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Huawei founder Ren Zhengfei urges employees to prepare for hard days ahead and focus on profit not sales

  • Ren told employees in a memo that they should focus on profits and cash flows instead of revenue to ensure the company’s survival
  • The internal warning indicates Huawei is in crisis management mode amid falling revenues and profits

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Ren Zhengfei has urged employees to focus on profit. Photo: Xinhua

Ren Zhengfei, founder of Huawei Technologies Co, has written an internal memo to employees urging them to focus on profitability as opposed to sales, as the Chinese telecoms giant prepares to endure a global economic recession, according to people familiar with the situation who saw the memo.

Ren, who is 77 and still the undisputed leader of the Chinese technology giant, told employees that they should focus on profits and cash flows instead of revenue to ensure the company’s survival over the next three years, according to Chinese media outlet Yicai, which first reported the memo. Ren said Huawei would scale back or divest noncore businesses, signalling that more job cuts could follow after the company’s headcount shrank by 2,000 in 2021, the first drop since 2008.

Huawei declined to confirm or deny the internal memo.

The internal memo was intended to “send a chill to everyone” as the company’s survival is at stake amid the impact of US trade sanctions, Ren wrote. He added the next two years would be key and that employees should face reality when making forecasts about the business. “No more stories, we have to talk about the realities,” the memo states. “We have to survive first, and we’ll have a future if we can survive”, said Ren in the memo.

The internal warning indicates Huawei is in crisis management mode amid falling revenue and profit. Huawei saw its revenue shrink further in the first half of 2022 with a 5.9 per cent year on year decline to 301.6 billion yuan (US$44.7 billion), with its net profit margin at 5 per cent, down from 9.8 per cent in the same period last year.
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