Revealing the record that made “everyone shudder” of Mr. Nham Chinh Phi: Huawei is nearing a crisis

A leaked internal message from Ren Zhengfei, founder of Huawei Technologies Co., has gone viral on Chinese social media due to predictions about the future.

Nham Chinh Phi’s internal recording caused a fever on Chinese social networks (Photo: AP)

The leaked transcript, first published by China’s Yicai news agency on August 23, paints a bleak picture of a world headed for a recession. The memo urges Huawei employees to focus on the survival of the company and give up optimistic thinking.

Huawei has refused to confirm this record, but according to some sources cited by SCMP, it is accurate.

“The next 10 years will be a painful period in history, when the world economy enters a recession…Huawei needs to abandon all overly optimistic forecasts and make survival an important goal. within the next three years,” Nham wrote.

He also said that Huawei’s budget for 2023 needs to stay more reasonable, must shrink or close unprofitable businesses in the next few years, and adjust the market structure. Huawei should properly position employees, evaluate performance, company finances, and inventory.

This is not the first time that Ren, 77, has reminded Huawei employees that the company is headed for a crisis. Huawei’s rotating chairman, Eric Xu Zhijun, for 2020 and 2021 has also repeatedly said that the company’s goal is to survive US sanctions that prevent it from accessing technology derived from Huawei. America, for example smartphone chips.

However, Ren’s new warning comes amid new challenges, as Beijing is implementing a zero-COVID policy, despite the Chinese economy is in its worst shape in decades. Huawei also saw its revenue decline further in the first half of 2022, down 5.9% year-on-year to 301.6 billion yuan ($44.7 billion).

This record has sparked controversy on Chinese social media because it provides a realistic forecast of China’s economic outlook and also offers an appropriate business strategy in that context, and here it is. These are very honest words, according to Ivan Lam, an analyst at Counterpoint Research.

“It is rare for companies to get to the point of such a direct matter, and one has been waiting for a business leader to be willing to speak out like this,” Lam said. “Many business leaders have mentioned the macro environment when talking about business results, but they are often more focused on business operations and optimism.”

The memo has become a hot topic on Weibo, with many saying Ren’s words “make everyone shudder.”

“The economic slowdown has caused an unprecedented challenge to the majority of ordinary people and private companies in China,” one of the most viewed comments on Weibo, wrote. “When a giant like Huawei raises this issue, they talk about the severity of the problem.”

Many other internet users criticized Mr. Nham for his decision to cut bonuses for employees who did not meet revenue targets. “Most employees don’t get the rewards they deserve when the company is doing well, so don’t be cold to us,” one person commented.