A New Year Message for 2024: Stay Grounded for Steady and Long-term Growth - Huawei

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Stay Grounded for Steady and Long-term Growth

A New Year Message for 2024
Ken Hu, Rotating Chairman
Ken Hu

After years of hard work, we've managed to weather the storm. And now we're pretty much back on track. In 2023, we expect to wrap up the year with over 700 billion yuan in revenue. Our ICT infrastructure business has remained solid, and results from our device business surpassed expectations. Both our digital power and cloud businesses are growing steadily, and our intelligent automotive solutions have become significantly more competitive.

On behalf of the company, I'd like to thank our customers for your ongoing trust and support. Thanks to our partners across the value chain for standing with us through thick and thin. And I'd also like to thank every member of the Huawei team for embracing the struggle – for never giving up. And, of course, we can't forget our loved ones, everyone who has provided their quiet and unfailing support along the way. Thank you all. Shared conviction has helped us break the siege and forge ahead together.

Throughout the past year, our sales and service teams have worked incredibly hard to meet customer needs and ensure stable and secure network operations around the world.

In China, typhoons raged along the coast back in July, severely damaging communications infrastructure in many locations. We worked side-by-side with our carrier customers to rapidly get networks back online.

In Europe, despite significant challenges in the local market, our data storage team managed to win over a customer with an outstanding solution, earning highly favorable recognition.

In Indonesia, our local delivery team managed to rapidly deploy a communications network along the Jakarta-Bandung High-Speed Railway in only 120 days.

In Burkina Faso, for a project spanning hundreds of kilometers of rivers and lakes, our veteran delivery team traveled to every single site and completed all construction work before the rainy season took hold.

In Latin America, a customer's network was overloaded, so they requested an urgent network expansion within 26 days. Our delivery team overcame all manner of difficulty to make the impossible possible.

Thanks to the hard work of our R&D, supply, and other teams, we have made further progress in business continuity and technological leadership. We have resumed large-scale supply of smart devices, switched more than 200 subsidiaries over to our own MetaERP system, and are already seeing large-scale commercial use of our computing solutions. Our basic software, including openEuler and GaussDB, has been adopted in multiple industries, and our self-developed HongMeng Kernel was granted the highest-level security certificate in the industry.

Hard work has enabled us to survive and grow, but we still have serious challenges ahead of us. Geopolitical and economic uncertainties abound, while technology restrictions and trade barriers continue to have an impact on the world. Together, these forces are reshaping business models and the global value chain.

No matter what changes we see in the external environment, we firmly believe that digital, intelligent, and low-carbon transformation will continue to be the predominant development trend around the world. We need to maintain strategic focus, fully leveraging the collective strengths of our business portfolio, our ability to innovate, and our grasp on complicated hardware and software platforms. This will allow us to keep providing our customers with high-quality products and services alongside our ecosystem partners.

We need to proactively embrace this window of opportunity and invest our limited resources in the most critical strategic domains. In recent times, breakthroughs in foundation models have been transforming AI from scenario-based customization at a workshop level to large-scale development and application at an industrial level. Growing adoption of foundation models will demand an incredible amount of computing power. So we need to build a leading computing backbone to help all industries thrive.

In 2024, all business units should focus on creating value and growing the harvest.

Our ICT infrastructure business is the company's ballast, and needs to continue serving in this role. That means making the most of its advantages across domains like computing, storage, and networking, and leveraging its systems engineering capabilities to provide end-to-end support for the digital and intelligent transformation of industries. In particular, our carrier business needs to more effectively support the business success of our customers by helping them boost data traffic, innovate new services, and drive network evolution.

Our device business needs to double down on its commitment to developing best-in-class products and building a high-end brand with a human touch. The device business should also work with partners to accelerate the development of native HarmonyOS mobile apps, achieve historical breakthroughs in the HarmonyOS ecosystem, and provide consumers with an inspired experience across all scenarios.

Huawei Cloud should aim to become the company's digital backbone, enabling all aspects of our operations, while providing all industries with a trusted platform that helps them grow and flourish.

Digital Power needs to keep enhancing product quality and honing its competitive edge to seize low-carbon opportunities, contribute more profit to the company, and keep driving rapid, sustainable growth.

Our Intelligent Automotive Solution business needs to keep working closely with partners to translate its technological advantages into business success.

All business units should keep inspiring confidence while avoiding blind optimism. Everyone needs to effectively identify risks – paying special attention to inventory risks – and boost operating efficiency.

Quality is our lifeline. We must ensure the security and stability of networks and platforms through end-to-end quality management. Networks are becoming increasingly complex, and digital and intelligent products are seeing broader, more in-depth adoption. Quality has become a key factor in our customers' decision-making process. So we need to make quality our core competency and take concrete action to build quality products.

We have built up significant experience and capabilities in quality management over the past 30+ years, and we need to adapt this experience to address the unique characteristics of different business domains. We should also share these capabilities with our suppliers, channel partners, and ecosystem partners. Through end-to-end quality management systems and capability development, we can provide our customers with competitive, high-quality products and solutions.

Ecosystem development is crucial for growth in our computing, enterprise, consumer, and cloud businesses. Like any company, Huawei has limited capabilities, so we should focus on the products and services that we do best.

We are working to develop strong platform capabilities. This requires matching the right technologies with the right scenarios, working very closely with our partners, and cultivating thriving ecosystems. To make this happen, we need to change our mindset and focus more on open collaboration. We need to combine strengths across the industry and work to help others succeed. Partner and ecosystem development needs to be a long-term strategy.

At the same time, we need to crack the hard nuts: focus on developing foundational ICT technologies and building up our capabilities in complicated software and hardware platforms. We should open up these capabilities and provide them as platform services to our partners. This can help them to maximize their own strengths in developing scenario-based solutions. And together, we can promote shared success.

Our overall strategic direction is clear. We will continue to streamline HQ, simplify management, and ensure consistent policy, while making adjustments where needed. We will continue to delegate operational authority to field offices, whereas our budget management will be centralized. When it comes to operations management, all business units need to rapidly build awareness, strengthen their capabilities, and assume end-to-end responsibility. We will continue to push forward with our transformation project for contract reviews and conclusions at the rep office level, giving rep offices the autonomy to manage operations and make their own decisions.

The company will continue optimizing appraisal and incentive policies to promote collaborative operations and value sharing between different business domains. With talent transfer policies, we will encourage mature businesses to proactively transfer their outstanding managers and experts to new business domains, like computing, cloud, and digital power. This will help new businesses to quickly build up their organizations, seize new opportunities, and achieve high-quality growth. This will also allow mature businesses to refresh their talent mix and present their people with new development opportunities. An organization brimming with vitality and aspiration will have inexhaustible drive and potential.

As the company moves forward, our managers need to keep up with the times and never stop improving. They need to have both the courage and ability to fight for success. Managers should have a clear strategic direction and approach, and develop solid operations maps accordingly. They need to rapidly update their knowledge and skills for new businesses and technologies, and shoulder greater responsibilities, in order to succeed in key markets at critical moments.

We are optimizing our manager selection policy to put more emphasis on contributions and results. We will stick with our manager selection mechanisms while implementing the resumé system. In essence, generals have to work their way up the ranks, and we will identify the right candidates based on their contributions in the field.

Only those who have made solid contributions will be assessed at the company level. Our purpose is to enable more people with stronger contributions to emerge and grow. We want to build up a team of managers who can take charge of modern operations and lead the company to new levels of success.

We need to keep working on the business environment, compliance, as well as cyber security and privacy protection, in order to protect our lifeline and better support business development. We have to be aware that changes in the business environment are not caused by geopolitical conflict alone, but also by fluctuating global economic cycles. We should approach these changes rationally, work to better understand the industrial policies and requirements of different countries and regions, and make positive contributions where we can.

Compliance is essential for the company's development. The more volatile the business environment, the more we need to focus on compliance management and risk control. At the same time, cyber security and privacy protection are the cornerstones of our ongoing business development. We need to keep building on our end-to-end governance system to continuously provide our customers with secure, trustworthy, and resilient products and services. Our approach has always been to customize internal policy for different countries. And we'll stick to this. But we also need to replicate and promote best practices more broadly, adapting them to different situations. All in all, we need to keep our feet on the ground and engage in pragmatic communication to win the trust and support of customers and other stakeholders.

The more we experience and reflect, the stronger we become. In the past, we didn't give up in the face of mounting pressure, nor did we allow ourselves to get carried away in a swell of growing praise. The road ahead is still bumpy, but history favors those with firm beliefs.

We need to continue to forge ahead and unite as many people as possible. Together, we can overcome any challenge. As long as we keep our feet on the ground, we will move ahead steadily towards greater success. Great people create great times, and we're laying the groundwork for more heroes to emerge and shine.

Happy New Year!

December 29, 2023