Huawei Founder Sees Live or Die Moment From U.S. Uncertainty

Huawei’s founder Ren Zhengfei warned in an internal memo the company is at a “live or die moment,“ according to Bloomberg. He has advised underutilized employees to form “commando squads“ to explore new projects. Workers who fail will have their salaries cut every few months and may lose their jobs, the billionaire said.

Since May, Huawei has occupied the uncomfortable position of being both an established global technology brand and 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 this week, the uncertainty caused by American sanctions has already cost the company a great deal. Even if Huawei is eventually brought in from the cold, the impact of this summer’s upheaval will be widespread and painful.

The most immediate of Huawei’s losses is the international smartphone market. 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 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%.

Ren warned in his memo that redundant staff need to find a way to make themselves useful. “They either form a ‘commando squad’ to explore new projects, in which case they could be promoted to company commander if they do well,“ he wrote. “Or they can find jobs in the internal market. If they fail to find a role, their salaries will be cut every three months.“

The consumer division is, according to Huawei itself, its growth engine. Accounting for 45% of its revenue last year, the business that sells phones and other gadgets is instrumental to Huawei’s future health, and it’s taken a substantial reputation blow from all the allegations and sanctions levied against Huawei. That won’t be repaired anytime soon.

Ren wrote that the company’s priorities are for employees to make “meritorious deeds“ and for management “to promote outstanding employees as soon as possible and infuse new blood to our organization.“