Why Huawei founder Ren Zhengfei’s new memo has gone viral on China’s internet
- The founder’s memo, addressed to Huawei employees, paints a gloomy picture of a world heading into economic recession
- Ren’s message offers an honest reading of China’s economic prospects, which is rare in the country, according to experts
A leaked internal memo by Ren Zhengfei, founder of Huawei Technologies Co., has gone viral on China’s social media, as his bleak outlook of the global economy strikes a chord in the country’s business and technology sectors.
Huawei declined to confirm or deny the memo, but sources told the Post that the text, which has been widely reported locally and shared on the internet, is authentic.
“The next 10 years will come down as a painful period in history, as the world economy goes into recession … Huawei needs to tone down on any over-optimistic forecast and make survival its most important creed in the next three years,” Ren wrote.
This is not the first time that Ren, 77, has reminded Huawei employees that the firm is navigating a business crisis. Huawei’s rotating chairman, Eric Xu Zhijun, also repeatedly said in 2020 and 2021 that the company’s goal was to survive US sanctions, which barred its access to US-origin technology, such as advanced smartphone chips.
However, Ren’s new warnings come amid fresh challenges, as Beijing carries on with draconian Covid-19 controls despite the Chinese economy being in its worst shape in decades.
China’s gross domestic product grew only 0.4 per cent in the second quarter, the worst since the first quarter of 2020, when the coronavirus shut down large swathes of the country, driving GDP down by 6.8 per cent.
Ren’s memo has sparked heated discussions on Chinese social media because it offered a realistic reading of the country’s economic prospects and came up with a business strategy accordingly, in a display of honesty that is uncommon in the country, according to Ivan Lam, a senior analyst at Counterpoint Research.
“It’s rare for companies to point directly to the problem, and people have been waiting for an influential figure who is willing to [break the silence],” Lam said. “Many company executives have touched on the macro environment in their earnings calls, but they usually focused on their business performance and their optimism for an impending recovery. Apparently people didn’t think that was enough.”
Ren’s memo became a trending topic on microblogging platform Weibo on Tuesday, as some of his quotes, including his description of the memo’s purpose as “sending a chill to everyone”, drew wide attention.
“The economic downturn has imposed an unprecedented challenge on most ordinary people and private companies in China,” said one of the most popular comments on Weibo. “When a giant like Huawei is raising this issue, it speaks volumes about the severity of the problem.”
Amid rising Sino-US tensions, as well as tightening monetary policy by global central banks and the yuan’s depreciation, mainland stock markets plunged on Wednesday, with the benchmark Shanghai Composite Index tumbling 1.86 per cent and the Shenzhen Component Index losing 2.88 per cent.
Other internet users criticised Ren’s decision to cut the bonuses of employees whose teams fail to turn a profit. “Most workers didn’t get matching rewards when the company was doing well, so please don’t ‘send a chill’ to us,” one comment read.
Ren, who remains the undisputed leader of the world’s largest telecommunications equipment maker, joins a small number of Chinese tycoons who have spoken about their business struggles and views of the economy.
Wang Xing, founder of online delivery service platform Meituan, posted a widely quoted line on his social media account in late 2018, which said that year would be the worst of the previous decade but the best of the next decade.