China’s Huawei reports sales fall amid US sanctions but profits hit record

Chinese telecoms company Huawei has reported a decrease in sales but record profit for 2021, as its top executive, Meng Wanzhou, made her first public appearance since being released from Canadian custody last autumn.

The Shenzhen-based company said on Monday its net profits surged 75.9% year on year to 113.7bn yuan (£13.6bn), despite US sanctions. But its revenue skidded 29% to 636.8bn yuan, in line with Huawei's previous forecast in December.

Over the past decade, Huawei rose to become the symbol of China's growing technological prowess. When the US-China trade and technology rivalry intensified in 2018, the company was caught in the crosshairs. Former US president Donald Trump had moved to cripple Huawei over security and espionage concerns.

Meng was arrested in Canada in 2018 at the request of the US after being accused of lying to banks in Hong Kong about Huawei's dealings with Iran. The Chinese authorities, in return, arrested two Canadians. Both were freed as Meng went home last year. State media hailed it as a diplomatic victory for China.

The tech firm attributes its profitability to "improved product portfolios and more efficient internal operations". It also said its HarmonyOS was used in more than 220m Huawei devices as of 2021, "becoming the world's fastest growing mobile device operating system".

Huawei is not a publicly listed company, so its accounts are not subject to the same level of audit as companies traded on the stock market.

Speaking at a press conference on Monday, Meng, the company's chief financial officer and the daughter of Huawei's founder, Ren Zhengfei, said despite a revenue decline in the past year, the company's ability to make a profit and generate cashflows was increasing. It was also more capable of dealing with uncertainty, she added.

Meng acknowledged the challenges sanctions have brought to her company. "The multiple rounds of sanctions imposed by the US have significantly affected our business, especially smartphones and PCs," she said. Huawei logged 243bn yuan in consumer business sales - almost 50% down from 2020.

Despite this, the company appeared to be determined that the only way forward is to double down on its investments in research and development. Huawei spent 142.7bn yuan last year on R&D, which was about 22.4% of its total revenue.

Guo Ping, Huawei's rotating chairman, said the company would continue to attract "world-class talent" and double down on its partnerships with top universities around the world to set up joint labs, despite increased level of scrutiny in the west.

"Our fight to survive is not over yet," he said. "No matter what comes our way, we will keep investing. That is the only way forward."

One of the most imminent uncertainties the company must face is the future of its presence in Russia. Vladimir Putin's invasion of Ukraine yet again put Chinese companies under the international scrutiny as western businesses, including McDonald's, pulled out of the market.

"Some countries have come up with policies [vis-a-vis Russia], but they are complex and constantly changing," said Guo, referring to Russian sanctions, adding: "We are carefully evaluating them." He added that Huawei had no plan to promote HarmonyOS in Russia for the time being.