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(Bloomberg) – The founder of Huawei Technologies Co., Ren Zhengfei, warned in an internal memo that the company was at a "critical moment" and advised underused employees to form "commando groups" to explore New projects. Workers who fail will see their wages reduced every few months and risk losing their jobs, said the billionaire yesterday.
Since May, Huawei has the uncomfortable position of being both an established global technology brand and a member of the US entity list, which prevents it from trading with US suppliers. Despite a series of 90 day repairs, the latest of which was done yesterday, the uncertainty caused by US sanctions has already cost the company a lot of money. Even if Huawei is finally imported from the cold, the impact of this summer's upheaval will be widespread and painful.
The most immediate loss of Huawei is the international smartphone market. The company's internal estimates indicate that it plans to sell 60 million fewer phones in 2019 than it would have done without US taxes. According to IDC data, Huawei has increased its mobile shipments by 34%, from 206% to 201 million. In the first quarter of 2019, its pace accelerated to a 50% improvement, while rivals Samsung Electronics Co. and Apple Inc. saw their sales plummet. In the second quarter, partially affected by US sanctions, Huawei's growth was reduced to 8.3%.
After successfully penetrating the European mobile phone market, Huawei was poised to become the world's largest handset provider. However, the loss of Google 's Android, the brain of its phones and the app store ecosystem associated apps has made unwanted Huawei devices outside of China.
Ren warned in his note that excess staff must find a way to make themselves useful.
"They train either a" commando team "to explore new projects, in which case they could be promoted to a company commander if they do well," he wrote. "Or they can find a job in the domestic market. If they can not find a position, their salaries will be reduced every three months. "
More: Huawei's founder wants an 'invincible iron army' to fight the United States.
According to Huawei, the consumer sector is its engine of growth. The sales of phones and other gadgets accounted for 45% of its sales last year and make a decisive contribution to Huawei's future health. It is a serious blow to the reputation of all the accusations and sanctions imposed on Huawei. It will not be repaired anytime soon.
On the same front, Huawei lost time in software engineering because it had to scramble to create a potential substitute for Android. As a result of this ban, the company has grown to 24 hours, working up to 10,000 developers across three teams and three offices to eliminate the need for US software and circuits. Huawei ended up hurrying his HarmonyOS this month, just to show that he could code his own operating system, although he convinced very few people that he had left him something that was coming close to an android alternative.
The loss of Huawei's talent for the fading world reputation and overwork resulting from his recovery efforts will be less quantifiable, but still significant. The company has downsized because of the new situation.
Ren wrote that the company's priorities are for employees to do "meritorious deeds" and that management "promote as quickly as possible exceptional employees and breathe new life into our organization."
Commerce Secretary Wilbur Ross said some US telecommunications were "dependent" on Huawei's technology and needed time to dissipate. So, while the Washington authorities are giving Huawei a little more breath, the situation of the company is still very precarious, as stated by its founder.
Without US commercial intervention, Huawei would threaten Samsung to become the world's most prolific handset provider and capitalize on its lead in 5G technology instead of taking into account the cost of lost customers. The company remains in a strong position, but the dynamism of its growth and the luster of its state-of-the-art technology have both been weakened by the measures taken by the US government.
To contact the reporters on this story: Vlad Savov in Tokyo at [email protected], Gao Yuan in Beijing at [email protected]
To contact the editors responsible for this story: Edwin Chan at [email protected], Peter Elstrom, Vlad Savov
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