Huawei Technologies Co.’s founder and billionaire Ren Zhengfei warned in an internal memo the company is at a “live or die moment” and advised employees to form “commando squads” to explore new projects.
He said that Huawei would spend more on production equipment this year to ensure supply continuity, cut redundant roles and demote inefficient managers.
Workers who fail will have their salaries cut every few months and may lose their jobs, the Huawei's boss and former Chinese army officer said.
Since May, Huawei is a member of the United States Entity List, which bars it from trading with American suppliers. Despite a series of 90-day reprieves, the latest of which came on Monday, the uncertainty caused by American sanctions has already cost the company a great deal.
The company’s internal estimates show it expects to sell 60 million fewer phones in 2019 than it would have done without the U.S. impositions. In 2018, Huawei grew its mobile shipments by 34% to 206 million, according to IDC data, and in the first quarter of 2019 its pace accelerated to a 50% improvement while rivals Samsung Electronics and Apple both saw shrinking sales. By the second quarter, partially affected by U.S. sanctions, Huawei’s growth had been slashed to 8.3%.
The Chinese company has penetrated the European mobile market and had been on a path to becoming the world’s biggest phone vendor. However, the however the loss of Google’s Android, and the related Play Store app ecosystem made Huawei devices undesirable outside of China.
Huawei's consumer division is, according to the company, accounted for 45% of its revenue last year.
Huawei tried to create a a potential Android substitute, and rushed to announce the HarmonyOS, just to demonstrate it can code its own operating system. However, the new OS is not convincing as it lacks the support of app developers.
Huawei, along with the majority of Chinese companies, is also suffering from
talent drain, as a result of the tarnishing of its global reputation and the overwork that has been required in order the company to recover. And that despite the fact that it is among the few companies in China that can offer employees salaries comparable to those offered by western tech companies.
According to Ren, Huawei, which employs nearly 190,000 people around the world, is reforming its operation globally by granting more power to the frontline, cutting out reporting layers and eliminating inefficient posts.
“In 3-5 years time, Huawei will be flowing with new blood,” Ren said. “After we survive the most critical moment in history, a new army would be born. To do what? Dominate the world,” Ren said.