Huawei Is Fighting For Survival Despite Record Sales

The chairman of Huawei Technologies Co. Ltd, has said the company is fighting for survival, despite achieving great sales in 2019. The company disclosed on Tuesday (Dec. 31) that its sales rose by 18% to reach 850bn Chinese Yuan ($120bn) in 2019, despite the United States placing Huawei on a sanctions list in May.

In the company's New Year message, rotating chairman, Eric Xu said, “Despite concerted efforts by the US government to keep us down, we have made it out the other side and continue to create value for our customers.” However, Eric Xu said 2020 would be “a difficult year” and “survival will be our first priority.”

Huawei Technologies Co., Ltd. is a Chinese multinational technology company that provides telecommunication equipment and sells consumer electronics, as well as smartphones. The company is headquartered in Shenzhen, Guangdong; and was founded in 1987 by Ren Zhengfei. Huawei was initially focused on manufacturing phone switches but has expanded its business to include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China, and manufacturing communications devices for the consumer market.

According to Yahoo Finance, the US ‘black listing’ means Huawei is forbidden from sourcing parts from U.S. suppliers. Multiple governments around the world have also banned Huawei from working on 5G infrastructure, citing national security concerns. The Trump administration has repeatedly put pressure on the U.K. to follow suite.

The chairman further said, “The external environment is becoming more complicated than ever, and downward pressure on the global economy has intensified. We need to keep working hard to earn the trust of our partners and local governments, improve our reputation in local markets, and keep creating greater value for our customers and society as a whole. Any teams that don't contribute to enhancing the competitiveness of operating units or improving strategic support and services will be merged or downsized,” he said. “People who are made redundant during this process will be transferred to other teams to ensure focus and the company's survival.”

Citing that the US “campaign against Huawei is strategic and long-term,”  the chairman said Huawei could come through the problems stronger. He said, “Difficulty is the prelude to greater success, and adversity the whetstone of an iron-willed team. It's a great opportunity for us to motivate ourselves and build up some muscle. A great opportunity for us to be more united as a team, and develop the capabilities we need to better navigate future challenges.”

Huawei had a great year in 2018 as the company reached the 200 million phone shipment mark for the first time, pushing the Chinese tech giant ahead of Apple to become the world’s No. 2 smartphone brand by units sold. Xu also announced in the memo that Huawei’s total revenue in 2019—which includes the company’s carrier business and enterprise business in addition to consumer gadgets—topped 850 billion Yuan (around 121 billion), an 18% increase over 2018. 

Huawei is currently trading at 3.18 Yuan per share.