Huawei's Annual Award 80,000 per employee

Huawei's microblogging of 12.5 billion yuan issued a year-end bonus, and it suddenly became a "fire". It all looked like a banner of victory. In the microblogging of competitors, some people have already called Weibo a "lethal strike," and "many colleagues are preparing resumes." On January 21st, Huawei's CFO (Chief Financial Officer) Meng Wanzhou announced its 2012 performance forecast in Beijing. In 2012, global sales revenue is expected to reach 220.2 billion renminbi (about 35.5 billion US dollars), an increase of 8%; net Profit was 15.4 billion yuan, a year-on-year increase of 33%. According to Meng Wanzao, the total bonus of Huawei employees is 12.5 billion yuan, a 38% increase from 2011, and senior officials do not participate in dividends.

1. Contrarian growth in 2012

In the past 2012, it was undoubtedly a cold winter for telecom equipment suppliers. Whether it was multinational giants Ericsson, Nosi, Alcatel-Lucent, or China’s ZTE, there were different degrees of declining year-on-year, and ZTE even more. It is expected that there will be a huge loss of 2.5 billion yuan to 2.9 billion yuan in 2012.

However, in 2012, Huawei achieved an inverse market growth, with a net profit of 15.4 billion yuan, which envied its peers. According to Meng Wanzhou, Huawei’s three major businesses basically achieved the expected business performance in 2012: the operator’s business realized sales revenue of approximately RMB160.3 billion, and the sales of consumer services (mainly smart phones) was approximately RMB48.4 billion, in Japan. High-end markets such as North America and Europe achieved breakthroughs, while business operations in the incubation phase also achieved revenue of 11.5 billion yuan.

Regarding the reasons for the growth of performance, Meng Wanzhou said that this was mainly due to Huawei's addition of smart phones, tablet computers and cloud computing services in the past two years. In addition, Huawei also benefits from investments in mobile devices in emerging markets. Huawei's global sales revenue for 2011 was 32.4 billion U.S. dollars, ranking second in the world. Ericsson’s revenue ranked first was 33.2 billion U.S. dollars. In 2012, Huawei’s revenue reached US$35.5 billion. The industry expects Ericsson’s revenue in 2012 may be lower than in 2011. This also means that Huawei is likely to surpass Ericsson and become the world’s largest telecommunications equipment supplier.

Mengwan Boat predicts that the overall revenue of Huawei Group will increase by 10% to 12% on the basis of 2012.

2, there is enough funds to issue the year-end bonus

In releasing the 2012 results, Meng Wanzhou also revealed that Huawei's 2012 employee year-end awards totaled 12.5 billion yuan, up 38% from the previous year. According to the latest number of employees announced by Huawei, more than 140,000 people estimate that the per capita annual bonus is around 80,000 yuan. Once this news was announced, it immediately triggered a hot debate on the Internet. Many netizens relied on Huawei's incentive measures. They believed that Huawei had never forgotten its employees during the year of its harvest, and most of the profits were awarded to its employees, which was helpful to boost employee morale. Some netizens expressed emotion: The year-end awards have the opportunity to work for Huawei."

However, 1.25 billion of the 15.4 billion net profit was taken out for the year-end bonus. There is a voice questioning whether Huawei has such cash flow payments. On this issue, Ms. Meng Zhou disclosed that Huawei’s current asset-liability ratio was 65%. As of December 31, 2012, Huawei had US$12.5 billion in cash on the books, which was sufficient for employee dividends. In addition, Huawei has obtained a credit line of US$33 billion, and Huawei’s funding guarantees are sufficient.

It is reported that Huawei’s dividends are heavily paid while some of the company’s top officials voluntarily gave up the year-end awards. On January 17th, Huawei held a “swearing oath declaration” meeting at its headquarters. Facing hundreds of senior managers from all over the world, Huawei promised to be honest and upright and prevent internal corruption. The company stated that all income from the top level to all backbone layers can only come from Huawei's salary, rewards, and dividends. Therefore, Huawei's high year-end awards also create conditions for eliminating internal corruption at the institutional level.

According to Huawei's regulations, the rotating CEOs Guo Ping, Hu Houkun, Xu Zhijun, CFO Meng Wanzhou, and Huawei CEO Ren Zhengfei and Huawei Chairman Sun Yafang did not have annual bonuses.

3. Increase transparency or IPO

As a communications equipment giant, Huawei has established influence in the world, but Huawei has not been listed. In recent years, news about Huawei's IPO has continued to spread and has been repeatedly denied. According to sources, Huawei intends to choose the IPO in the United States or Hong Kong. However, the company's opacity has always been a major weakness of Huawei, and it has also become a shortcoming that restricts Huawei's IPO. Over the past two years, Huawei has continuously increased the transparency of the company. Some commentators believe that this is Huawei's preparation for overseas IPOs.

At the performance announcement on January 21st, Meng Wanzhou said: “Huawei chose this opportunity today to announce its 2012 results, and it will continue to be announced every year. I believe that we are increasingly aware of the transparency and openness of Huawei. When asked about whether Huawei is ready to go public, Meng Wanzhou’s reply was: “Huawei is open about whether or not to go public. Regardless of whether it is finally listed, we will always abide by the promise of development and transparency. We will refer to the standards of the listed company to improve from me."

According to public information, Huawei is an employee-owned company. Currently, approximately 65,000 employees hold Huawei stocks. Among them, Huawei founder Ren Zhengfei currently holds about 1.4% of Huawei's shares.