Huawei makes first management shuffle in six years

Huawei Technologies has promoted Sabrina Meng Wanzhou, its chief financial officer (CFO) and daughter of company founder Ren Zhengfei, to vice-chairwoman as part of a broader reshuffle that once again shone a light onto the unique management structure at the world’s largest telecommunications equipment supplier. 

Meng will become one of four executives holding the vice-chair role and will remain as CFO, according to a Huawei spokesman. Her father in turn relinquished his vice-chairman role, while retaining his chief executive title as the company elected a new board for the first time since 2012 amid setbacks to its expansion into the US.

Under a rotation system, vice-chairmen Guo Ping, Eric Xu Zhijun and Ken Hu Houkun previously took turns every six months as rotating chief executive, working alongside Ren. With the reshuffle, the three executives will no longer rotate as chief executive, but will instead rotate as chairman, working alongside a permanent chairman, Howard Liang Hua. 

The reshuffle at the company Ren founded in 1987 has left some analysts puzzled.

While Ren, 73, has been adamant that none of his family members would succeed him in leading Huawei, Meng’s additional role as vice-chairwoman would seem to put her in the line of succession.

It was unclear how Huawei’s new rotating chairman system would help the company, according to Bryan Ma, a vice-president at technology research firm IDC, following its previous rotating chief executive process.

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“This is a time for management to hunker down and move forward after its recent setbacks in the US,” Ma said.

Huawei’s management reshuffle has come after the company found itself at a crossroads in the US, the world’s largest economy, where the expansion of its network equipment and smartphone businesses have been stymied by security concerns over the firm’s ties with the Chinese government.

In January, mobile network operator AT&T walked away from a deal to distribute Huawei’s smartphones in the US because of “political pressure” over security worries. Verizon Communications had also abandoned plans for a smartphone distribution pact with Huawei for the same reason, according to reports.

Last month, Republican senators proposed a bill to block the US government from buying or leasing telecommunications equipment from either Huawei or ZTE Corp.

Electronics retailer Best Buy last week was reported to be winding down its sales of Huawei’s smartphones in another blow to the Chinese firm.

IDC’s Ma said ZTE’s smartphones, in contrast, are sold more widely in the US.

Huawei’s hopes of expanding in the US are looking bleaker as trade tensions between China and the US escalate. The administration of US President Donald Trump proposed last week an estimated US$60 billion tariff package against imports from China.

Last Friday, a Wall Street Journal report said the Federal Communications Commission (FCC) was contemplating a new rule to prevent small and rural mobile network operators from receiving federal subsidies if they adopt products from Chinese companies such as Huawei and ZTE.

Although Huawei and ZTE’s share of equipment in the US wireless network market remains insignificant, the FCC action would prevent them from gaining any more share, especially with the roll-out of next-generation of 5G mobile services in the next few years.

Both Huawei and ZTE declined to comment on the report.

In light of recent developments, Ma said there was no way of knowing how decisions at privately held Huawei decisions will be made under its latest approach to collective leadership.

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Hong Kong-listed ZTE, the world’s fourth largest telecommunications equipment maker, conducted its own senior management reshuffle in 2016, several months before it agreed to pay US$1.2 billion in fines for breaching US sanctions against Iran and North Korea.

Despite its difficulties in the US, Huawei targeted to achieve revenue worth US$102.2 billion this year, up from an estimated US$93.7 billion last year.

Ren founded Huawei after he retired from the Chinese armed forces 35 years ago in 1983, when the government disbanded its engineering corps.

Born into a rural family in a remote mountainous town in the southwestern province of Guizhou, Ren joined the army’s engineering corps, where he set up a chemical fibre factory and rose to the equivalent rank of a deputy regimental chief, according to his official biography at Huawei.

This is a time for management to hunker down and move forward after its recent setbacks in the US

Bryan Ma, vice-president at IDC

Liang, who has worked at various roles in Huawei since joining the firm in 1995, was elected last week as the company’s new chairman. He replaced Sun Yafang who has retired after working there since 1989.

The new board appointments, which took immediate effect from March 23, consisted of 17 regular members and three alternate members, and reflected Huawei’s tradition of collective leadership, according to the company.

Huawei is expected to announce its latest annual financial results in Shenzhen this Friday.

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