Huawei forms new teams to advance into digital finance, energy, manufacturing, public services sectors amid US sanctions

The new teams now bring to 20 Huawei’s total number of so-called legions, which are cross-departmental groups that work on specific industries
These legions reflect Huawei’s goal to expand its revenue sources, while working to stay relevant in the smartphone and telecoms equipment markets

Huawei

Che Panin BeijingandIris Dengin Shenzhen

Published: 9:00pm, 2 Jun 2022

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Chinese telecommunications giant Huawei Technologies Co has set up five new business organisations to further diversify its operations, as its core smartphone and international carrier equipment operations continue to struggle under US trade sanctions.

These so-called legions will each focus on specific industries that include digital finance, energy, machine vision, manufacturing digitalisation and public services, according to a video announcement posted on Shenzhen-based Huawei’s online employee forum on Tuesday.

“A legion is an elite organisation focused on business exploration and cultivating business models,” Huawei founder and chief executive Ren Zhengfei said in the video.

The addition of these five new organisations – essentially, cross-departmental teams with a mission to work on specific industries – now brings to 20 the total number of legions established by Huawei since starting the initiative in October last year.

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The creation of legions reflects Huawei’s goal to quickly expand its revenue sources, while working to stay relevant in the global smartphone and telecoms carrier equipment markets.

Huawei, the world’s largest telecoms equipment maker and formerly China’s biggest smartphone vendor, was added to Washington’s trade blacklist in 2019. It has scrambled to adapt its operations to tighter restrictions imposed in 2020, covering access to chips developed or produced using US technology, from anywhere.

Huawei must win this battle, according to Ren. “Everyone needs to keep this mission in mind … We need to make winning battles one of our core beliefs,” the 77-year-old company founder said in the video.

Ren, who joined the military during China’s Cultural Revolution, said Huawei had “no path to retreat” after establishing its first legions last October. Those included teams focused on digital transformation products and services for smart mining, customs and ports; technologies to reduce energy consumption of data centres; smart systems for highways; and the photovoltaic industry.

Huawei revenues continue to shrink as firm struggles under US sanctions

In March this year, the legions that Huawei created covered a broad swathe of industries. These included power, public services, railway and aviation, interactive media, fitness and health, display semiconductors, industrial estate, wide area networks, data centres, and digital sites.

Privately held Huawei, however, has not revealed any financial data that would indicate how its legions strategy has made a difference in its operations.

Meng Wanzhou, Ren’s daughter who was named Huawei’s new rotating chairwoman in March, was also featured in the video, which showed her singing along and cheering with the company’s other executives and employees.

With no end in sight to US restrictions amid simmering tensions between Beijing and Washington, Huawei has been sharpening its focus on diversification since 2020, including co-developing a luxury electric sport-utility vehicle, expanding its cloud services operations in the Asia-Pacific region and establishing partnerships for its HarmonyOS mobile platform.

China’s Huawei speeds up bond sales to fund business transformation

In April, the company filed a patent application on the mainland for a semiconductor packaging innovation, which industry analysts described as a potential way for the firm to ease the disruptions caused by US chip sanctions on its operations.

Also in the same month, the company unveiled a new range of commercial office products to deepen its push into the enterprise market.

Huawei’s enterprise market expansion comes after its recent move to issue 3 billion yuan (US$448.680 million) of short-term debt, a month after selling 3 billion yuan in China’s interbank market. The proceeds will support business development and “implementation of critical strategies”, according to the company.

In September last year, Huawei rotating chairman Eric Xu Zhijun said the company had also been investing in domestic firms that specialise in chip-making tools and materials. He indicated, however, that China’s semiconductor industry has not yet reached a level of maturity to help Huawei in its current predicament. Before Meng’s recent appointment, Xu had been sharing the rotating chairman role with Guo Ping and Ken Hu Houkun, who is acting chairman from April 1 to September 30 this year.

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