Ren Zhengfei's declaration of survival

On August 23, some media reported that Huawei's internal forum launched an article on the afternoon of the 22nd about "the company's business policy should shift from the pursuit of scale to the pursuit of profits and cash flow".

Ren Zhengfei said in this article that the global economy will face a recession and a decline in spending power, and Huawei should change its thinking and business policy, shift from pursuing scale to pursuing profits and cash flow, and ensure that it survives the crisis in the next three years. Taking survival as the most important program, the fringe business has shrunk and closed across the board, passing the cold to everyone.

In fact, Mr. Ren just said the truth that others don't dare to say, and although other business owners didn't say so, they were clear in their hearts, and they didn't have The confidence of Huawei.

Everyone can understand that before the final exam, the teacher told everyone that it was difficult for everyone to prepare mentally, and at this time, a top student pessimistically told everyone that the exam might not be good.

After the results were released, everyone's grades declined, but the results of this honor student were still among the best.

What should really be worried about is actually those students who have not achieved very good grades, but often these students are still very confident that they feel that they have a hundred points of homework after being reminded by the teacher, and they are not dumbfounded until the results are out.

At present, Huawei's main profit channels are three blocks, the first is for operator services (5G-related ICT communication equipment, etc.), the second is for consumer services (terminal consumer electronics), and the third is for government and enterprise services (cloud services, digital platform construction, etc.).

Among the above businesses, the first is the business line started by Huawei, but it is now at the peak of revenue, although it has the support of officials and operators, but there will not be much room for growth in the future.

In fact, consumers are also hesitant between 4G and 5G, although 5G has the advantage of hard conditions, but under the comprehensive experience, consumers mostly feel that 4G is easy to use.

It can only be said that the excessive success of 4G has caused difficulties in the promotion of 5G now, plus the technical impact brought by electromagnetic wavelengths, etc., and the promotion of 5G is not as smooth as imagined.

The second line is greatly affected by trade sanctions, the mobile phone business revenue continues to decline and even affect the normal operation of Huawei, coupled with the decline in sales caused by sluggish consumption, this line is destined to be too tight in the future.

Huawei has considered entering the semiconductor manufacturing business and obtaining manufacturing capabilities by developing its own localization, but there is no clear further progress at present, Huawei may underestimate the difficulty of manufacturing and the degree of burning money, or as a design service company, Huawei does not want to get involved in the manufacturing industry with low profit margins and large investment.

In fact, other domestic mobile phone manufacturers are also in the tight days, even because of excessive dependence on mobile phone business, but not As strong as Huawei.

And after the decline in Huawei's terminal business, the market has not been occupied by friends, but cheapened Apple's domestic market and Samsung's overseas market, which is not good news for our country.

Mobile phone products themselves have also begun to enter the bottleneck period of development, caught in the "increase in the amount of no price" of the internal volume competition, the room for progress has not been large, terminal companies need to think about the transformation of the route.

The third line is Huawei's current growing business line, thanks to Huawei's strong technical strength and good government relations, this line will increase steadily in the future, digital new energy, digital agriculture, smart city and other construction have Huawei's participation.

But the increase in revenue for corporate and government services does not fully offset the potential risks posed by the decline in the previous lines.

And in this business line, although Huawei has technology, it is most likely the role of Party B, which needs to meet the needs and challenges of Party A, and the difference between Party A and Party B basically understands that Huawei should not want to completely become the role of Party B.

As for revenue expansion such as financial services, Huawei is at a disadvantage compared with other Internet companies, and the supervision of this area after the ant incident is also more stringent, and the growth space is relatively limited.

At present, Huawei's main transformation direction is business transformation and the other is the transformation of management mode.

In terms of business transformation, it is mainly the second line, that is, the transformation of terminal goods, the development of smart wearables, smart home appliances, automobiles and driving services and other fields, reducing the dependence on mobile phones.

Because this route can use its own accumulated user groups, and for terminal manufacturers, the technical difficulty of these products is not higher than that of traditional electronic products such as mobile phones and computers, and the project route can also be roughly borrowed.

However, this road is destined to be very fierce competition, such as smart wear, home appliances, car manufacturing these routes are also the direction of other terminal manufacturers to try, but also to face the traditional car companies and tram new forces of market competition, Huawei on this road does not have obvious advantages.

Coupled with Huawei's more tendency to embed its own services in the automotive field, Huawei can bear less capital flow risk than other companies that make their own cars, but it also means taking into account the opinions of other companies.

The transformation of the management model is to change the problems caused by the disorderly expansion in the past, and to develop in the direction of refinement and cash flow protection.

Because of the upward trend of domestic economic development in the past, most domestic enterprises are developing in the direction of spreading the pie, extensive management, large companies have many diseases, employees generally complain about long working hours, and most of the time is spent on meetings and prevarication.

This practice can easily lead to a lot of waste of funds, in the case of economic stagnation, it is easy to have cash flow risks, and when some black swan or gray rhino events come, the building will collapse is often an instantaneous thing.

In the future, all major manufacturers should reduce unstable or poorly competitive businesses, expand cautiously, and focus on maintaining their core profit points to ensure their own cash flow.

Of course, for employees, this also means possible shrinking treatment, poor promotion prospects, and the risk of layoffs.

In view of the disease of these large companies with many meetings and complex processes, the route of other Internet manufacturers is to simplify administration and delegate power, that is, to delegate power to middle-level and grass-roots managers, so that some of the meeting losses of upward reporting and departmental docking can be reduced.

Huawei's route is "legionization", which is to take the project to be done as the guide, gather many different departments, sort out their respective rights and responsibilities first, and then form a legion to jointly take charge of the project.

This practice is similar to the operation of setting up a leading group or a special case group in the system, gathering some departments and units involved in matters, communicating their respective rights and responsibilities first and facilitating liaison, so as to avoid problems such as non-cooperation of some departments when the follow-up project is promoted.

Let's just say that, personal opinion, for reference only.