profit-Linked Compensation)
**[Article 97]** Business divisions implement a compensation system linked to virtual profit. In the compensation policy of business divisions, the company follows the principle of equal risk and benefit with compensation.
**IX. Crisis Management**
(Crisis Awareness)
**[Article 98]** The refresh cycle of high technology is getting shorter and shorter, and the path of all high-tech enterprises is full of crises. Due to Huawei's success, the crises contained within the company's organization are also increasing and deepening. We should see that when the company is at a crisis point, it faces both crisis and opportunity. The goal of crisis management is to turn danger into opportunity, enabling the enterprise to cross the trap and enter a new growth stage.
(Early Warning and Disaster Reduction)
**[Article 99]** The company should establish an early warning system and rapid response mechanism to sensitively predict and perceive subtle but significant changes in the external environment caused by competitors, customers, suppliers, and policies and regulations; handle major emergencies that affect the company's image caused by unexpected events of senior leaders and product reasons.
**Chapter 6: Successors and Amendment of the Basic Law**
(Inheritance and Development)
**[Article 100]** The management methods and experience accumulated by Huawei over the years are the company's precious wealth and must be inherited and developed. This is the responsibility of supervisors at all levels. Only through inheritance can development occur; only through the accumulation of quantitative changes can qualitative changes occur. Carrying forward the past and opening up the future is the foundation for the prosperity of our cause.
(Requirements for Successors)
**[Article 101]** Recommending talents and doing one's best is the difference between leaders and models. Only those who recommend talents and continuously cultivate successors can become leaders and successors to positions at all levels of the company.
The most important criterion for the qualifications of senior and middle-level cadres is whether they can recommend and cultivate qualified successors. Leaders who cannot cultivate successors should voluntarily retire in the next term. It is not enough to make oneself excellent; one must also make one's successors more excellent.
We must systematically prevent the third, fourth, and subsequent generations of company successors from becoming corrupt, selfish, and complacent. When some of our senior leaders use their positions to seek personal gain, it indicates that there are serious problems in our company's cadre selection system and management. If we only deal with the matter as it arises and do not seek the root cause from the system, then we are not far from death.
(Generation of Successors)
**[Article 102]** The successors of Huawei are leaders naturally generated from employees and cadres at all levels through collective struggle.
The challenging opportunities in the company's rapid growth, as well as the company's democratic decision-making system and collective struggle culture, create conditions for the emergence of leader talents; the committees at all levels and the office meetings of department heads at all levels are not only specific forms of the company's senior democratic life system, but also a hotbed for cultivating successors. We must cultivate, select, and test people in practice. We must be vigilant against people who cannot do things but are good at socializing being heavily used.
We must unswervingly learn from the first and second generation entrepreneurs. Learn their spirit of hard struggle in thought and their courage to explore unknown fields; learn their team spirit and open-mindedness, adhere to and continuously improve our fair and reasonable value evaluation system; learn their strong enterprising spirit and sense of responsibility, and dare to demand and spur themselves with high goals; learn their spirit of seeking truth from facts, with both philosophical, sociological, and historical vision and a meticulous work attitude. Going to the world and realizing our mission is the unswerving task of Huawei's generation after generation of successors.
**Amendment of the Basic Law**
**[Article 103]** The Basic Law is amended every ten years. The amendment process follows the principle of following the wise, not the majority.
Select 10% of employees from managers, technical backbone, business backbone, and grassroots cadres to conduct amendment demonstrations and draft clear proposals.
Then from this 10% of employees, select another 20% to review the amendment proposals together with the board of directors and the executive committee. And publish the final proposal to solicit opinions from the majority of employees.
Finally, a tripartite equal representation of the board of directors, the executive committee, and outstanding employees conducts the final approval. The Basic Law is the guiding principle for the company's macro management and is the degree of unity of opposites in handling major relationships in the company's development. One of its purposes is to cultivate leaders. High and middle-level cadres must seriously study the Basic Law, understand its spiritual essence, and master its way of thinking.
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