Huawei’s internal forum published an article on August 22 about the whole company’s business policy changing from pursuing scale to pursuing profit and cash flow, Chinese media outlet Yicai reported on August 23.
Ren Zhengfei, the founder of Huawei, mentioned in the article that the global economy will face a recession and declining consumption capacity in the near future, and that Huawei should change its thinking and business policy from pursuing scale to pursuing profit and cash flow to ensure that it will survive the crisis in the next three years. “We should take survival as the most important program, shrink or close the edge business. Every employee needs to realize the upcoming crisis,” wrote Ren.
Ren added that Huawei should narrow its business lines and focus on improving profits. “Our optimistic expectations about the future should be lowered. In 2023 or even 2025, we must take high-quality survival as the most important task and seriously implement every plan,” wrote the founder.
Regarding specific businesses, Ren mentioned that Huawei’s cloud services should focus on supporting Huawei’s business development, and the digital energy department needs to increase investment and strengthen team capacity. For smart car solutions, it is necessary to strengthen the closed loop of business, focus on improving competitiveness of several key components, and the rest can be jointly developed with others.
On August 12 this year, Huawei disclosed its operating results for the first half of 2022 in a low-key manner. Data show that Huawei achieved sales revenue of 301.6 billion yuan ($44 billion) and net profit margin of 5.0% in the first half of this year. The Carrier BG contributed 142.7 billion yuan, the Enterprise BG 54.7 billion yuan, and the Device BG 101.3 billion yuan. By contrast, these three BGs achieved revenues of 136.9 billion yuan, 42.9 billion yuan and 135.7 billion yuan in the first half of last year respectively.
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“While our device business was heavily impacted, our ICT infrastructure business maintained steady growth,” said Ken Hu, Huawei’s Rotating Chairman.
Huawei insiders have said that starting from 2021, Huawei is vigorously promoting the organizational change of “legion operation” internally, which has led to the recovery of business facing enterprises. These legions, or “integrated teams,” will be the most important business change direction of the company in the future.