(Yicai Global) April 4 -- Ren Zhengfei, the founder of Huawei Technologies, has shared his views about the Chinese telecom giant's consumer and carrier business strategy for the next few years on the Shenzhen-based company's publishing platform.
Consumer Business Reform
Huawei Consumer Business Group is undergoing a strategic structural transformation. Huawei must turn its product lines into bestsellers to seize market opportunities. So it needs to cut down some other product lines. The CBG should be open-minded during the development and help the company relocate redundant personnel to help it avert excessive layoffs in other departments as well as external recruitment. The firm has issued a document to stop external recruitment for general positions, and even punish those who aim to do so without consent.
The CBG must not cut down its research and development investment amid the reform and it must keep on moving forward. Quality and service are top priorities. The CBG must also actively guarantee its supply and financing systems. The unit must treat quality as the lifeline of all products. No quality, no future.
The CBG will also hone its strategic focus. Huawei has granted the CBG independence along with good hopes of its structural adjustment by setting up a lean management style. If a company diversifies its portfolio too much it will disperse its strategic power, and the result is a weak position easily surpassed by others. In fact, the CBG has no solid foundation as the final products are doomed to have a shelf life of just one generation, perhaps spanning three years. If others are better, they will surpass Huawei's CBG in three years. So the foundation is user habits.
Does the CBG have a strategic position? Yes. It does not depend on technology but user habits. An information society can have many standards, but people have habits. If you can cultivate a habit of using Huawei's networks and equipment, it will become deeply rooted in people's lives. That's when Huawei will have a strategic position and a place to stand.
Huawei will focus on the reform of Huawei Carrier Business Group, and the company must truly make the unit into a global strategic strength. Why? Firstly, the US picked Huawei's CNBG system as its first target for attack. Huawei is only one or two years ahead of the world, according to its rotating Chief Executive Xu Zhijun. The firm has no special bestselling products, and no strategic threats. Others will catch up with Huawei in only two years.
Huawei's carrier business has a great strategic position for the company. The future of the information society is based on a cloud. The foundation of this cloud society is connection and computation. Huawei is already the first in the world in terms of connection. It will also strive to catch up and live up to the public's expectation in the field of computation. Therefore, the company has very high requirements for the CNBG which is under great pressure. Everyone knows that CNBG has more staff, more senior experts and managers than other departments. The CNBG's personnel may enjoy fewer bonuses than others, but they must be more motivated to work.
R&D Spending USD100 Billion in Five Years
Huawei sticks to the "troika" driven by the three forces of leading technologies, the law and public opinion under the current circumstances to seize the final victory. The first engine is R&D and the market. The company must truly achieve technology and product leadership under the guidance of the board of directors and standing committees.
If the CBG gains a sales revenue of USD150 billion by 2023, the company will receive a total revenue between USD250 billion and USD300 billion. In this case, the firm needs to invest USD100 billion in R&D over the next five years to refashion its network architecture in order to meet the European Union's General Data Protection Regulation requirements for network security.
Editor: Emmi Laine