Ren Junfei, the billionaire founder of Chinese smartphone and telecommunications giant Huawei. Said his company needs to focus on survival and let go of unprofitable businesses. As the global economy will enter a recession over the next decade, due to local media reports.
The 78-year-old tycoon gave a stern warning in an internal letter first released by China’s financial information center Yicai. And now widely reported in local media, including the state-owned Securities Times. Ren, believed to have amassed a net worth of $1 billion from his private company Huawei. Did not specify which companies would be shut down. A Huawei spokesman declined to comment.
The once reclusive tycoon, meanwhile, has also urged Huawei to abandon. Its pursuit of scale and revenue growth and focus instead on cash flow and profit generation. According to the letter, global consumption will “broadly” decline and see no reversal over the next three to five years for various reasons. Including the pandemic and the effects of war.
“Profits and cash flow are expect to increase even as sales fall,” the billionaire wrote. “I will encourage people to fight to win and let everyone feel the cold.”
Huawei said earlier this month that first-half profit fell 50 percent year on year to 15.1 billion yuan ($2.2 billion), while revenue fell 6 percent to $44 billion. The company, which reports its financial results regularly despite being privately owned, report a 25% year-over-year decline in phone sales. While revenue from the company’s carriers and software increased.
In addition to US sanctions imposed since 2019 that have restricted the company’s access to critical technology, including Google’s Android operating system. Huawei is now grappling with China’s shrinking smartphone market. IDC said that shipment in the second quarter fell 14.7 percent to 67.2 million units. A sharper decline than the 8.7 percent decline worldwide. The consultant attributed the weakness to Covid-19-related restrictions. And weak consumption in China and forecasted demand to remain weak in the year’s second half.