Ren Zhengfei CEO Of Huawei: $30B Hit From U.S. Blacklist “Very Small”

The following are excerpts from a CNBC EXCLUSIVE interview with Huawei CEO Ren Zhengfei and CNBC’s Dierdre Bosa, which aired today Wednesday, June 19 throughout CNBC’s Business Day programming. The interview took place at Huawei’s campus in Shenzhen, China. Video from the interview is linked to below.

Video and full transcript below.

Ren Zhengfei Camera issues with Huawei P30

soyvanden / Pixabay

Huawei CEO Ren Zhengfei: Expect to See Some Slowing of Growth… $30B Hit From U.S. Blacklist “Very Small”

Huawei CEO Ren Zhengfei: We can withstand the US crackdown from CNBC.

Ren Zhengfei

REN ZHENGFEI’S TRANSLATOR: If $30 billion is impacted, then we can reach around 100 billion U.S. dollars. In the financial statement by May, I saw that we’re still growing at a relative 20%. We expect to see some slowing of the growth, but we haven’t seen that yet. But we are making adjustments internally. So, we project there might be a slowdown, but until yesterday’s report I didn’t see any slowdown. And we don’t know what will be the growth by the end of the year. But we believe the 30 billion U.S. dollars will be a very small thing. And we can withstand that we’re not a public company. We don’t attach very importance to high numbers. We focus on the performance, the quality of the performance.

Huawei CEO Ren Zhengfei: We can withstand the U.S. Crackdown
Video: https://www.cnbc.com/video/2019/06/19/huawei-ceo-ren-zhengfei-exclusive-interview-us-blacklist-revenue.html

REN ZHENGFEI’S TRANSLATOR: For consumer business, because of changes in the market, the 40% maximized decline was the number – was the highest number we had at one time. And the growth is picking up. And the decline is down to around 20% in overseas markets. So, profit margin is quickly recovering, climbing up. So, once again, the impact on the consumer business is not a big one.

Huawei CEO Ren Zhengfei: We can still buy U.S. Parts if companies get government approval
Video: https://www.cnbc.com/video/2019/06/19/huawei-ceo-ren-zhengfei-the-us-ban-on-huawei-hurts-the-us-and-china.html 

DEIRDRE BOSA: Two years from now are you still buying the same amount of components from the U.S.?

REN ZHENGFEI’S TRANSLATOR: Maybe even more. They can’t– for all these years, American suppliers have contributed to Huawei. If we do not buy from them when we can, then that will be a blame on our conscience. But however, we are not to blame. Now there is a restriction on us to buy from them. Actually, until today we’re still placing orders to American suppliers. They just– those suppliers have to ask approval from Washington. If they get approval, we can still buy from them. If they don’t get approval, then we have to find other ways.

Huawei CEO Ren Zhengfei: Attacking us hurts U.S. and China

Video: https://www.cnbc.com/video/2019/06/19/huawei-ceo-ren-zhengfei-the-us-ban-on-huawei-hurts-the-us-and-china.html 

REN ZHENGFEI’S TRANSLATOR: I don’t know why an American company report to U.S. government all the time. We don’t need to do that. We just pay the taxes.

DIERDRE BOSA: The export ban against Huawei is already having an effect on American companies that sell to you. We’re seeing it in their forecast for revenue profits in the year ahead. Are they talking to U.S. officials on Huawei’s behalf? Are they trying to lift the export ban or at least win some exemptions?

REN ZHENGFEI’S TRANSLATOR: I think—are they able to actually lift this kind of ban? I– I don’t know. Attacking Huawei is painful for both sides. So, it’s revenue jobs here and so it is also jobs on the American company side. They are a listed company. It’s a bigger impact. We are not lesser company, so we don’t need to show them the same kind of responsibility. It’s also benefit of not being listed.

Huawei CEO Ren Zhengfei: I would take President Trump’s call
Video: https://www.cnbc.com/video/2019/06/19/huawei-ceo-ren-zhengfei-i-would-take-president-trumps-call.html

REN ZHENGFEI’S TRANSLATOR: Of course, I would like to pick it up. We can communicate and achieve cooperation– to achieve win, win. Because information market is very big and we don’t know how big can it be. Let’s work together to build an informed the society. We can all contribute because U.S. is still– very leading and advanced and Huawei will only be able to be leading in a very focused area. However, on the wider scope, the United States is still the leading one. So, we should work together to build and contribute the information in society.

Huawei CEO Ren Zhengfei: If biz declines, we’ll ask Alibaba, Tencent to step up
Video: https://www.cnbc.com/video/2019/06/19/huawei-ceo-downplays-30-billion-revenue-hit-from-us-ban.html 

REN ZHENGFEI’S TRANSLATOR: Then we should ask Alibaba and Tencent to work harder, so they can step in to make more contributions to the country. We don’t have pressure on our shoulder and I think this time, this issue is a test for us. If we weather the storm, then we will get stronger. So, what doesn’t kill you will get you stronger. In China, we say the phoenix will rise from the fire and the bird that doesn’t get killed by the fire is phoenix. And we believe in this big fire will address this issue at our hand.

Huawei CEO Ren Zhengfei: Many subsidiaries outside China… Abide by local regulations
Video: https://www.cnbc.com/video/2019/06/19/huawei-ceo-downplays-30-billion-revenue-hit-from-us-ban.html 

REN ZHENGFEI’S TRANSLATOR: We have plenty of subsidiaries outside China. In every country, we abide by local laws and regulations. We have subsidiaries across 170 countries around the world. And they are independent subsidiaries. But setting up those subsidiaries is not trying to prove to politicians. Instead it’s to fully comply with laws, regulations, and the laws of UN and international laws. So those subsidiaries abide by local laws and regulations. I do not have any intention to prove to politicians.

Huawei CEO Ren Zhengfei: Google would see a loss
Video: https://www.cnbc.com/video/2019/06/19/huawei-ceos-exclusive-interview-with-cnbc-on-trumps-tech-ban.html

REN ZHENGFEI’S TRANSLATOR: Google and us are standing in the same lines of interest. If Google systems are not installed in our devices, there would be billions of users lost for Google. And they would also see loss in many aspects and we don’t have their systems, our revenue would drop too. So, there would be things we’d have to shoulder too. So, this is an issue of shared interest.

Huawei CEO Ren Zhengfei: Advocating for U.S. access would be a waste of our effort 

DEIRDRE BOSA: Do you think that it’s appropriate for U.S. companies like Google, Facebook, and Twitter to be banned in China while you advocate for access to the U.S. market?

REN ZHENGFEI’S TRANSLATOR: No. Restricting Huawei into the U.S. market, well, that is the action taken by sovereign state. What does that have to do with Huawei?

DEIRDRE BOSA: You’re not advocating for access to the U.S. market?

REN ZHENGFEI’S TRANSLATOR: No. That will be a waste of our effort.

Huawei CEO Ren Zhengfei: Europe still welcomes our business 

REN ZHENGFEI’S TRANSLATOR: Despite the heavy pressure, they still trust Huawei. Once this pressure is lifted, then there will be huge significant amount of the request of demands coming from customers. And by that time, our question will be: can we have the sufficient capability to answer to all those demands?

DEIRDRE BOSA: Mr. Ren, you’re already losing customers across the world. Australia has banned Huawei equipment.

REN ZHENGFEI’S TRANSLATOR: Australia, in terms of our business, is relatively a small market. It’s not even as big as the neighboring city. Even if they welcome us–we might not go there.

DEIRDRE BOSA: Europe is a big market and one of your most important. They are considering the same measures.

REN ZHENGFEI’S TRANSLATOR: No. No. I don’t think so. Europe still welcomes us.




About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and three kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own 2.5 grams of Gold