(Bloomberg) – Huawei Technologies Co. founder Ren Zhengfei warned in an internal announcement that the company is at a "live or die time" and advises underutilized employees to form "commando squads" to investigate new projects. Failure workers will cut their wages every few months and may lose their jobs, the billionaire said yesterday.
Huawei's most immediate loss is the international smartphone market. The company's internal estimates indicate that it expects to sell 60 million fewer phones in 2019 than it would have done without US bills. In 2018, Huawei increased its mobile shipments by 34% to 206 million, according to IDC, and in the first quarter of 2019, its pace accelerated to 50% improvement while rivals Samsung Electronics Co. and Apple Inc. saw a contraction in sales. In the second quarter, partially affected by US sanctions, Huawei's growth declined to 8.3%.
After successfully penetrating the European mobile market, Huawei was about to become the largest phone provider in the world, but Google's loss of Google's Android, the brains inside its phones, and the related ecosystem of the app Play Store, make Huawei devices unwanted outside China.
Rehn warned in his note that redundant staff should find a way to become useful.
"commando squad" to investigate new projects – in which case they could be promoted to company commander if they did well, "he writes. "Or they can find a job in the internal market. If they fail to find a role, their salaries will be reduced every three months.
Read more: The founder of Huawei wants the "Invincible Iron Army" to fight the United States
The consumer divide, according to Huawei itself, is its engine for growth. Considering 45% of its revenue last year, the business of selling phones and other gadgets is essential to Huawei's future health and has been hit with a major reputational blow from all the allegations and sanctions imposed against Huawei. This will not be corrected any time soon.
On the same front is the loss of Huawei's time on software engineering, as it had to counteract itself to create a potential replacement for Android. As a result of the US ban, the company has shifted around the clock, working to 10,000 developers across three shifts and three offices to eliminate the need for US software and schemes. Huawei ultimately hastened HarmonyOS this month, only to demonstrate that it could code its own operating system, though it convinced very few people that there was anything approaching an alternative to Android waiting for its wings.
Less measurable, but still significant, will be the leakage of talent that Huawei suffers from tarnishing its global reputation and the fatigue due to its efforts to rebuild. The company has cut its workforce in response to its new circumstances.
Rehn writes that the priorities of the company are for employees to do "meritorious deeds" and for management to "encourage exceptional employees as soon as possible and to infuse new blood into our organization. "
In explaining the new extension of Huawei's withdrawal from US sanctions, Commerce Secretary Wilber Ross said that some US telecoms were" dependent "on Huawei's technology and needed time to get rid of it. So while the Washington authorities give Huawei a little more breathing space, the company's position is still very precarious, as its founder stated.
Without US commercial intervention, Huawei would threaten Samsung to crown the world's largest a prolific smartphone provider, and it would win its leading position in 5G technology instead of counting the cost of lost customers. The company remains in a strong position, but the dynamism of its growth and the brilliance of its avant-garde technology have been diminished by measures taken by the US government.
To contact reporters on this story: Vlad Savov in Tokyo at email@example.com; Gao Yuan in Beijing at firstname.lastname@example.org
To contact the editors responsible for this story: Edwin Chan at email@example.com, Peter Elstrom, Vlad Savov
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