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A leaked internal memo by Huawei's founder Ren Zhangfei that outlined his company's bleak position has stirred up concern in China about a possible economic crisis.

"No more stories, we have to talk about the realities,” the memo stated, according to the South China Morning Post (SCMP).

"We have to survive first, and we’ll have a future if we can survive."

In the memo, Ren told employees they should expect a "chill", and that Huawei would focus on profit and cashflow, over revenue for the next three years.

Ren also said Huawei would scale back or divest from non-core businesses, indicating job cuts.

According to The Guardian, the 77-year-old CEO cited the pandemic, the war in Ukraine, and the U.S.'s "continued blockade" on some Chinese businesses as reasons for global economic downturn.

"The next decade will be a very painful historical period," wrote Ren.

SCMP reported that the memo indicated Huawei was in "crisis management mode".

In 2021, the company's headcount dropped by 2,000, while revenue shrank in the first half of 2022 with a 5.9 per cent year on year decline to 301.6 billion yuan (S$61.18 billion).

In addition, its net profit margin was 5 per cent, having stood at 9.8 per cent for the same period in 2021 — a stark contrast from the days when Huawei had overtaken Apple and Samsung as the global leader in smartphone sales.

Concerning for the whole of China

Sometimes referred to as China's largest firm, Huawei's struggles also signal the possibility of wider struggles in the country's economy.

According to The Guardian, China is not expected to reach its economic growth target of 5.5 per cent this year.

The company also previously found itself caught in the middle of rising U.S.-China tensions.

Members of the Five Eyes intelligence sharing network, Britain, Canada, New Zealand, Australia and the U.S., have banned Huawei from accessing their 5G networks over concerns that it could compromise national security, lead to the theft of corporate secrets, or put political dissidents in danger.

Ren previously claimed that he would not help China spy on the U.S. "even if required by law".

Online, the memo — which The Guardian reported was shared and discussed by more than 100 million users on Chinese social media — sparked alarm from some over what it could mean for Chinese people and small businesses.

One comment on Weibo quoted by SCMP read: "When a giant like Huawei is raising this issue, it speaks volumes about the severity of the problem."

Speaking to The Guardian, Trivium China analyst Linghao Bao said that Ren's words stood out because he sounded like he was in "panic mode".

"In addition, it’s a politically sensitive time right now. We’re just a couple of months away from the 20th party congress. As you know, economic performance is tied up with the party’s legitimacy."

Top photo by Wang Zhao/AFP/Getty Images