2021 is not only a year of freedom for Meng Wanzhou, but also a key node for Huawei to move from a trough to a counterattack.
Text/Liu Fan Intern Liang Yupeng
After returning to China for 184 days, Meng Wanzhou made her first public appearance. On March 28, as Huawei's vice chairman and CFO (chief financial officer), Meng Wanzhou attended Huawei's 2021 annual report press conference and performance briefing, and the most important company financial information for 2021 was also handed over to her. Although Meng Wanzhou has been promoted to CFO for 11 years, this year is the first time that Meng Wanzhou has spoken at Huawei's annual report meeting, and its symbolism is self-evident. 2022 is the year of Meng Wanzhou's fate, and she is already 50 years old and Huawei, 35 years old, have just gone through an extremely difficult but desperate year. Coincidentally, the past 2021 was not only a free year for Meng Wanzhou, but also a key node for Huawei to move from a trough to a counterattack.
In the past two years, due to the continuous suppression of the United States, Huawei's multiple business lines have been under pressure, and it has no choice but to restrain its previous strong posture in various industries and gradually shrink the company's strategy - as Huawei's rotating chairman Xu Zhijun said: "Survive, survive with quality." Has Huawei done this in the past 2021? The first is revenue, and the sharp decline is already expected. In 2021, Huawei achieved sales revenue of 636.81 billion yuan, compared with 891.37 billion yuan in 2020, a year-on-year decline of 28.9%. Specific to the three major businesses, none of them escaped the fate of austerity. The bulk of the drag on overall performance is obviously from the consumer business, which previously accounted for more than half of Huawei's overall revenue, so the consumer business suffered the most in the case of limited chips and so on. In 2021, the consumer business achieved sales revenue of 243.4 billion yuan, down 49.9% year-on-year, and the sale of glory was also included; the operator business also declined slightly, with sales revenue of 281.5 billion yuan, down 6.9% year-on-year. Only the corporate business achieved growth, with sales revenue of 102.4 billion yuan, but only a slight increase of 2% year-on-year. Surprisingly, in the case of a sharp decline in revenue, Huawei's net profit achieved a substantial increase of 73.9% year-on-year, reaching 113.7 billion yuan. As for the reasons, Huawei has pointed out in the annual report: "The increase in net profit is mainly due to the income from the sale of some businesses, the improvement of operating quality, and the optimization of product structure." "Selling should mean glory. Honor was officially sold to a consortium led by State-owned Assets In Shenzhen in November 2020, and the deal should have been finalized last year. Although Huawei did not announce the amount of money to sell Honor, according to the current market value of Xiaomi of 290 billion yuan (the current market value of Xiaomi is at a low level), even if the valuation of Honor is only 1/3 of Xiaomi, it is still worth nearly 100 billion yuan. In this way, Glory has obviously lost a large tube of blood for Huawei. Of course, on the other hand, if there is no blood transfusion brought by glory, Huawei's net profit last year may not be optimistic.
Although revenue has fallen sharply, Huawei has maintained a high investment in research and development, with annual R&D expenditure of 142.7 billion yuan, which is basically the same level as 141.8 billion yuan in 2020. However, due to the sharp decline in revenue, R&D investment also reached a record high of 22.4% of the annual revenue. In an interview with the media after the performance meeting, Guo Ping, Huawei's rotating chairman, also said that Huawei will still recruit more than 10,000 fresh graduates this year. In the middle of last year, Guo Ping said that Huawei is promoting organizational change, still open to absorbing outstanding talents from around the world, and cannot achieve high-quality survival only by reducing food and clothing. Now it seems that Huawei has implemented this point very thoroughly. It can also be seen from the sharp increase in net profit that Huawei has basically achieved "quality survival" in the past year, although the price is to lose glory.
The counterattack began to Huawei "survived", so did the hardest days pass? Or is it time for Huawei to turn from falling to rising? Not long ago, some internal employees of Huawei told ZAKER Technology that many employees believe that 2021 is the lowest point of the company, and many businesses are streamlining or shrinking. However, after adjustment, starting this year, these businesses will be more active in action, including mobile phone business will gradually recover. Reflected at the company level, Huawei has made intensive adjustments during this time. In October last year, Huawei founder Ren Zhengfei and a group of Huawei executives appeared in Songshan Lake, Dongguan, and the Coal Mine Corps, The Smart Highway Corps, the Customs and Port Corps, the Smart Photovoltaic Corps, and the Data Center Energy Corps were sworn in. Just two months later, Ren Zhengfei issued a presidential document, announced the establishment of a corps reserve working group, and appointed 10 reserve corps commanders. The ten reserve corps include interactive media (music), sports health, display core, campus network, data center network, data center base, station and module power supply, airport rail, power digital services, and government affairs netcom.
While it sounds a bit "militarized," the concept is actually referenced by Google. Huawei said that it hopes to break the boundaries of existing organizations through legionnaire operations, quickly assemble resources, intersperse operations, improve efficiency, do a deep job in one area, and be responsible for commercial success, so as to produce more grain for Huawei. In terms of cloud business, Huawei has not only changed a number of CEOs, but also made many organizational structure adjustments. Now HUAWEI CLOUD services place more emphasis on providing comprehensive solutions such as 5G and AI for sub-sectors. Most of the above adjustments belong to the to-B business for enterprises, which is also the only growth sector among the three major businesses in 2021. It is not difficult to see that the enterprise business will be the growth point of China's key layout this year. In the consumer business, although Yu Chengdong, managing director of Huawei, CEO of consumer business and CEO of the smart car solution business unit, said that Huawei's mobile phone will "return the king" next year. But there is still no obvious solution. The biggest growth point of the consumer business still comes from the automotive business. Yu Chengdong said at the beginning of this year that Huawei will challenge the sales target of 300,000 vehicles per year this year, and the annual sales of cooperative car companies will reach 100 billion yuan. However, although there have been many cooperative models released and announced, there are only two models officially listed by Huawei and cooperative car companies. Among them, the Xilis SF5 released in the first half of last year was recently caught in the storm of suspension of production, and the M5 released at the end of last year was only on sale. Now that the first quarter is coming to an end, it is difficult to achieve such a high goal.
From the perspective of the industrial chain, Huawei's intelligent auto parts business has listed more than 30 smart auto parts, and has developed more than 300 industrial chain partners in the past year. The foundation of the automotive business is still quite solid. As for huawei's operator business performance is also the most stable, from 2018 to 2022, sales revenue is basically maintained between 280 billion yuan and 300 billion yuan, and the growth and decline are not large. It is foreseeable that for a period of time in the future, operator business will still be used as a "ballast stone" to stabilize Huawei's basic disk.
Xu Zhijun, Huawei's "destiny of heaven", once told the outside world, "(The senior team) is clear about what is appropriate and what is not appropriate in the survival stage; we are clear about our future, what we should do, what we should not do." Huawei's performance in 2021 confirms this statement. Whether the 50-year-old Meng Wanzhou knows his fate is unknown to others. But Huawei's perception of its own destiny clearly exceeds that of other companies. But as Guo Ping summed up at the performance meeting, "The problems we are facing have not been solved, and Huawei will continue to survive and seek development in 2022." ”