Exclusive: Despite Sanctions, Huawei’s Ren Zhengfei Says Company Profits Increased Last Year

What’s new: Huawei Technologies Co. Ltd. posted revenue and profit growth in 2020 despite U.S. sanctions, founder Ren Zhengfei said at the firm’s annual conference this month, according to an internal memo obtained by Caixin.

Ren said that Huawei needs to put more effort into R&D to overcome the difficulties.

As for supply chain issues, he said that Huawei should continue to pursue its “1+N” strategy, with “1” referring to domestic partners and “N” referring to international ones. He said that the company needs to have good relationships with suppliers from the U.S., Japan, Europe, the U.K. and Taiwan.

Huawei also needs to improve its software development, Ren said. “It will be hard for us to just rely on hardware to keep our leading position in the world in the future,” he said.

The background: The former U.S. Trump administration placed Huawei on a Commerce Department blacklist in May 2019 that banned it from buying components from American companies on national security grounds. The ban and follow-up sanctions effectively cut off Huawei’s access to semiconductor chip supplies and caused the Chinese telecom giant’s global smartphone sales to plunge.

Earlier this month, Ren publicly said that he hopes the new U.S. administration will have an “open policy” to allow the company to buy “large volumes” of U.S. equipment and materials.

Chinese state councilor and Foreign Minister Wang Yi said on Monday at a forum in Beijing that China and the U.S. should work together to reopen a dialogue and “build up goodwill” to repair their damaged relationship.

Under former President Donald Trump, Washington aggressively sanctioned Chinese enterprises like Huawei, ByteDance Inc.’s short-video app TikTok and Tencent Holdings Ltd.’s social messaging app WeChat. It was part of a broader effort to unpick some of the complex supply chains linking the world’s two largest economies.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

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Matthew Walsh contributed to this report.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editors Marcus Ryder (marcusryder@caixin.com) and Flynn Murphy (flynnmurphy@caixin.com)

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