As the Chinese telecom giant Huawei is battling restrictions from the United States, the company has now warned about the slower growth and management cutbacks ahead in the year 2020.
Eric Xu, the rotating chairman of Huawei, said in an year-end letter that “it’s going to be a difficult year for us.” The message comes ahead of a new year that will test how well the company can compete for global 5G business and smartphone customers under pressure from the U.S.
Given that the company is still under the U.S. trade blacklist and the issue resolution isn’t in sight, he said that “we won’t grow as rapidly as we did in the first half of 2019” and added that the U.S. will create a challenging environment to survive and thrive.
To ensure the company’s growth, Huawei will toughen its stance on lagging units and managers. In the memo, Eric Xu talked about the need to weed out as many as 10% of the company’s worst-performing managers in 2020. Some support or even operational units will be merged or downsized, and employees could get re-assigned to other divisions.
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Xu also said that the company will prioritize supply chain security and go “all out” to build its own mobile software system — Huawei Mobile Services — designed to replace many popular applications such as Google Maps, YouTube and Gmail.
Huawei has shown resilience amid the crackdown that began in May earlier this year. The company’s revenue grew 18 percent to 850 billion yuan (~$121 billion) in 2019, although the company missed its initial goal of $125 billion to $130 billion.
The smartphone business became the company’s biggest revenue contributor in the first half of this year. Shipments reached 240 million units for all of 2019, up 16.5 percent from 206 million last year. The company is expected to remain ahead of Apple and behind South Korea’s Samsung Electronics.
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