In 2019, Huawei’s biggest external variable in the development process is undoubtedly a crackdown by the U.S. government. The crackdown, while putting the world’s largest telecommunications equipment company on the opposite side of the government of the world’s only superpower and forcing Huawei into the global media spotlight, has also been proactive in its communications with the outside world.
According to Huawei, the impact on overseas revenue from Huawei’s consumer business in 2019 was at least about $10 billion, which is closely related to the inability of Google’s GMS services , with consumer business outside China growing at a rapid rate before May 16, 2019. The fourth quarter recovered slightly.
However, in the interview, Mr Xu also said the Chinese government would not let Huawei kill or ignore Huawei.
It’s the Chinese market that helps Huawei withstand U.S. pressure
On March 31, Huawei officially released its 2019 Annual Report.
In 2019, Huawei achieved global sales of RMB858.8 billion, up 19.1% YoY – compared with 19.5% YoY in 2018, which was essentially flat.
Net profit of RMB62.7 billion, up 5.6% YoY – by comparison, net profit growth was 25.1% in 2018.
From this, we can see that under the pressure of the United States, Huawei on the one hand in the overall business performance of strong pressure resistance, but on the other hand, its net profit has been not small impact.
In terms of Huawei’s three business segments, Huawei’s carrier business achieved sales revenue of RMB296.7 billion, up 3.8% YoY, while its business sales revenue was RMB89.7 billion, up 8.6% YoY, and consumer sales revenue was RMB467.3 billion, up 34% YoY.
It can be seen that in 2019, Huawei’s consumer business, led by Yu Chengdong, has become an engine for Huawei’s overall revenue growth.
In terms of business share, Huawei’s consumer business accounted for 54.4% of revenue, the carrier business was 34.5%, and its enterprise business was 10.4% – the weight of the consumer business has exceeded half.
If you look at the region:
China Market: Business revenue increased by 36.2%, thanks to the growth of the consumer business and the promotion of the business business – it is worth mentioning that the Chinese market accounts for 59% of revenue;
Europe Middle East and Africa region: growth of 0.7%, basically flat – 24.3% year-on-year growth in 2018;
Asia Pacific: A 13.9% decline in revenue was due to fluctuations in the investment cycle of some national operators and the inability of consumers to use the GMS ecology;
Americas: Year-over-year growth of 9.6%, mainly due to the competitiveness of digital infrastructure and mid-range products in the consumer business in Latin America.
As a result, Huawei’s ability to maintain steady revenue growth in 2019 is largely dependent on the vast Chinese market, while the focus is on the consumer business, which is the smartphone market, which is in line with huawei’s smartphone business’s performance in the Chinese market.
Overall, it is the Chinese market that has helped Huawei withstand U.S. pressure.
Huawei’s business highlights in 2019
What business advances has Huawei made at the business level in 2019?
First look at the carrier market, the annual report shows:
By the end of 2019, Huawei’s 5G carrying solutions had been deployed in more than 90 operators worldwide, signing the world’s first 5G SA core network commercial contract in the Middle East region , helping 35 5G operators around the world build 5G boutique networks through2019.
In the enterprise market, Huawei Cloud has more than 200 cloud services and more than 190 solutions, and more than 3 million enterprises and developers are developing in the cloud based on Huawei Cloud. By the end of 2019, Huawei had been chosen as a partner for digital transformation in more than 700 cities and 228 Fortune 500 companies worldwide.
It is worth mentioning that Huawei’s cloud business continues to grow in the enterprise market.
According to IDC’s February 2020 china public cloud service market 2019 Q3 Tracking report, Huawei Cloud Q1 through Q3 2019 has grown by more than 300% in three consecutive quarters in the IaaS-PaaS market.
In China, Huawei Cloud has served government, Internet, automotive manufacturing, finance, genetics and other industries, including more than 30 national ministries, more than 600 government and public utilities, and 30 of the top 50 Internet companies – overseas, Huawei Cloud and partners operate 45 availability areas in 23 geographic regions around the world.
In the consumer-based end business, Huawei’s performance in 2019 has been impressive, specifically:
In 2019, Huawei shipped more than 240 million smartphones, up more than 16% year-on-year, with more than 6.9 million 5G handsets shipped. According to market research firms IDC and Strategy Analytics, Huawei has a market share of 17.6% in 2019, the second largest in the world.
Huawei Mate and P-Series flagship handsets shipped more than 44 million units, up 53% year-on-year and accounting for 18.33% of Huawei’s total shipments.
PC shipments increased by more than 200% year-on-year, with tablets outperforming Apple in Q3 and Q4 shares, while smart wearables business shipments increased 170% year-on-year;
The endpoint cloud service business has covered more than 170 countries and territories, with 6 regional operations centers and 15 data centers worldwide;
With more than 1.3 million registered developers worldwide and more than 55,000 applications integrated with HMS Core, the HiLink platform has accumulated more than 50 million users, access to more than 100 categories, more than 1,000 models, and total IoT connected device shipments of more than 150 million.
In addition, at the research and development level, Huawei invested 131.659 billion in research and development in 2019, accounting for 15.3% of annual revenue, and has invested more than 600 billion yuan in research and development over the past 10 years;
It’s worth noting that in 2019, under pressure from the U.S., Huawei became more open to communication, with more than 4,500 Chinese and foreign journalists, more than 3,000 experts and scholars, more than 1,000 government group visits, and 300 interviews with company executives.
According to relevant statistics, as of early December 2019, Ren Zhengfei has been interviewed, delivered, articles and other external communications up to 40 times.
Xu Zhijun: Chinese government won’t let Huawei kill
In 2020, huawei is a challenge for any company.
In his annual report, Huawei Chairman Liang Hua said the company could face even greater difficulties in 2020, both to overcome the challenges of long-term “physical inventory” constraints and to address the impact of the outbreak.
However, in response to the possible impact of the outbreak, Huawei Chairman Xu Zhijun also revealed at the annual report launch that Huawei’s production activities in China have largely resumed.
So the bigger challenge for Huawei in 2020 could come from the U.S. “entity list” – and, according to Reuters’ March 26 report, the U.S. is formally planning to impose new restrictions on China-based global chip supplies, such as TSMC.
In response, Huawei’s rotating chairman also responded by:
I don’t think the Chinese government will let Huawei kill or ignore Huawei. I believe the Chinese government will also take some counter-measures. Why not ban U.S. companies’ 5G chips and base stations and smartphones and smartphones, as well as smart terminals, from being used in China for the same cybersecurity reasons? Even in this case, Huawei can buy chips from Samsung in South Korea, MTK in Taiwan, and China, even if Huawei makes sacrifices because it can’t produce chips for a long time, i believe there will be a lot of chip companies in China to grow up, and South Korea, Japan, Europe, Chip makers in Taiwan are currently offering chips to develop and produce products.
Mr Xu added that if pandora’s box was opened, it could be a devastating chain to the global industrial ecology, which could destroy more than just Huawei. He also said he expected The Reuters information to be false, or else it would be endless after the meeting – after all, it would be hard for any player in the global industrial chain to be alone.
As a result, how to deal with the challenges posed by the U.S. government in 2020 will probably be Huawei’s biggest challenge.