Tough times are ahead for China, the founder and CEO of the country's largest private company warned employees in a memo seen as unusually candid. In the leaked memo, Huawei founder Ren Zhengfei said the technology company needs to make "survival" instead of growth its main focus for the next few years, the Guardian reports. "The next decade will be a very painful historical period, as the global economy continues to decline," Ren wrote, citing issues including COVID restrictions, the war in Ukraine, and the "continued blockade" of some of its technology by the US and other countries.
"With survival the main principle, marginal businesses will be shrunken and closed, and the chill will be felt by everyone," Ren said, according to financial news outlet Yicai. Huawei, which has seen revenue and profits decline sharply this year, said the email was meant for employees and declined to comment further, reports Reuters. The leaked email went viral in China, with commenters on social media wondering how much pain is in store for ordinary people and small businesses if a giant like Huawei expects to struggle.
Analysts say the email struck a chord in China because there is so little open discussion of the economy and related issues including harsh COVID restrictions, rising unemployment, and a real estate crisis. "It’s rare for companies to point directly to the problem, and people have been waiting for an influential figure who is willing to [break the silence]," Ivan Lam, an analyst at Counterpoint Research, tells the South China Morning Post. He says that while other companies have touched on the wider situation, "they usually focused on their business performance and their optimism for an impending recovery. Apparently people didn’t think that was enough." (Read more China stories.)