Ren Zhengfei signals job cut to Huawei employees?

Huawei founder Ren Zhengfei said the company will spend more on production equipment this year to ensure supply continuity, cut redundant roles and demote inefficient managers in the wake of U.S. export curbs, Reuters reported.
Huawei phone campaign in China

Huawei is indicating a job cut after United States said this week that it will extend by 90 days a reprieve that permits Huawei Technologies to buy components from U.S. companies to supply existing customers. US also added more than 40 of Huawei’s units to its economic blacklist.

China-based Huawei is the world’s #1 telecom network maker and the second largest smartphone company. US believe that Huawei is supporting the China government and it is a threat to the national security.

Ren Zhengfei, in a memo sent to employees on Monday loaded with military metaphors, has 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 Zhengfei, a former Chinese army officer, said in the memo.

Huawei posted 23 percent in increase in its first half revenue, helped by strong smartphone sales in China, its home market. Cisco, one of the competitors of Huawei, recently said it is not receiving attention in China due to the China-US trade war.

“Our results looked good during the first half. It is likely because China-based clients made payments in time, the big volume made cash flow look good, this doesn’t represent the real situation,” Ren Zhengfei said in the memo.

Ren Zhengfei 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.

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.

Ren Zhengfei in June said the ban was worse than expected and that Huawei’s revenue may stay flat in the next two years. Ren Zhengfei in the memo called on employees to try their best in meeting the sales target outlined at the start of the year before the ban. Huawei aims to achieve revenue of around $125 billion in 2019 from more than $100 billion in 2018.

Ren Zhengfei 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.