What’s The News?
The Chinese phone giant Huawei’s CEO, Ren Zhengfei sent out a companywide email to staff on Friday. The email warned employees that the slowdown in the sale of its 5G equipment due to the increased scrutiny by various countries over its business could lead to possible job cuts.
What Does It Convey?
“In the coming years, the overall situation will probably not be as bright as imagined, we have to prepare for times of hardship, Ren said, according to The Financial Times.
By that what Ren meant was a dismal indication that the company is apparently preparing for cutbacks. “We also need to give up some mediocre employees and lower labor expenses,” mentioned Ren’s email message.
Huawei also finds itself entangled with intensive surveillance over the assumption by the U.S. and its allies that China uses Huawei products as potential tools for spying. However, Ren has vehemently denied these charges. At the company’s recent media event he even called Trump a ‘great president’ in an extraordinary plea to end America’s war with his company.
To a large extent, Huawei’s problems have been offshoots from a slew of recent incidents which has damaged the company’s reputation even further. Ren’s daughter – Meng Wanzhou, who is also the company’s Chief Financial Officer – is awaiting extradition to the U.S., after being arrested last month in Canada for allegedly violating U.S. sanctions against Iran.
President Trump is in consideration of a complete ban on all of Huawei’s equipment in the U.S. with an executive order. What’s more the governments of Australia and New Zealand have also banned Huawei’s 5G equipment from being used in their countries’ network. Germany has joined this list recently announcing that it is considering a similar ban on the use of Huawei’s 5G gear.
Why Should I Pay Attention?
The Bigger Market Picture: There has been speculation that Huawei’s troubles could lead to increased sales by rivals Nokia and Ericsson.
Although Ren even told employees in his email that, “Things went too smoothly for us in the last 30 years.” While Huawei said it has likely hit $100 billion in revenue for 2018, partly due to the growth in its smartphone business. But that meteoric growth may slow down, warned Ren.
Ren’s email stated,
“We were in a phase of strategic expansion, our organization expanded in a destructive way. We have to review carefully if all geographical subsidiaries are efficient. […] In order to achieve overall victory, we need to conduct some organizational streamlining.”
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