In a worried, almost panicked tone, Huawei boss Ren Zhengfei addressed his employees and announced difficult years.
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The Huawei boss warns of difficult years.
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Huawei CEO Ren Zhengfei looks to the future with concern. In an internal memo he announces a change in mentality and speaks of the survival of the company. According to a report by the Guardian, he specifically names the pandemic, the US economic blockade and finally the Russian war of aggression in Ukraine as causes.
Layoffs and sales possible
In the memo, Zhengfei also makes it clear that no department is safe from action: “The cooldown will be felt by everyone.” In order to survive the next three years, the company must focus on profits over expansion and cash flow. That points to possible layoffs in (or even sale of) less profitable parts of the business.
“Huawei must scale back overly optimistic expectations for the future and make survival the most important guideline by 2023 or even 2025, not just surviving, but surviving with quality,” Zhengfei said.
China and USA: Huawei at the center of the trade conflict
While the relationship between China and the United States continued to deteriorate under ex-President Donald Trump, the company became a central point of contention. Huawei is not only one of the largest companies in China, as a telecommunications service provider and smartphone manufacturer, Huawei is also a direct interface to the digital infrastructure. Due to the group’s close ties to the Chinese government, concerns and allegations of espionage in western countries have repeatedly been raised.
The US and some allies eventually barred Huawei from their markets. This also prevented lucrative state contracts, for example in the 5G expansion. In 2021, sales fell by 28.6 percent compared to the previous year. However, this did not detract from the company’s success, because in the same year the group reported a profit increase of 76 percent.
Memo Goes Viral – Concern for Small Businesses
But the constant supply of global crises is slowly having an effect on Huawei. At least so much that Zhengfei strikes unusually clear, almost panicky tones. The Guardian quotes analyst Linhao Bao: “The reason Ren Zhengfei’s words stood out is the way he said them. He sounded like he was panicking.”
And the words definitely caught the eye, the memo went viral on Chinese social networks and was read and discussed by over 100 million users. Concerns were also raised about the impact that the next few years will have on small and medium-sized companies, if a company like Huawei is already sounding such worried tones.
