Ren’s roadshow continues as Huawei warns of job cuts

Huawei Founder Ren Zhengfei has prepped his employees with a warning of ‘hardship’ and job cuts in the future.

In an email to employees, seen by the Financial Times, Ren has laid out an ominous prediction for the firm. The eras of 3G and 4G came too easily for the business and the extraordinary success which has fuelled Huawei’s domination over the last few years should not be expected as the firm enters the 5G frenzy.

“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 in the email.

Huawei confirmed to Telecoms.com the email was sent out to employees, though stressed that this is not necessarily new rhetoric from the management team. Over the last couple of months, Ren has been open with employees over the challenges in the future, while this email should be seen as a further step in this communication to re-iterate market conditions will make life for Huawei more difficult that it has become accustomed to.

Having started life in 1988, Huawei’s growth over the last two decades has been astronomical. Passing revenues of $1 billion roughly 20 years ago, the firm exceeded $100 billion in 2018, with the Consumer business group rumoured to have overtaken the Carrier business group as the biggest. Of course, dominance in the 4G era created this position of comfort to allow the Consumer business group to launch its assault on the global smartphone market.

Although this is one of the few examples of Ren being directly quoted in the media, the content of the email should hardly come as a surprise considering trends over the last couple of months.

“5G cannot possibly become as easy as 4G,” said Ren. “Maybe a mine will go off here and there. And even if there won’t be a big explosion all over the place, we will still need to feed 180,000 staff. Wages, salaries and dividends amount to over (US) $30 billion a year.”

Specific numbers have not been detailed, though Ren seems to be readying the troops for what could be a difficult few years fighting against currently unvalidated accusations and suggestions of nefarious behaviour.

Along with the US, Australia, New Zealand, Taiwan, Japan and South Korea, Germany looks to be the next country to block the commercial intentions of Huawei. The Federal Office for Information Security (BSI) has previously stated it would not ban any companies from participating in the 5G frenzy without proof, though there are other factors to consider. Deutsche Telekom certainly wants to stay on the good-side of the US with a certain merger still not greenlit.

This is certainly not going to be the end for Huawei, but this communication from Ren confirms one thing to the world; Huawei truly realises how serious this situation has become and commercial contracts will be much more difficult to win in the future.