Thirty-something Huawei’s recent events continue.
On the morning of March 30th, Huawei Holdings Co., Ltd. announced its 2017 annual report. As a company in the Chinese science and technology circle with an unprecedented volume but has not yet landed on the capital market, Huawei's annual report data has always been of great concern to the industry.
Operators business winter consumer business into the second largest sector
According to statistics, in the year of 2017, Huawei’s overall sales reached a historic USD 92.549 billion (equivalent to RMB 603.621 billion), an increase of 15.7% year-on-year, and cash flow from operating activities was as high as RMB 96.3 billion.
The operating profit for the year was 8.645 billion U.S. dollars (RMB 56.384 billion), an increase of 18.7% year-on-year; the annual net profit was 7.275 billion U.S. dollars (47.455 billion U.S. dollars), a year-on-year increase of 28.1%.
In 2016, Huawei's profit growth was almost stagnant. Compared with the growth of less than 0.5% in 2016, the strategy of prioritizing profit in the past year has been effective.
The increase in profits this time comes mainly from the increase in scale, the improvement of operational efficiency, and the reduction of exchange losses. The financial report shows that in 2017, Huawei's gross sales margin was 39.5%, a decrease of 0.8 percentage point from 40.3% in the previous year.
Compared with financial reports of previous years, the carrier's business is still the area that contributes most to Huawei's overall revenue. In 2017, Huawei’s sales revenue in this business reached RMB 297.8 billion. However, the business growth of operators as the mainstay of income is declining year-on-year: 23.6% in 2016, 21.4% in 2015, 16.4% in 2014, and only 2.5% in 2017. In response, Huawei stated in its annual report: "The business of the operator is affected by the fluctuation of the investment cycle of the market and it still maintains a stable operation. "An analysis suggests that this may have something to do with the pace of advancement of 5G technology." This is not a problem that Huawei has to face, but the entire industry needs to wait for the arrival of the 5G full-scale commercial era.
Huawei's enterprise business has ranked first in growth rate for three consecutive years. In 2017, it achieved sales revenue of RMB 54.9 billion, a year-on-year increase of 35.1%. In 2017, Huawei officially established cloud services as a business unit and established Cloud BU. This will be the focus of Huawei's corporate business in the future.
In terms of consumer business, Huawei shipped 153 million smartphones in 2017, which was among the top three in the world. Its sales revenue reached 237.2 billion yuan, a year-on-year increase of 31.9%. This figure also exceeds the target of RMB 228 billion set by Yu Chengdong, the CEO of Huawei's consumer business, in early 2017.
Moreover, from the perspective of the proportion, the consumer business has become Huawei's second largest business segment with a proportion of 39.3%, which is only 10% worse than the pillar business operator segment.
Some analysts pointed out that with the high growth of consumer business income, it is expected to catch up with the top carrier business in the revenue list in the next few years. Today's mobile phone business has already become a hematopoietic weapon for sales revenue from the initial margin-based division of OEM production and thin paper.
However, Huawei's attempt to enter the US market in the first quarter of 2018 has been repeatedly frustrated. Not only operators such as AT&T and Verizon, but also public channels such as Best Buy began to say no to Huawei's mobile products. Under the environment where the growth of the domestic mobile phone market has peaked, it is no small challenge for Huawei to continue to maintain the high growth of consumer services.
Will earn more money will be divided into per capita annual salary of 68.89 million yuan
The industry has said, "Huawei will make money, it will split the money." This is also the key to Huawei's continued growth and growth. According to the annual report, Huawei's salary, salary, and other benefits paid by employees in 2006 were 106.851 billion yuan, which was approximately 12.7 billion yuan more than that in 2016. In addition there are 17.15 billion yuan in the "time unit plan".
In addition, the annual report also disclosed that currently there are approximately 180,000 Huawei employees and over 160 nationalities. The localization rate of overseas employees is approximately 70%. In terms of 180,000 employees, the annual salary per employee of Huawei was 688,900 yuan in 2017 based on the amount of employee salary, salary, and other benefits, and the amount of time under the project plan.
In addition, according to media reports, Huawei recently held a 2018 gold medal recognition ceremony at Putian Base. Ren Zhengfei, the president, presented awards to 32 gold medal winners and took photos. One employee said with excitement that I worked for Huawei for 8 years. It was a real honour to see my boss and take a picture for the first time. This is even more fun than my $1 million bonus!
It is reported that the Gold Medal Award is the highest honor awarded to employees by Huawei and is intended to reward teams and individuals who have made outstanding contributions to the continued business success of the company. In 2017, Huawei selected 1785 gold medal individuals and 574 gold medal teams. However, only 32 Gold Medal Award-winning employee representatives receive invitation letters each year and are invited to take a photo with Huawei's president Ren Zhengfei at Huawei's Putian base A3 Lake.
In addition, Huawei continued to invest in the future in 2017, with R&D expenditures of RMB 89.7 billion, an increase of 17.4% year-on-year, and R&D expenditures of more than RMB 394 billion in the last ten years.
The change of the board of directors continues the collective leadership model
Along with the annual report, there is also a list of Huawei's new board of directors. Sun Yafang, who was dubbed as Huawei's "Queen" by the outside world, stepped down from the board of directors and withdrew from the board of directors and was taken over by Liang Hua. Meng Zhouwan to replace his father Huawei founder Ren Zhengfei as vice chairman and continue to serve as CFO of Huawei.
The new session of the Board of Directors continues the collective leadership mode, and the rotating CEO system will no longer be operational and will be replaced by the chairmanship mechanism.
For Huawei's new personnel changes, communication expert Xiangli Li analyzed that Liang Hua should be the company’s legal representative, but not the company’s top leader. The company’s top leadership is the rotating chairman, Guo Ping, Xu Zhijun, and Hu Houkun. People are the top leaders during the rotation, and the Moon Boat plays an important role. Yu Chengdong, who has made great achievements in the field of mobile phones, has also become a managing director, indicating that his status has also been greatly improved. Mr. Ren retired to a certain extent, but the status of the spiritual leader is believed to be unshakable, and will not completely withdraw from Huawei's management in a short time. Of course, his management is no longer a specific management, but will affect the direction of development and cultural mechanisms. Huawei is gradually shifting the layout for the leadership.