Huawei posts record result, frets about downturn

14 Jul 2008

Huawei Technologies, the poster child for China's hi-tech industry, has just announced a 48% boost in sales and 32% hike in net profit for 2007.

While admittedly a little slow to be declared, it's an impressive performance in an industry where nearly all of its foreign rivals are making losses.

Of course many would point that it is because of Huawei and crosstown rival ZTE that Alcatel-Lucent, Nokia-Siemens and Nortel wallow in the red.

A clue to its success is surely the relentless drive of CEO co-founder and CEO Ren Zhengfei. A mainland newspaper reports that the ex-PLA officer continues to channel Intel's Andy "only the paranoid survive" Grove.

For the third time in eight years, he warned staff of an impending economic "winter".

"The economic situation will possibly weaken," he said. "I hope that senior cadres have prepared themselves psychologically. 2009 and 2010 may still be even more difficult."

You have to wonder what's "difficult" about the latest result. But that's the style of Huawei's great helmsman. In the last decade he's laid to waste most of his competitors and posted record profit and revenues year in year out. Now he's warning once more about a downturn.

His previous warnings came in the tech boom in 2000, and then during a period of macro-economic change in China in 2004. In neither case did a "winter" emerge, although the company did downsize in 2004.

Now he's mostly worried about the faltering global economy; Huawei now draws more than half of its sales from outside China.

But he's also worried about internal culture and attitudes. The biggest reason for corporate failure, Ren believes, is internal.

His warnings are part of a necessary steeling of Huawei's corporate structure and business practices. Staff need to have "crisis consciousness" to maintain growth and innovation. The next winter is always around the corner.

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