Huawei drew back but committed to future transformation

By Tai Hing-shing
2022-4-3

Like in the previous two years, the Chinese hi-tech giant, Huawei, is going to recruit more than ten thousand colleague and university new graduates this year. This is a certainty out of the shadow of U.S. sanctions policy. Its future ahead, may be, still on the hands of its top executives.
As revealed in its 2021 annual report, Huawei was recorded 28.5% decline in revenue(636.8 billion Yuan in total) but surprising 75.9% rise in net profit to 113.7 billion Yuan. Its limited access to advanced chips under the U.S. sanctions policy led to nearly 50% down in consumer business including smart phone and PC. As a result, Huawei was forced to sell its budget smart phone brand, Honor, and a server unit. These one-off gains contributed to its net profit, for sure. However, it could not be denied that it steadily enhanced profitability by redrawing business map and redesigning technical architecture.
Communication infrastructure and enterprise business were less hurt by the U.S. sanctions. Overall, the giant’s cash flow was increased and liability ratio was reduced. One of new domains, intelligent automotive solution business, was expected to make financial contributions in the coming years. As for the chips issue, it worked on technologies in future chipmaking with an aim on improving systematic performance.
The report did not particularly address the company’s business in Russia. Thus, in addition to the restrictions imposed by the U.S, Government, there are more uncertainties in world economic and trade environment in the post Russia-Ukraine conflict era. We will see how strategic actions are taken to cope with these challenges.
As a fundamental tradition, the company heavily invested 142.7 billion Yuan, or 22.4% of total revenue, in R&D last year. This shows its goal for substantiality in such a complicated world and to keep its industry position. Despite decline in smart phone sales, other consumer electric products like smart wearables and true wireless stereo earbuds saw considerable growth in 2021. As an operating system replacement, the HarmonyOS was successfully introduced to more than 220 million Huawei mobile devices.
A clear message from the annual press conference is that Huawei will not retreat from global market. The dominance in the Chinese market can certainly nurture its long-term competitiveness for a stronger global presence. With a vision on 2030, it had set eight areas, namely Health Care, Food, Living Spaces, Transportation, Cities, Enterprises, Energy, Digital Trust, to explore and actualize its information and communications technology(ICT). The blueprint is not merely a slogan on paper. It was partly generated from the discussions on more than 2,000 seminars in the past three years.
2021 is the Huawei’s first yearly decline in total revenue, largely due to the external sanctions. Once it survives the challenge, it could fight back and stay on the right track of further development. 2030 may be different from what they envisaged, Huawei’s core values will be tested and cherished.

 

Tai Hing-shing is an independent political commentator and international relations scholar.

The views expressed in this article are the author’s own