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March 1, 2017

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Huawei employees face likely job losses

STAFF at China’s Huawei Technologies Co are bracing for possible job cuts amid intense pressure to improve earnings as an executive said the flagship smartphone business has missed internal profit targets.

Huawei faces challenges after losing its top spot in China, the world’s biggest market, to new contender Oppo last year.

Huawei’s mobile unit missed an internal profit target for 2016 even though revenues exceeded targets, Richard Yu, head of its consumer business division that includes mobile device operation, said during the Mobile World Congress in Barcelona this week.

“It is still profitable but the profit margin is very low,” Yu said of the unit that contributes around one third to the group’s revenue.

In an internal memo sent last Friday, Huawei Group founder and CEO Ren Zhengfei urged all employees to work hard, saying the company would otherwise “fall apart.”

“Thirty-something strong men, don’t work hard, just want to count money in bed, is that possible?” Ren said in the memo. “Huawei will not pay for those that don’t work hard.”

The remarks have unnerved some of Huawei’s 170,000-strong workforce, 45 percent of which are in research and development, a division said by Huawei staff in online communities to be most insecure.

“Everybody is nervous,” said a 36-year-old engineer in Huawei’s consumer business unit who declined to be identified. “We are now all thinking more of the next steps, realizing permanent employment with the company is no longer a given.”

According to company insiders, Huawei maintained its 5 percent annual quota to eliminate the worst performers, but was seen indirectly pushing underperformers out by asking them to relocate to undesirable posts.

“Huawei does not have layoff plan,” the company said in an e-mailed response.

In another sign of profit pressure at Huawei, which is unlisted and collectively owned by some 80,000 employees, the company cut its dividend to 1.53 yuan (22 US cents) per share in 2016 from 1.98 yuan a year earlier, according to a shareholder source.



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