Huawei 2014 Annual Report Download - page 106

104 Huawei Investment & Holding Co., Ltd. 2014 Annual Report
Legal risks: The legal environments in some of the
regions in which Huawei operates are complex. We
strive to fully comply with all local laws and regulations;
nevertheless, legal complexity can make us susceptible
to risks that cause negative effects. Huawei will continue
to assess and respond to such risks.
Trade barriers: Today, Huawei conducts business
around the world. The complex international
economic and financial landscape and increasingly
fierce competition may leave us facing trade barriers
in certain countries. Many factors threaten the free
trade of Huawei products; for example, increasingly
sophisticated trade barriers that include investigations,
hefty anti-dumping and anti-subsidy duties, and various
safeguards that require special product quality and
technical specifications. Huawei has sought to mitigate
risks, but trade barriers may still exist that adversely
affect Huawei's operating results.
Natural disasters: Earthquakes, floods, epidemics, and
other natural disasters may impact certain elements of
Huawei's business operations. However, we can also
contribute to local disaster relief together with local
people and in doing so create new opportunities.
Country-specific risks: Huawei currently conducts
business in more than 170 countries and regions
worldwide. The complex international economic and
political landscape may expose Huawei to particular risks
in certain countries, such as civil unrest, economic and
political instability, sharp exchange rate fluctuations,
foreign exchange controls, sovereign debt crises,
regulations on local business operations, and labor issues.
In particular, tensions between regions, civil wars,
mutual sanctions, or local unrest may greatly hinder
Huawei's business operations and development. To
address these risks, Huawei must have a high aptitude
for risk management. We must closely monitor possible
risks and environmental changes, and take prompt
countermeasures to minimize any impact on our
business.
Operational Risks
Supply continuity: Although Huawei strives to avoid
relying on a single supplier, it is not always possible
to achieve this due to objective factors. Finding
alternative suppliers or redesigning products can be
time-consuming and costly. If a single supplier suspends
its supply or provides substandard products, Huawei's
ability to meet delivery requirements will be severely
compromised. To mitigate this risk, we periodically
assess and audit our suppliers and take preemptive
action to ensure component substitutes or solution
redesigns are available.
Business continuity: As the division of labor becomes
highly globalized, Huawei must rely on third parties
(including companies and professional institutions) for
manufacturing, logistics, and services. If a third party
discontinues its business, Huawei's operations and
business performance may be compromised, either
directly or indirectly. Therefore, we must constantly
improve end-to-end business continuity management to
guarantee our basic interests and those of our customers.
Information security and IPR: While Huawei has
adopted stringent information security measures to
protect its IPR, it is almost impossible to prevent other
companies from improperly using our information,
patents, and licenses. Even if we can resort to IP
litigation to protect our IPR, we may still suffer losses
from improper usage.
Financial Risks
For further information on financial risks, see "Financial
Risk Management" on pages 40 to 42 of this Annual
Report.