Huawei founder details 'battle mode' reform plan to beat U.S. crisis
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[August 20, 2019] By
HONG KONG (Reuters) - China's Huawei will
spend more on production equipment this year to ensure supply
continuity, cut redundant roles and demote inefficient managers as its
grapples with a "live-or-die moment" in the wake of U.S. export curbs,
founder Ren Zhengfei said.
His remarks come as the United States said this week it will extend by
90 days a reprieve that permits Huawei Technologies to buy components
from U.S. companies to supply existing customers, but it also moved to
add more than 40 of Huawei's units to its economic blacklist.
In a memo sent to employees on Monday loaded with military metaphors,
74-year-old Ren asked staff to work aggressively towards sales targets
as the firm goes into "battle mode" to survive the crisis.
"The company is facing a live-or-die moment," Ren, a former Chinese army
officer, said in the memo, which was seen by Reuters. Huawei confirmed
the contents of the memo.
"If you cannot do the job, then make way for our tank to roll; And if
you want to come on the battlefield, you can tie a rope around the
'tank' to pull it along, everyone needs this sort of determination!"
Huawei is a key theme in a broader, year-long U.S.-China trade war, with
Washington slapping it with the trade ban in May citing national
security risks. Huawei, however, posted a 23% revenue jump in the first
half, helped by strong smartphone sales in its home market.
Ren said in the memo, "In the first half, our results looked good, it is
likely because our Chinese clients were sympathetic and made payments in
time, the big volume made cash flow look good, this doesn't represent
the real situation."
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Huawei founder Ren Zhengfei attends a panel discussion at the
company headquarters in Shenzhen, Guangdong province, China June 17,
2019. REUTERS/Aly Song
But he expressed confidence in Huawei's full-year results and said it needs to
"spend the money and solve the production continuity issue" by ramping up
strategic investment on things including production equipment.
According to the memo, 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.
While Ren said in June the ban was worse than expected and that Huawei's revenue
may stay flat in the next two years, in the memo he called on staff to try their
best in meeting the sales target outlined at the start of the year before the
ban - which was to grow its revenue to around $125 billion from more than $100
billion in 2018.
He also warned of cash flow risk if receivables are not paid in time. He asked
staff to be conservative in ensuring dues were paid in time by clients, because
otherwise the lack of liquidity could be fatal to the company.
(Reporting by Sijia Jiang; Editing by Himani Sarkar and Muralikumar Anantharaman)
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