On March 28, Huawei held its 2021 annual report conference in Shenzhen, releasing its 2021 performance data. One of the very interesting is that in 2021, Huawei realized revenues of 636.8 billion yuan, a year-on-year decline of 28.6%. A drop of close to 30% can be said to be an unheard of phenomenon.
We can see that Huawei's operating cash flow realized 59.7 billion yuan, compared with last year, improved by 69.4%. A very good cash-to-income ratio was maintained. As of the end of 2021, the balance of cash and short-term investments totaled RMB 416.3 billion, up 16.5% year-on-year. Huawei is doing much better in this area than many large companies that are now living on debt and don't have any internal source of growth.
Huawei's business continues to suffer from U.S. suppression and sanctions
This refers mainly to the Western countries for Huawei's chip sanctions, due to the inability to produce new self-developed chips, Huawei in the end of 2020, Huawei sold its own subsidiary, "glory". The company sold its subsidiary "Glory" at the end of 2020, and since then Huawei's cell phone shipments have fallen out of the top five of China's cell phone sales. At the same time the chip's limitations are not only limited to cell phones, but also Huawei's routers and network switching products, which used to be the heavyweight of the income yearly revenue as well.
Huawei's 5G business has encountered a bottleneck
Huawei has been laying out its own 5G program since the beginning of 2018 and has taken the strategy of advancing both domestically and abroad, which has just begun to have a very significant effect, but with the unfolding of the U.S.-China conflict and the trade war, Huawei's overseas market The company has also encountered bottlenecks in its overseas business, with many of its previously contracted projects terminated due to pressure from the United States. At the same time, the domestic 5G market has been built in 2020, due to the lack of a better supporting application scenarios. So the promotion of 5G applications has also been greatly restricted. These have affected the promotion and sales of Huawei products.
The ongoing impact of the epidemic
The global epidemic has entered its third year, and the impact of the epidemic has penetrated deeper into everyone's lives, as economic activity has been greatly inhibited, and the ultimate transmission down to the gradual decline in personal consumption and business production inputs. This also directly affects the production - sales - reproduction of this complete industrial structure, Huawei as a technology manufacturing enterprises are also one of the links, it is difficult to be spared by the impact of this objective factors.
Of course, Huawei is now prepared for the decline in revenues, we can see from the following three points:
One, Huawei is now holding a large amount of cash flow, which is in the predicament of the bottom of the move.
We can see that Huawei's operating cash flow realized RMB 59.7 billion, a 69.4% improvement compared to last year. A very good cash-to-income ratio was maintained. As of the end of 2021, the balance of cash and short-term investments totaled RMB 416.3 billion, up 16.5% year-on-year. Huawei is doing much better in this area than many large companies that are now living on debt and don't have any internal source of growth.
Second, increase investment in research and development, at all times do not forget to attract outstanding talent to join the enterprise
From the 2012 to 2021 nearly ten years of R & D investment data can be seen, in 2013, Huawei's R & D investment accounted for the proportion of the entire scale of revenues is 13.2%, to 2021, R & D investment accounted for the proportion of the whole scale of revenues has reached 13.2%. In 2013, Huawei's R&D investment accounted for 13.2% of its overall revenue, and by 2021, it will account for 22.4% of its overall revenue. Huawei's R&D investment has been ranked second in the world. It is this R&D capability that ensures that Huawei still has decent products that can be brought out to continue to occupy the market when it is being attacked from all directions. At the same time, Huawei's annual salary of 700,000 per capita is still the place where outstanding students aspire to be, and Huawei's establishment of the talented youth class to provide the strength for the continuous development of its enterprises. In addition, we also seem to Huawei 2021 to reduce the cost of sales expenditure of 100 million, and these savings are invested in research and development, is to put the good steel are used on the knife edge.