On March 28, Huawei released its 2021 annual report, the third annual report since it was sanctioned by the United States in 2018. Huawei Chairman Guo Ping said that Huawei is now facing difficulties that advanced technology cannot be obtained, and if we want to survive, we must increase strategic investment and actively seek system breakthroughs when a single point of technology leadership encounters difficulties.
The annual report, which was personally handled by Meng Wanzhou after returning to China, seems to be worse than expected: in 2020, Huawei's three major businesses maintained positive growth, and the revenue of the Chinese market increased by 15.4%; but in 2021, Huawei only maintained growth in the enterprise business, and the growth rate dropped from 23% in the previous year to only 2.1%, and the revenue of the Strongest Support China Market also fell by a staggering 30.9%.
Many years ago, when Huawei was still in the stage of rapid development, founder Ren Zhengfei wrote "Huawei's Winter", in which he warned Huawei employees:
The arrival of the crisis is unconscious, and I think all employees can't think from their own point of view. If you don't have a broad mind, you can't get change right. If you don't get change right and resist it, the company will die.
Huawei, what the hell is going on?
Revenue fell sharply but net profit increased sharply?
Huawei's financial report shows that the company's revenue in 2021 was 636.8 billion yuan, down 28.6% year-on-year.
For the overall decline in revenue, Meng Wanzhou said that there are three reasons:
First of all, Huawei has encountered multiple rounds of sanctions from the United States, and the company's mobile phone, PC and other businesses have been under great pressure - the financial report shows that Huawei's consumer business fell by 49.6% year-on-year, without the support of fist products, only tablets and watches can not make up for the gap in mobile phones;
Secondly, China's 5G construction has been basically completed in 2020, so the customer demand for 5G services has decreased; Huawei did not announce the number of contracts for 5G base stations in the financial report, and as the domestic 5G base stations basically completed the layout, Huawei is difficult to do in overseas markets, resulting in a 7% decline in its carrier business.
Finally, the impact of the epidemic, Meng Wanzhou said that Huawei also has pressure under the epidemic. For example, during the epidemic period, many cities in China have adopted strict epidemic prevention measures, resulting in a decrease in the flow of customers and business hours of offline physical stores. In addition, the price increase of raw materials caused by the epidemic has also caused Huawei to exert operational pressure.
Although the revenue stall is obvious, Huawei's operating profit has increased significantly, mainly from the income from the sale of Glory.
Last year, Huawei split glory and sold it to the outside world, and the financial report Zhonghua did not disclose the specific selling price of glory, but other net income and expenditure showed that the sale of glory was exchanged for the company's revenue of up to more than 50 billion yuan.
If this revenue is deducted, Huawei's net profit will be cut from 113.7 billion yuan, which is actually not much different from the 64.65 billion yuan in 2020.
Today, Huawei's sale of Honor is a win-win deal: Huawei has exchanged a huge amount of money that can sustain the company's development, and Honor has avoided US sanctions after independence and has the opportunity to be reborn - according to the latest report data released by Counterpoint, Honor rose to second place for the first time in the fourth quarter with a market share of 17% in the fourth quarter of 2021, doubling year-on-year.
Can building a car save Huawei? But Huawei is determined not to build cars
For Huawei, the sale of glory can only be a one-time income, and it is difficult for HUAWEI CLOUD, digital energy and other businesses to make up for the losses caused by consumer business.
HUAWEI CLOUD is a new project promoted by Huawei after the consumer business is restricted, and at the financial report press conference, the head of Huawei said that HUAWEI CLOUD achieved sales revenue of 20.1 billion yuan in 2021, an increase of 37% year-on-year, ranking second in China.
However, HUAWEI CLOUD is difficult to achieve profitability in the short term. At present, Alibaba Cloud, which has the largest market share in cloud computing in China, only achieved profitability in the fourth quarter of 2020 after 12 consecutive years of investment; and Tencent Cloud, which did not separately disclose the scale of revenue, although it surpassed the game revenue in the fourth quarter of last year to become Tencent's largest source of revenue, but in fact, the business has not yet achieved profitability, dragging down the company's net profit performance.
Car building should have been an option for Huawei, but Ren Zhengfei was firm in Huawei's strategy of not building cars, resulting in Huawei not getting much in the smart car market. Huawei Chairman Guo Ping reiterated at the Huawei annual report press conference that Huawei does not build cars, and Huawei should use huawei's accumulated technology for more than 30 years to deeply integrate with the automotive industry to help car companies build and sell good cars.
Huawei said in the financial report that HUAWEI HiCar has established in-depth cooperation with more than 30 mainstream car companies, and many car companies have achieved full platform integration. In 2021, HUAWEI HiCar will support more than 100 models, complete integration on more than 30 industry platforms, and support more than 10 million vehicles.