The founder of Huawei admits that the company is in a moment of “life or death”

Huawei founder Ren Zhengfei during an interview in Shenzhen on Tuesday.

The employer has urged his workers to form “squadrons of command” to create new projects and thus avoid a reduction in salary or dismissal

The founder of Huawei, Ren Zhengfei, warned on Monday through an internal statement that the company is in a “time of life or death” and has urged employees with low workload to form “command squads “to explore new projects. Workers who fail in their entourage will receive salary cuts every few months and may even lose their jobs, the billionaire said.

Since May, Huawei has occupied the awkward position of being blacklisted in the United States — Entity List — which prevents it from trading with US suppliers. Despite receiving 90-day moratoriums, the last one announced Monday, the uncertainty caused by US sanctions has already cost the company a lot. Even if Huawei finally saves itself from the entry into force of the veto, the impact of this summer’s turmoil will be widespread and painful.

Huawei’s most immediate loss is the international smartphone market. The company’s internal estimates show that it expects to sell 60 million fewer phones in 2019 than it would have done without US impositions. In 2018, Huawei increased its mobile shipments by 34% to 206 million, according to IDC data, and in the first quarter of 2019 its pace accelerated to a 50% improvement, while its rivals Samsung and Apple saw sales every time minors For the second quarter, partially affected by US sanctions, Huawei’s growth is estimated to decline by 8.3%.

Having successfully penetrated the European mobile market, Huawei was on its way to becoming the largest phone seller in the world. But the loss of Google’s Android operating system, which gives access to Play Store applications, made Huawei devices undesirable outside of China.

Ren has urged in the statement that employees who do not have high utility should find a way to change their situation. “Or they form a squadron of command to explore new projects, in which case they could be promoted if they do well, … or their salaries will be reduced every three months,” he warned.

The consumer division is, according to Huawei, its growth engine. Representing 45% of its revenue last year, the business that sells phones and other devices is critical to Huawei’s future health, and has received a serious reputational blow for all the charges and sanctions imposed against it. That will not be repaired in the short term.

In addition, there is the waste of software engineering time, as the company was forced to advance the creation of a replacement for Android. Following the veto, Huawei had more than 10,000 developers working in three shifts 24 hours a day to eliminate the need for Google software. This is how Huawei ended up rushing its HarmonyOS this month, only to demonstrate that it can code its own operating system, although it convinced very few people that it has something similar to an alternative to Android.

Less quantifiable but still significant will be the loss of talent that Huawei suffers from the fogging of its global reputation and the excess work that results from its efforts to recover. The company has reduced its workforce in response to its new circumstances.

Ren wrote that the company’s priorities are for employees to perform “meritorious actions” and for management “to promote outstanding employees as soon as possible and infuse new blood” into the organization.

In announcing the new extension of the moratorium on sanctions against Huawei, US Secretary of Commerce Wilbur Ross said that many US companies are “dependent” on Huawei so they are given 90 more days to “unlink.” But although this is a respite for the tech giant, its situation will continue to be very precarious, something that the founder has underlined.

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