On March 31, Huawei released its 2019 annual report (in Chinese). Net profit increased 5.6% to CNY 62.7 billion, cash flow from operating activities was CNY 91.4 billion, a year-on-year increase of 22.4%. Like all technology players, Huawei leverages its investment on Research and Development (R&D) a lot. In 2019, about 96,000 people were engaged in R&D, accounting for nearly half of the total employees; total R&D investment reached CNY 131.7 billion. As of the end of 2019, the company held more than 85,000 validly licensed patents worldwide.
For three business sectors, consumer business increased by 34%, accounting for nearly 55% of total revenue. Operator business grew by 3.8%, occupying nearly 35% and enterprises business up by 8.6% taking share of around 10%.
Through global regions, China's mainland is still the biggest growth point, with 36.2% sales revenue growth holding nearly 59% of total revenue. The second area is Europe, Middle East and Africa which account for nearly 24%. Asia-Pacific area business decreased about 13.9% to CNY 70.5 billion revenue and America increased 9.6% to CNY 52.5 billion which is the smallest sales revenue proportion.
Since technology is always its core competence, Huawei consisted of developing 5G, cloud computing, its own operating system Harmony OS and many others to welcome the wave of global digital economy. As a leader in global 5G, Huawei established a 5G joint innovation center with operators in Europe, and carried out more than 300 5G vertical industry application exploration projects with global operators and major industry partners.
Several main players in China also have spotlighted on this trend and compete for market share inside and outside China. Except the biggest Huawei, other closing followers including Xiaomi, OPPO, Vivo and others. Last year, Lei Jun, chairman of the Xiaomi Group, said (in Chinese) that Xiaomi will release at least 10 5G phones this year. As China government mentioned 'New Infrastructure' most frequently since this March, and 5G is listed as the main national technology, this digital wace will just be stronger.
Last year was a difficult year for Huawei, the United States put Huawei on "Entity List" in May, Google's parent company Alphabet stopped business and services related to Huawei and so on. And 2020 will face challenges as well since it's still on the blacklist and the COVID-19 pandemic is getting more serious. While Huawei shows strong confidence for the completed and cruel environment, according to the company's chairman of the board, "in 2020, Huawei may face greater difficulties. The challenge of 'Entity List' restriction must also deal with the impact of the epidemic situation. But we are confident to overcome difficulties, continue to move forward and create greater value for customers and society."