Huawei CFO Meng Wanzhou returns to embattled Chinese telecoms giant as 2021 revenue plunges under US sanctions

The Huawei chief financial officer assured that the firm is ‘more capable of dealing with uncertainty’, after posting its worst annual revenue performance
Privately-held Huawei posted total 2021 revenue of US$100 billion, down 29 per cent from a year earlier

Huawei

Iris Dengin ShenzhenandChe Panin Beijing

Published: 4:48pm, 28 Mar 2022

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Huawei Technologies Co chief financial officer Meng Wanzhou, who returned to China after more than 1,000 days of detention and house arrest in Canada, on Monday took centre stage at the press conference for the company’s annual report, marking her high-profile comeback at the struggling, US sanctions-hit telecommunications giant.

Meng, daughter of Huawei founder and chief executive Ren Zhengfei, made her official return at a time when the Shenzhen-based company lost some ground in the US$100 billion global telecoms equipment market, as the firm scrambled to adapt its operations to tighter restrictions imposed by Washington, covering access to advanced chips developed or produced using US technology, from anywhere.

Privately-held Huawei posted total 2021 revenue of 636.8 billion yuan (US$100 billion), down 29 per cent from a year earlier and its worst annual sales performance on record. Net profit reached 113.7 billion yuan, a 76 per cent jump from a year ago.

But 50-year-old Meng, widely seen as a her father’s heir apparent at Huawei, put a positive spin on things. “Despite a revenue decline in 2021, our ability to make a profit and generate cash flows is increasing,” she said. The chief financial officer was joined in the company’s presentation by Huawei rotating chairman Guo Ping.

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Hero’s welcome for Meng Wanzhou at Huawei offices in China after extradition battle and quarantine

Revenue from Huawei’s consumer business, which includes smartphones, declined 50 per cent to 243.4 billion yuan, while revenue from its carrier business tumbled 7 per cent to 281.5 billion yuan.

“We expect Huawei’s smartphone shipments to drop to a range of 20 to 25 million units this year, compared with about 30 million to 35 million units last year,” said Eddie Han, senior analyst at Isaiah Research.

Han indicated that the decline in shipments owed to Huawei’s difficulty in selling 4G smartphones in mainland China, where 5G handset sales have picked up. Russia, one of Huawei’s important overseas markets, is now also subject to various trade sanctions, he said.

At the Shenzhen press conference, rotating chairman Guo said Huawei is carefully evaluating policy changes, without elaborating, in response to a questions about the company’s operations in Russia, which has been hit with trade sanctions after its invasion of Ukraine on February 24. He also indicated that Huawei has no plans to launch mobile platform HarmonyOS outside China.

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Meng entered the press conference wearing a black dress, prompting attendees to put up their smartphones and take pictures of her from a distance. She sat on the front-row dais, seemingly unaffected by all the attention.

Meng, whose return to China in a chartered flight last September was hailed as a diplomatic victory, assured that Huawei is “more capable of dealing with uncertainty” at this time, years after the company was added by the US government to a trade blacklist.

“The multiple rounds of sanctions imposed by the US have significantly affected our business, especially smartphones and PCs,” she said. Although the company was also under pressure from Covid-19 pandemic disruptions, she said “5G [network] construction in July was basically completed in 2020”.

Meng also reiterated Huawei’s commitment to research and development, despite existing challenges. “We will continue to invest heavily in talent and R&D to ensure long-term innovation,” she said. “We believe that this type of investment will enable us to supply high-quality products and services to our customers.”

Huawei, according to Guo, plans to recruit more than 10,000 fresh graduates in 2022. The firm hired about 26,000 fresh graduates in the past two years.

Battered by US, Huawei founder Ren Zhengfei tells employees to keep fighting

Meng’s assurance that Huawei was now better equipped to handle adversity reflects her father Ren’s own approach to pushing forward in battle, as a means to motivate the company’s employees amid recent difficulties.

“We must go through hard work and brave sacrifices to fight for a peaceful environment for the next three decades so that no one dares to bully us,” 77-year-old Ren said in a two-and-half minute video published by Huawei last November. “We are fighting for ourselves as well as our country.”

Much has happened since Meng’s detention at Vancouver International Airport in December 2018 on an extradition request from the US Department of Justice, which charged Meng of fraud for misleading banks regarding Huawei’s business dealings in Iran. During that year, Huawei was on an upwards trajectory to become the world’s largest smartphone vendor, moving ahead of Samsung Electronics and Apple.

From a low-key Huawei executive, Meng turned into the central figure in a widely-watched diplomatic struggle between Beijing, Washington and Ottawa. That turned her into a household name in China. Meng’s speech at the tarmac of Shenzhen Baoan International Airport was broadcast nationwide.

China freed two Canadian citizens, Michael Kovrig and Michael Spavor, on the same day after Meng signed a deferred prosecution agreement with the US Justice Department.

Huawei takes Sweden to court following 5G ban

Huawei, which is still the world’s largest telecoms equipment maker, was formerly China’s biggest smartphone vendor. The company’s change of fortunes has led it to explore other revenue streams.

Since late 2020, Huawei has pursued initiatives to diversify its operations. These include drawing up plans to co-develop a luxury electric sport-utility vehicle, selling refurbished smartphones and licensing its handset designs, expanding its cloud services operations in the Asia-Pacific region, helping domestic enterprises cut their carbon footprint, supplying more 5G base stations and core network gear to China’s major telecoms operators, establishing partnerships for its HarmonyOS mobile platform and divesting its Honor budget smartphone business.