As a well-known technology company in China, Huawei has experienced many challenges in recent years. Taking operating profit as a key indicator, for example, the amount of profit in the past three years has been a roller coaster ride, with sharp fluctuations.
According to publicly available financial data, Huawei achieved a profit of 64.6 billion yuan in 2020, but in the next two years, the profit fluctuated significantly, with 113.7 billion yuan in 2021, but last year it was suddenly **, leaving only 35.6 billion yuan.
This figure is even lower than the 36.9 billion yuan in 2015, a difference of 1.3 billion. So why did Huawei's operating profit decline so sharply in just one year?
Huawei's main business is smartphones, with sales reaching 500 billion yuan in 2020, accounting for 54% of total revenue. However, in 2021, Huawei's mobile phone business was severely affected by the inclusion of the United States in the Entity List, especially in the European market.
Huawei has achieved a net income of about 57.4 billion yuan through its Honor and Super Fusion businesses. If you deduct the impairment of more than 20 billion yuan in the operator's business, Huawei's profit increased by 49.1 billion yuan in 2021, which is why Huawei's profit soared to 113.7 billion yuan in 2021.
If you don't take into account the revenue of mobile phones and other businesses, Huawei's profits will decline in 2021.
1.In addition to the mobile phone business, Huawei's other businesses such as 5G base stations and enterprise networks have also been hit hard, which has had a negative impact on the company's revenue.
2.Over-reliance on the electronics technology industry and specific regional markets is an important reason for Huawei's declining profits. Although Huawei has a high market share in the domestic market, it has not performed well in overseas markets, resulting in an over-concentrated business.
3.At the same time, Huawei's business is mainly concentrated in the electronics industry, which makes the market too narrow and difficult to expand into new business areas.
After an in-depth analysis, it was found that Huawei was severely constrained by the external environment. Under the pressure of negative news such as 5G construction competition around the world and sanctions imposed by the United States**, it is not easy for Huawei to maintain its original growth rate.
All these factors have had a huge impact on Huawei's business expansion, which in turn has led to a year-on-year decline in profits. Although Huawei has repeatedly emphasized that it does not build cars, it has cooperated with a number of new energy companies, invested more than US$3 billion in smart car solutions, established cooperative relations with more than 300 industry chain partners, and has a R&D team of 7,000 people.
In the long run, the smart car business will be one of Huawei's core businesses, but if it fails to achieve the expected growth, Huawei will face serious challenges.
In short, Huawei's declining profits year by year are caused by a combination of factors: the decline of its core business, the constraints of its business structure, and the challenges of the external environment.
Although Huawei will face great difficulties in the future, due to its years of accumulation and continuous innovation in the market, Huawei still has sufficient strength and capabilities to maintain its business competitiveness and future development prospects.