Huawei is cold

Text | Su Jianxun

Huawei likes to summarize its different stages with objects. In 2019, Huawei suffered a series of supply cuts, when Huawei's public activities often saw a photo of a Soviet fighter full of holes - Ren Zhengfei used it as a metaphor for Huawei at that time: the fighter did not crash in history, but successfully returned home because the fuel tank and engine of the core components were not hit.

Today's Huawei, the image is still there, but the reference has changed. On the last day of March 2023, Huawei released its 2022 annual report, and the image of "plum blossoms in the snow" could be seen at the venue of Shenzhen Bantian headquarters, whether it was a presentation of PPT, media cards, or even cold pastries.

Image taken by 36 Kr

"Today's Huawei is like plum blossoms, and plum blossoms are fragrant because she has experienced severe cold tempering." Xu Zhijun, Huawei's rotating chairman, said at the scene.

From the financial data, Huawei is still in the cold. According to data released by Huawei Chief Financial Officer Meng Wanzhou, in 2022, Huawei's annual revenue will be 642.3 billion yuan, a year-on-year increase of 0.9%. Operating profit was 42.2 billion yuan, and the operating profit margin was 6.6%, the lowest level in history.

Image from Huawei's earnings report

From broken fighters to plum blossoms, today's Huawei is no longer full of holes.

Throughout March, Huawei released good news about domestic substitution, first Ren Zhengfei mentioned that "13,000+ devices will be replaced in three years"; At the earnings conference, Xu Zhijun once again announced that Huawei has created the tools required for processes above 14nm in the United Nations EDA (electronic design automation) companies, and will complete full verification in 2023.

Since Huawei was added to the Entity List in May 2019, Huawei has become accustomed to encountering adversity and climbing up again and again. GMS Android was cut off, Huawei sacrificed the Hongmeng system; Without 5G chips, Huawei still released P60 and Mate X3 dual flagship mobile phones with 4G; Chip hardware process is difficult to break through, Huawei from EDA software to find a breakthrough...

This also explains why Meng Wanzhou mentioned R&D investment in a strong way: even if the revenue increase is minimal and profits are stretched, Huawei does not dare to reduce R&D spending for a moment - Huawei's total R&D investment in 2022 is 161.5 billion yuan, accounting for 25.1% of the annual revenue, which is its highest figure in the past decade.

April 1 was the first day Meng Wanzhou became Huawei's rotating chairman. Huawei's rotating chairman is on duty for six months, and Meng Wanzhou's rotation period is from April 1 to September 30, 2023. The rotating chairman is Huawei's top leader during his tenure and leads the company's board of directors and executive board.

"Huawei is the successor of the system, never an individual. Huawei does not tie the fate of the company to individuals. For the role of rotating chairman, Meng Wanzhou said, on the screen behind her, a few plum blossoms were attached to a poem - combing plums after snow is pressing branches, and the spring sun is already shining.

The picture is from the official Huawei

1. Accumulate grain to make income more "resilient"

A significant difference in Huawei's 2022 annual report is that Huawei announced for the first time the revenue of sectors divided by industry portfolio, including digital energy (50.8 billion yuan); cloud computing business (45.3 billion yuan); Smart Vehicle Solution Components (CNY 2.1 billion); ICT infrastructure ($354 billion); Terminal business (214.5 billion yuan).

Speaking of the reasons, Xu Zhijun said in response to media questions on the spot: In the past few years, Huawei has been building a resilient product portfolio, and these businesses are listed separately in the hope that they can better develop in the future.

In the past ten years, Huawei has published performance reports according to carrier business, enterprise business, and consumer business, and it is difficult to see the volume and growth rate of specific services in this extensive way of division, and after the separate list, emerging services such as cloud, vehicle, and digital energy have a greater sense of presence and a more intuitive survival mission.

Breaking up coupled business segments and activating organizational resilience – the internal logic is similar to Alibaba's recent organizational overhaul.

On March 28, Alibaba CEO Daniel Zhang issued a letter to all employees, announcing the establishment of six business groups under the group, including Alibaba Cloud Intelligence, Taobao Tmall Business, Local Life, Cainiao, International Digital Business, and Dawen Entertainment. "Qualified business groups retain the possibility of financing and listing." Daniel Zhang talked about.

Although Huawei is not listed, it also needs to mobilize organizational vitality and increase revenue channels. "We must strive to fight more food so that we can not only survive, but also lay the foundation for future development." Xu Zhijun said at the press conference.

Under the severe situation, Huawei must not only "accumulate grain", but also quickly hand over the report card.

Huawei's Digital Energy, which has the largest revenue in the industry sector, was established in June 2021 and mainly provides software and hardware equipment for data centers, wireless base stations, and photovoltaic infrastructure. In 2021, Huawei ranked second in global inverter shipments.

Around 2020, under the tide of "carbon neutrality" at home and abroad, operators now need to build 5G base stations and data centers, and need to achieve low-carbon/zero-carbon in energy consumption and emissions. According to data released by Huawei, more than 1,000 data centers have been deployed around the world, and more than 340 operators have purchased Huawei's green ICT services.

In the eyes of energy customers, they also need Huawei's refined To B service capabilities.

Wu Xiaoping, executive deputy general manager of Tongwei New Energy Co., Ltd., which is engaged in the construction of photovoltaic power plants, once told 36Kr that a photovoltaic power plant of several hundred megawatts consists of hundreds of thousands of photovoltaic units, which further tests the cost/quality control ability of enterprises for micro units, and Huawei can control the entire project implementation list in "two pages" through SOP standardization.

"Huawei is our number one communication partner, and we understand our customers better than their customers." Wu Xiaoping told 36Kr.

In addition to continuously expanding the industry, Huawei has also set its sights on "small and medium-sized enterprises" that it did not disdain to pay attention to in the past.

On February 28, during Mobile World Congress 2023 (MWC2023), Huawei Enterprise BG announced an important new strategy, Huawei's SME Business Strategy. Chen Banghua, Vice President of Huawei Enterprise BG, said that this year, Huawei will increase investment in the SME market and systematically build capabilities such as "R&D, marketing, sales, supply, and service".

2. "Che" is a clear gun and a hidden arrow, and "cloud" is attracting attention

At the earnings conference, the most tense confrontation came from Xu Zhijun's topic about the "car" business.

"Some departments, individuals or partners of Huawei are abusing the Huawei brand, and Huawei is in the process of verifying." Xu Zhijun's tone was serious, and he continued to reiterate: "Huawei's brand built after more than 30 years will not be abused, Huawei has not built cars, nor does it have any brand of cars." ”

Xu Zhijun's remarks all point to Yu Chengdong, CEO of Huawei's intelligent vehicle solution BU. At 9 a.m. on the day of the earnings conference, Yu Chengdong released a Weibo about the car with the proudness of "HUAWEI Qianjie".

Source: Screenshot of Yu Chengdong's Weibo

36Kr also exclusively learned that on the morning of March 31, Huawei issued a decision-making announcement signed by Ren Zhengfei, once again emphasizing that "Huawei does not build cars" and "is valid for 5 years". At the same time, Ren Zhengfei also put forward strict requirements for the exposure of the Huawei logo in the design of the car, emphasizing that "Huawei" or "HUAWEI" cannot be used in the publicity and appearance of the whole vehicle.

According to the depth of cooperation with car companies, Huawei's automotive business can be divided into three categories: the most shallow cooperation is the sale of parts, such as the Harmony operating system and domain controllers; Secondly, it is the supply of modular solutions, such as Huawei's HI solution, and the representative cooperation is Beiqi Extreme Fox, Changan Avita, GAC, etc.; Huawei is most deeply bound to car companies is the smart car business, and has cooperated with Jinkang New Energy to launch models such as Jinkang Cialis, Qianjie M5, M7, etc., and M9 models have also been exposed.

The smart car model led by Yu Chengdong helped the desperate Cialis to "come back to life", and the monthly sales of the two parties jointly launched the Qianjie model once reached 10,000 units. But no matter how external voices comment, Ren Zhengfei's signed announcement undoubtedly once again shows Huawei's position on the automotive business.

The external environment is grim, and Huawei must also be tough in solving organizational governance problems internally.

It has always been Huawei's practice for those who can take the top position. Even Meng Wanzhou, who is of the same blood as Huawei's founder Ren Zhengfei, reiterated at the earnings conference that Huawei has never been an individual successor, but a collective leader, and she, like the other two rotating chairmen, will be supervised by the board of directors and the board of supervisors.

Organizational change falls on the president of the business group, and there is a clear difference between progress and retreat.

On March 28, three days before the earnings conference, Huawei completed the five-yearly election of the board of directors, adding six new directors, including Zhang Pingan, Zheng Liangcai, Hou Jinlong, Yang Chaobin, Chao Jun, and Ying Weimin. Xu Wenwei (Huawei's "Big Xu" and "Little Xu" Xu Zhijun) and Yan Lida, who had successively served as presidents of Enterprise BG, are no longer directors.

Among them, Zhang Pingan, CEO of HUAWEI CLOUD, was appointed as the executive director. Cloud business, especially public cloud, has been a bright spot for Huawei's growth in recent years, with revenue of CNY 45.3 billion in 2022, a year-on-year increase of 125%. At present, the revenue scale is second only to Alibaba Cloud (77.6 billion yuan) and Tianyi Cloud (57.9 billion yuan) under telecom operators.

Hou Jinlong, chairman and president of Huawei Digital Energy, has also been appointed as a new director, and its business segment revenue in 2022 (50.8 billion yuan) even exceeds that of HUAWEI CLOUD (45.3 billion yuan), and Ren Zhengfei repeatedly mentioned the digital energy business at an internal meeting in August 2022, saying: "Huawei Digital Energy needs to strengthen its combat team and increase investment in strategic opportunities." ”

After 2019, Huawei's annual report release almost every year will be overshadowed with a tragic background. But four years later, Huawei also has to find a bright color in the gray - new business, new revenue, new leaders, Huawei is still a technology giant with hundreds of billions of cash flow, as Meng Wanzhou said: we still exist and will continue to exist. We may not succeed, but how can we not succeed if we are born to die?