Tag: Eric Xu
Chinese telecoms giant Huawei says “survival” will be its priority in 2020 after announcing lower than expected annual sales revenue, largely as the result of a US trade blacklisting.
- Huawei says 2020 will be a difficult year for the company as it remains on the US “entity list”
- Being included on the list means US technology sales to Huawei are blocked, preventing its access to Android
- Most of the smartphones sold this year were models launched before the ban
The world’s biggest maker of telecom network equipment and the second-largest smartphone maker was all but banned by Washington earlier this year from doing business with US companies, preventing its access to technology like Google’s Android operating system.
In an annual New Year’s message to employees, Huawei Technologies said its annual revenue would likely jump 18 per cent in 2019 to 850 billion yuan ($174 billion), and predicted tough times ahead as the US continued to restrict its business.
“In 2020, we will continue to remain on the US entity list,” wrote Eric Xu, Huawei’s rotating chairman, referring to a US Commerce Department list that effectively blocks US technology sales to a company.
“We won’t grow as rapidly as we did in the first half of 2019, growth that continued throughout the year owing to sheer momentum in the market.
“It’s going to be a difficult year for us … survival will be our first priority.”
The US Government alleges Huawei equipment poses national security risks because it could be used by the Chinese Government to spy on users. Huawei has repeatedly denied its products are a security threat.
It has urged other countries not to buy the company’s 5G mobile network equipment.
Australia is the only country to have categorically ruled out Huawei’s participation in the construction of its 5G network.
In the US, Huawei is only banned from participating in government contracts, while New Zealand’s spy agency banned mobile company Spark from using Huawei equipment in its planned 5G upgrade.
The company did not break down fourth-quarter figures, but according to Reuters calculations based on its previous statements revenue in the quarter rose to 239.2 billion yuan ($49 billion) — up 3.9 per cent from a year earlier and slower than the 27 per cent increase it reported in the third quarter.
“The external environment is becoming more complicated than ever, and downward pressure on the global economy has intensified,” Mr Xu wrote.
“In the long term, the US Government will continue to suppress the development of leading technology — a challenging environment for Huawei to survive and thrive.”
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Mr Xu also said that Huawei shipped 240 million smartphones this year, a 20 per cent increase from 2018. Huawei has mainly sold smartphones that were launched before the ban.
The newest Mate 30 smartphone first went on sale in September, but it cannot access a licensed version of Google’s Android operating system because of the trade curbs.
Mr Xu said in his letter that Huawei would in 2020 “go all out” to build its Huawei Mobile Services ecosystem, which comprises services such as cloud storage and an app gallery, describing it as “the foundation of our ability to sell smart devices in markets outside China”.
It is also developing its own mobile operating system, known as Harmony, although analysts are sceptical that the system is a viable alternative.
Calling difficulty the prelude to greater success, Mr Xu said the United States’ “strategic and long-term” campaign against Huawei was an opportunity to build capabilities to navigate future challenges.
“Despite concerted efforts by the US Government to keep us down, we’ve made it out the other side and continue to create value for our customers,” he wrote.
“This will only be possible if we keep on top of long-term trends, keep our strategy focused, and turn crises into opportunities.”
The five-page letter exhorts employees to hone their skills and rid themselves of complacency.
Saying that survival is the company’s top priority, Mr Xu warns that mediocre managers “who have lost their enterprising spirit” will be removed faster than before.