IF business is a jungle where the lion is king, then the wolves are looking to usurp the throne.

While Western executives are reading the sixth century BC Chinese classic °?- The Art of War by Sun Tzu - Chinese industry leaders are being told to study one of their contemporaries.

The "wolf culture" of privately owned Chinese telecommunications giant Huawei is a more visceral strategy for survival than Sun Tzu's analytical tract - it stresses innovation with the message "Get on top and stay there."

Huawei's founder and CEO Ren Zhengfei has described the wolf spirit as a blend of three qualities: extreme resilience in face of failure, a strong willingness to self-sacrifice, and sharp predatory instincts.

"In the battle with lions, wolves have terrifying abilities. With a strong desire to win and no fear of losing, they stick to the goal firmly, making the lions exhausted in every possible way," the media-shy Ren is reported to tell his staff. In a nation that has been lamenting its lack of innovation, the wolves have been scoring some inspirational successes against the lions recently.

Relying on its unique SingleFAN (fiber access network), Huawei has recently been chosen by British Telecom (BT) to provide access products to support its Openreach division in creating a new national fiber network.

In December last year, Tele2 of Sweden and Telenor of Norway picked Huawei to build their shared fourth-generation mobile networks, Long-Term Evolution (LTE), in Sweden ahead of Ericsson and other bidders after the Chinese firm delivered the world's first commercial LTE network in Oslo.

Originally a low-cost manufacturer of products designed by others, Huawei determined to shed its copycat image and move up the value chain when competition at home and abroad intensified in the 1990s.

To kindle a spirit of innovation, Huawei encouraged its staff to study wolves. "When you feel real threat of being eliminated by your rivals, the more thirst you will have for designing innovative products," says Chen Naixing, director of the Research Center for Small and Medium-sized Enterprises (SMEs) at the Chinese Academy of Social Sciences (CASS).

Huawei's corporate values reflected in the "wolf culture" set it apart from other Chinese firms, says Chen. "Facing a lion, wolves cannot afford to wait in fear. The perseverance and confidence that Huawei promotes aims to free its innovators from fear and enhance their confidence."

For thousands of years, Chinese scholars were at the cutting edge of ingenuity - inventing gunpowder, printing, cast iron, the compass and the chain suspension bridge - before the torch of innovation seemed to pass to the West in the 1600s.

The failure of China's modern inventors to reclaim their history-making legacy was the subject of debate at the China Internet Conference (CIC) held from August 17 to 19 in Beijing. "Innovation can start with imitation, but China's technology firms are copying too much, in technologies and business models," said Liu Shuang, CEO of ifeng.com, the online news portal of Hong Kong-based Phoenix TV.

Zhou Hongren, executive vice chairman of the Advisory Committee for State Informatization under the State Council, the Cabinet, said, "A lack of core technologies is a prominent problem in upgrading China's economy."

Fear of failure

Successful high-tech companies such as Huawei remain rare exceptions in China. For all their determination to become innovators, most Chinese firms struggle to design cutting-edge products comparable to those dreamed up in the West and Japan.

"Innovation means entering an unknown field. You might earn huge success or you might suffer a complete failure. They are equally precious," said Zhou Hongyi, chairman of Qihu360, one of China's leading Internet security service providers, during the CIC.

In China, it is not uncommon for a researcher to be sidelined by their boss and see their prospects of promotion dwindle if he ends up empty-handed after spending money and time on a research and development project, said Zhou.

"Fear of failure sometimes frightens away potential innovators in China, where the winners get applause and glory and those who fumble have to take responsibility and retreat into obscurity," says Chen.

Zhou and Chen recommend enterprises and institutes take a long-term view of researchers' failures and change the generally adopted reward system in which each result is taken as the sole criteria of success.

China's education system also stymies innovation with its discouragement of critical thinking and promotion of conformity as a virtue, says Chen, who would like a system that nurtures critical thinking. "Only when people are critical of the existing ways of doing things can they have the zest to adjust and devise better ones," he says.

Teamwork was also the foundation of great innovations, says Chen, citing the iPod, iPhone and iPad as examples of organizational innovation. In Huawei, every employee must remember "We can only succeed through teamwork," just as a lone wolf can never beat a lion.

In 1988, with 20,000 yuan (US$2,942) borrowed from his relatives and friends, 44-year-old ex-serviceman Ren Zhengfei founded Huawei as a distributor of imported exchange switches for a Hong Kong company. The 2010 Fortune Global list published by the US magazine "Fortune" ranked Huawei at number 397 with annual sales of US$21.8 billion and net profits of US$2.67 billion in 2009.

Forty-six percent of Huawei's 95,000 staff work on R&D, on which the company persistently spends at least 10 percent of its revenues. Even during the economic downturn in 2009, the company increased R&D spending by 27.4 percent from 2008 to 13.34 billion yuan.

With 17 research institutes in the US, Germany, Sweden, Russia, India, and Italy and other countries, mainly employing local engineers, it has also set up more than 20 joint innovation centers with top operators such as Vodafone. However, most Chinese enterprises are less enthusiastic about innovation.

Big industries, mainly state-owned enterprises (SOEs), have no reason to innovate, as they can achieve huge profits by virtue of their monopoly, says Professor Yao Shujie, head of the School of Contemporary Chinese Studies at the University of Nottingham.

"For SMEs and private businesses, the motivation is there, but most of them have funding shortages partly due to Chinese banks' selective lending approach, which favors SOEs," Yao says.

In 2008, China's large and medium-sized industrial firms (with an annual revenue of more than 30 million yuan) spent 0.84 percent of their revenues on R&D, a sharp contrast with the 5 percent to 10 percent allocated by companies in the West and Japan and the Republic of Korea, the National Bureau of Statistics (NBS) said on December 28, 2009.

(The author is a Xinhua writer.)