The founder of Huawei has issued a stark warning about the company’s future, raising concerns about the candour of his assessment and what it means for smaller businesses in the midst of China’s economic troubles and a global downturn.
Ren Zhengfei told Huawei employees in a leaked internal memo that “the chill will be felt by everyone” and that the company must prioritize profit over cashflow and expansion if it is to survive the next three years, implying more job cuts and divestments.
“The next decade will be a very painful historical period, as the global economy continues to decline,” Ren predicted, citing the pandemic as well as the impact of the Ukraine war and the United States’ “continued blockade” of some Chinese businesses.
“Huawei must reduce any overly optimistic future expectations, and we must make survival the most important guideline until 2023 or even 2025, and not just survive but survive with quality.”
Pandemic restrictions, a property industry crisis, and deteriorating international relations are all putting pressure on China’s economy. This year, the country is not expected to meet its 5.5% economic growth target.
It has been a source of friction between the United States and China, with Washington and other Western counterparts barring Huawei from their markets due to national security concerns. The company has also been prohibited from acquiring certain foreign technologies.
“In the past, we embraced the ideal of globalization and aspired to serve all humanity; what is our ideal now?” Ren asked.
“Survive and make as much money as we can.” From this vantage point, we must adjust the market structure and investigate what can and should be done.”
Ren’s memo went viral on Chinese social media, with more than 100 million users sharing and discussing it, with some worried about what it meant for regular people and small businesses if a company the size of Huawei was sending such warnings.