Huawei Technologies posted a 76% net profit growth last year, despite challenges such as the United States tech sanctions and the Covid-19 pandemic. Chief Financial Officer Meng Wanzhou, who was detained in Canada for almost three years, spoke at a Huawei conference, her first public appearance since returning to China in September last year. Meng quoted a Chinese proverb to describe her feeling: “One day in the middle of the cave, thousands of years in the world. I am trying to catch up with the rapid change and development,” she told the conference.
Huawei said it will increase research and development investment significantly, including recruiting 10,000 new employees this year. In 2021, Huawei posted revenue of CNY636.8 billion, compared with CNY891.4 billion in 2020. Net profit was CNY113.7 billion. Huawei is passing “the darkest zone,” Meng said, adding that “we have become more united.” The revenue of Huawei’s consumer business group, which includes smartphones and the Internet of Things (IoT) devices, reached CNY243.4 billion last year, down nearly 50%. Despite a revenue slump in 2021, Huawei’s ability to make profit and generate cash flow is increasing, making it more capable of dealing with uncertainty, she added. The company’s R&D expenditure hit a record-high CNY142.7 billion last year, representing 22.4% of its total revenue.
But Huawei admitted it is facing challenges due to the Covid-19 outbreak and U.S. tech sanctions, which have impacted its consumer business for smartphones, tablets and other devices. The sanctions have made it difficult for Huawei to obtain chips and key components it requires for some businesses. According to market research company Counterpoint, the company’s smartphone market share fell below 4% since the first quarter of 2021, compared with its peak of 20% in the April-June quarter of 2020.
Instead, Huawei has invested more in other sectors like cloud and software as well as emerging sectors like autonomous driving. It has also developed its own operating system HarmonyOS. In the past two years, Huawei has recruited more than 26,000 employees. Talent, scientific research and an innovative spirit are three key sectors that Huawei will depend on to survive and “reshape the ICT industry,” said Guo Ping, Huawei’s former rotating Chairman.
In the past five years, Huawei has had huge lead over other Chinese firms in terms of invention patents. It is followed by Oppo, BOE, State Grid and TSMC, according to PatSnap, a third-party patent consulting firm. In 2021, Huawei’s research spending accounted for 22% of its revenue, compared with 13.2% in 2013. Huawei’s total R&D expenditure over the past decade totaled more than CNY845 billion, the Shanghai Daily reports.
Meanwhile, Chief Financial Officer (CFO) Meng Wanzhou was named one of three rotating Chairpersons of the company, replacing Guo Ping. The three Executives, Xu Zhijun, Hu Houkun and Meng, will rotate to chair the company's Board of Directors and Executive Committee every six months. The current rotating Chairman is Hu.
