Huawei to cut 10,000 jobs
- By Lu Na
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E-mail China.org.cn, June 1, 2012
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A Huawei Technologies Co Ltd booth at a trade show in Beijing. [Photo/China Daily] |
Facing circulating rumors on China's most popular microblogging site Sina Weibo that Huawei Technologies Co. Ltd was cutting 10,000 jobs, and that the list of names of employees to be laid off had been delivered to each department, several company insiders confirmed on Thursday that Huawei had been planning the layoffs for a long time. However, the sources said neither the layoff notice nor the list of names had been delivered.
One insider said that the reason for the layoffs was the shrinking overseas market. In 2011, Huawei started to use the rotating CEO system. According to the same 2011 annual report revealing the management change, the company that year also hired 30,000 new employees – accounting for 21 percent of the company's total (140,000) – in order to meet its developmental needs in network services for both corporate clients and individual customers.
"The competitors for corporate clients mainly include Cisco, Juniper, IBM and HP and the competitors for individual customers include Apple, Samsung, HTC, Nokia and ZTE," the insider said, commenting that even though Huawei is cutting jobs, competitors also may not fare too well (due to similar business climates).
Another insider said that the layoff will begin with overseas employees and then move on to domestic ones. Departments such as the ones managing the company's network of business partners will have fewer cuts. This source also pointed out that the Huawei's normal business operations are not looking too well: In 2011, the company's international business revenue increased only 3 percent, lowest over the years according to the annual report; so restructuring was inevitable.
The insider said there are five main reasons for this round of layoffs: "First, the company has invested a lot for two new business groups: network services for corporate and personal clients. It has direct impact on cash flow and net profit; second, the company's core business revenue has shrunk; third, the company hired more people than its actual needs; fourth, it failed to break into the U.S. market, which continues to be controlled by Ericsson and Alcatel-Lucent; finally, the its management services had not been marketable.”
The source continued: "Simply said, [Huawei] did not grow where growth was needed, while its new businesses are in their early stages of implementation and could not provide any returns, so job cutting is unavoidable. However, the people who make real contributions to the company would not be let go unless the company breaks down."
In 2011, the net profit of Huawei was 11.65 billion yuan (US$1.83 billion), down 52.9 percent from the previous year and was the biggest decline in five years due to a number of reasons including the general slowdown of the industry's development. According to the annual report, the income of overseas markets still accounted for 70 percent of the company's total.
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