Huawei founder sees 'Live or Die Moment' from American uncertainty

(Bloomberg) – Huawei Technologies Co. founder Ren Zhengfei warned in an internal memo that the company is in a "live or die moment" and advised underutilized employees to form "command programs" to explore new projects. Workers who fail will have their salaries cut for a few months and may lose their jobs, the billionaire said yesterday.

Since May, Huawei has occupied the uncomfortable position of being both an established global technology brand and a member of the United States entity List, which prevents it from trading with US suppliers. Despite a series of 90-day orders, the latest one coming yesterday, the uncertainty caused by US sanctions has already cost the company a lot. Although Huawei is gradually brought in from the cold, the impact of summer's upheaval will be widespread and painful.

The most immediate of Huawi's losses is the international smartphone market. The company's internal estimates show that it expects to sell 60 million fewer phones in 2019 than it would have done without the US orders. In 2018, Huawei's mobile shipments grew 34% to $ 206 million, according to IDC data, and in the first quarter of 2019, the pace accelerated to a 50% improvement while competitors Samsung Electronics Co. and Apple Inc. both had weak sales. During the second quarter, partly influenced by US sanctions, Huawei's growth had been reduced to 8.3%.

After coming through the European mobile market, Huawei was on its way to becoming the world's largest phone seller, but the loss of Google's Android, the brain inside its handsets, and the related Play Store app ecosystem made Huawei devices unwanted outside of China .

Ren warned in his memo that redundant employees need to find a way to make themselves useful.

"They either form a & # 39; command call & # 39; to explore new projects – in which case they can be promoted to partner if they do well," he wrote. Or they can find jobs in the interior If they fail to find a role, their wages will be cut every three months. "

Read more: Huawei's founder wants an" Invincible Iron Army "to fight the United States

The Consumer Division is, According to Huawei itself, its growth engine. For 45% of last year's sales, the business of selling phones and other things is an important contribution to Huawi's future health, and it has taken a significant reputation from all the charges and sanctions imposed on Huawei. will not be repaired anytime soon.

On the same front is Huawie's loss of software technology that would have to shrink to make a potential Android replacement. In the wake of the US ban, the company switched to 24-hour days and then worked as many as 10,000 developers over three shifts and three offices to eliminate the need for US software and circuits. Huawei ended up rushing HarmonyOS out this month, just to demonstrate that it can code its own operating system, though it convinced very few people that it has anything approaching an Android option waiting in the wings.

Less quantifiable but still significant will be the talent flow that Huawei suffers from staining the global reputation and overwork that is a result of his efforts to recover. The company has reduced the workforce in response to the new circumstances.

Ren wrote that the company's priorities are for employees to do "meritorious deeds" and for management "to promote outstanding employees as soon as possible and bring new blood to our organization."

When explaining the new extension to Huawies deferring from US sanctions, Commerce Secretary Wilbur Ross said some US telecoms are "dependent" on Huawei tech and need time to turn away from it, so while Washington authorities are giving Huawei a little more respite, the company's situation is still very precarious, as The founder has hinted.

Without the US trade intervention, Huawei would threaten Samsung for the crown of the world's most productive smartphone provider, and it will leverage its 5G technology leadership rather than count the cost of lost customers. , but the dynamics of the growth and brilliance of innovative technology have both been diminished by the measures that of the US government.

To contact the reporters about this story: Vlad Savov in Tokyo at vsavov5@bloomberg.net; Gao Yuan in Beijing at ygao199@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter Elstrom, Vlad Savov

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