(Yicai Global) Aug. 23 -- Making it through the coming three years is the critical objective for Chinese telecoms giant Huawei Technologies at a time when the global economy faces recession, according to its founder.
“Over-optimistic expectations for the future should be adjusted, and in 2023 or even until 2025, we must adopt survival mode,” Ren Zhengfei said in an article published on the firm's internal forum yesterday. “Survival is the most important program.”
Huawei must change its thinking and business policy, from the pursuit of scale to the pursuit of profit and cash flow, Ren said, adding that the Shenzhen-based company will ditch or shrink marginal businesses and cut headquarters’ jobs to conserve resources to strengthen frontline teams.
“Whether we can achieve a breakthrough during this period is still uncertain,” he said, so any business plan should be made mainly based on cash flow and real profits, as Huawei can no longer just target sales growth.
“What we propose, we must capable of realizing it,” Ren said. “No fancy stories are acceptable. Especially when it comes to business forecasting, we must exclude all illusions.”
Beset by Covid-19 outbreaks in China this year and US government restrictions on its access to American technology since 2019, Huawei’s implied net profit halved in the first half of 2022 from a year earlier, while revenue fell 6 percent. Its net profit margin was 5 percent, down from 9.8 percent, the firm’s earnings report showed earlier this month.
As for the outlook of Huawei’s key business sectors, the founder commented that the cloud computing business should mainly serve Huawei’s own business development and take the path of supporting the industrial internet.
Huawei’s digital energy business needs more investment at the strategic window of opportunity to create greater value, he said, and Huawei plans to focus on several key technical areas to develop competitive products at its smart driving solutions business.
Editor: Emmi Laine, Xiao Yi