Huawei 2015 Annual Report Download

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Table of contents

  • Page 1
    .[G]KO/T\KYZSKTZ .URJOTM)U2ZJ  'TT[GR 8KVUXZ

  • Page 2
    ...? We create value for our customers. Together with telecom carriers, Huawei has built over 1,500 networks, helping over one-third of the world's population connect to the Internet. Together with our enterprise customers, we employ agile enterprise networks, including open cloud networks, to drive...

  • Page 3
    ...Acting CEO Business Highlights in 2015 Five-Year Financial Highlights Message from the Chairwoman 100 120 140 Corporate Governance Report Sustainable Development Abbreviations, Financial Terminology, and Exchange Rates 14 19 51 52 97 Industry Trends Management Discussion and Analysis Independent...

  • Page 4
    ... demand for a better experience while protecting carrier investment in 4G. We have built over 280 commercial networks with our 400G core routers. Having implemented our Product + Service strategy, we now support the operations of over 1,500 networks globally, serving more than one-third of the world...

  • Page 5
    In our consumer business, annual revenue grew by over 70%, securing a position for Huawei among the top three global device companies in terms of market share. This revenue growth is attributable to the robust growth of our mid-range and high-end products, our rapid development in high-end overseas ...

  • Page 6
    ...and high quality leads to a larger market share. In addition to high-quality devices, we must also increase our investment in services. Our ultimate purpose is to establish an effective service system and develop highly efficient service teams at different levels of the organization to support rapid...

  • Page 7
    ... innovation in business and technology, and foster a healthy industry ecosystem that supports fair competition, collaboration, and shared success. For our partners, we are in the process of establishing open labs to support joint innovation and reduce time-tomarket for new services. For developers...

  • Page 8
    ... mobile broadband connections to provide a better service experience, and support a 1 Gbit/s access rate. We will also support 1 billion cellular IoT connections and enable ubiquitous networks to connect everything. Achieving these goals will require innovation in technology and business models...

  • Page 9
    ... of their legacy assets. Specifically, we introduced 5G technology to optimize carriers' existing 4G network infrastructure and bring about higher speeds and a better user experience. Through this, we have helped carriers tap into vast new markets and develop more new services. Huawei is an active...

  • Page 10
    ...aggregate SaaS, and develop a leading cloud operating system, Big Data platform, and PaaS platform based on software platforms and enterprise cloud services to create an open cloud ecosystem. At the end of 2015, the number of Huawei's enterprise cloud partners exceeded 500. Working together, we have...

  • Page 11
    Five-Year Financial Highlights 2015 (USD Million)* Revenue Operating profit Operating margin Net profit Cash flow from operating activities Cash and short-term investments Working capital Total assets Total borrowings Owner's equity Liability ratio 13,711 57,319 4,464 18,339 68.0% 89,019 372,155 28,...

  • Page 12
    ... Pole. There are still major gaps, however, in broadband penetration and ubiquitous connectivity. At this very moment, Huawei is driving innovation in technologies and products such as LTE, Narrowband Internet of Things (NB-IoT), and 5G to bridge these gaps and build a Better Connected World. 10

  • Page 13
    ... or data. To meet these needs, we have forged extensive partnerships with consulting firms, app developers, system integrators, and channel partners. And through this commitment to openness, collaboration, and shared success, we will create value for our customers, enable digital transformation...

  • Page 14
    ... and management experience, we engage in a number of public service activities with governments, customers, and non-profit organizations. We support ICT innovation; participate in green initiatives and traditional cultural events; promote the development and training of local ICT talent; and...

  • Page 15

  • Page 16
    Industry Trends A Better Connected World: Driving Global Progress

  • Page 17
    ...operations platforms in order to manage and share both services and resources from end to end. Cloud data centers will deliver critical support in this aspect. Connectivity as a basic human right The heartbeat of humanity will soon be as much digital as it is physical. The mobile Internet is a game...

  • Page 18
    ...with strong buying power. Focusing on the new generation of consumers, device vendors will create greater value for users by providing personal services through smart devices that offer convenience, customization, and seamless mobility across scenarios. Wearables are cutting the user-device distance...

  • Page 19
    ... enterprise ICT spending plans. With their capacity to centrally provide services and share massive data, storage, and computing resources, cloud platforms will deliver significant gains in service efficiency. And the larger the user base, the lower the cost, which means better returns on investment...

  • Page 20
    .... And open-source hardware will open up excellent hardware development platforms to makers - tech enthusiasts fond of creating new devices. They will catalyze innovation in ICT hardware. integrated resources from the entire ecosystem. These services will include digital assistants that can help...

  • Page 21
    ... Huawei in Svalbard, Norway Management Discussion and Analysis 20 22 23 28 33 36 43 46 47 49 Our Value Propositions Business Review 2015 Carrier Business Enterprise Business Consumer Business Research and Development Cyber Security Openness, Collaboration, and Shared Success Results of Operations...

  • Page 22
    ... is committed to helping carriers increase net work capacit y, optimize net work management, and enable Internetized operations. As part of this goal, Huawei has continuously innovated new architectures (such as SoftCOM) and new technologies to deliver cutting-edge products and solutions that enable...

  • Page 23
    ... a support system to a production system, becoming one of enterprises' core competences. Huawei is committed to providing innovative onestop ICT infrastructure. As part of this drive, we deliver cloud data center infrastructure and digital infrastructure solutions to help customers maximize resource...

  • Page 24
    ... 2015, Huawei achieved significant results from its focus on the pipe strategy. The company achieved sustainable growth in the carrier, enterprise, and consumer businesses. Its annual revenue totaled CNY395,009 million, a 37.1% increase over the previous year. CNY Million Carrier Business Enterprise...

  • Page 25
    ...: Big Video - Everywhere, Big IT - Enabling, Big Operation - Agile, Big Architecture - Elastic, and Big Pipe - Ubiquitous. We provide end-to-end SoftCOM solutions for these five Big Initiatives. In addition, by focusing on openness, collaboration, and shared success, Huawei is committed to working...

  • Page 26
    ... their plans to increase investment in fixed broadband services. We launched our Gigaband development strategy, and encouraged industry players to work together to achieve the goal of building ultra-broadband networks that cover 90% of the world's population and enable a In September 2015, Huawei...

  • Page 27
    ... of digital services. We developed the Universe Big Data analytics platform based on the management of customer assets to help carriers transform toward digital operations and enhance the user experience. â- We provided data center integration services for 255 cloud data centers, and helped...

  • Page 28
    ... their network assets. A survey published by Frost & Sullivan ranked Huawei number one in the 2015 SDM market. Our flexible, real-time, and converged SmartPCC solution meets user demand for a differentiated service experience, and won the Best Traffic Management Solution award at the Policy Control...

  • Page 29
    ... Telecom Global partnered with Huawei to build over 20 cloud sites worldwide and extend the coverage of public cloud services to enterprise â- customers around the world. â- Our innovative, intelligent MTS solutions helped Telefónica and América Móvil build sites and operate efficiently. As...

  • Page 30
    ...helped IE, a power company in Nigeria, build a smart power consumption system. The solution dramatically reduced electric wire losses caused by non-technical reasons, and helped IE operate more efficiently. â- Huawei's Financial Cloud and Big Data solutions have been adopted by over ten mid-sized...

  • Page 31
    ... enterprise market: â- Worked with Telefónica to help CEPSA, the largest oil company in Spain, achieve digital and smart development for flow manufacturing. In March 2015, its Huawei l at e s t showcased innovations at CeBIT, the world's largest ICT trade fair. With the theme of Innovative...

  • Page 32
    ...(CMA) as a new security business model to protect against DDoS attacks. To date, over 2,000 customers worldwide have deployed our Agile Network Solution. According to reports released by IDC, the market share of our data center switches grew the fastest worldwide. Following our enterprise router and...

  • Page 33
    ... to successfully build an efficient SDN-ready cloud data center network. â- Our Agile Controller has been officially deployed on a commercial basis and adopted in multiple projects worldwide. In May 2015, Huawei held the Huawei Network Congress 2015 (HNC 2015), themed "From Agility to Imagination...

  • Page 34
    ... the enterprise business we had more than 8,000 channel partners and 350 solution partners worldwide. We have firmly implemented transparent and stable channel policies, and provided strong support to our partners in the areas of training, joint solution innovation, marketing, finance, supply chain...

  • Page 35
    ... and help develop ICT talent. We are also actively participating in and building an open ecosystem and working with our partners to provide services to our customers. New IT technologies, cloud architecture, IoT, and Big Data in particular, are reshaping enterprises' IT systems and business models...

  • Page 36
    ... channel development, brand development, and user coverage. This dual-brand strategy has enabled Huawei to enter the global market and establish mobile smart ecosystems for smartphones, smart homes, and wearables. Our mid-range and high-end smartphones accounted for over 30% of our total smartphone...

  • Page 37
    ... mobile phone brand. â- The number of our partners for developing cloud services grew by 150% year-on-year. After five years of continuous innovation, we have risen CSA STAR in the mid-range and high-end market, and increased our share in the global market: â- â- Our cloud services passed...

  • Page 38
    ... DC-centered network reconfiguration to better support the development of 4K/8K ultra-HD video and cloud services. Specifically, we: â- Released 4.5G-based NB-IoT technology. This technology equips cellular networks with the extensive connectivity of the IoT and allows for lower power consumption...

  • Page 39
    ... for future digital service operations. In the core network domain, we focused on providing customers with the best real-time voice/video, allaccess smart pipe, and full connection management and control solutions, and continued to pursue industryleading competitiveness in NFV, IoT, EPC, VoLTE...

  • Page 40
    ... physical networks, the system supports the smooth evolution of traditional data centers toward cloud data centers. â- Actively implemented the IoT ecosystem strategy based on Huawei IoT connection management platform and agents. We also supported the ondemand and dynamic deployment of services...

  • Page 41
    ... file and object interfaces, and resource pool sharing between files and objects. OceanStor 9000 also supports 4K HD video solutions, and is the industry's first storage system to support 6-layer 4K HD video production. â- Made innovative breakthroughs in large-scale antenna MIMO technology and...

  • Page 42
    ... establish open platforms and research the next-generation video coding technology Future Video Codec (H.266), jointly fueling the rapid development of enabling technologies for the video industry. â- Leveraged our achievements in machine learning to help carriers reduce their prepaid user churn...

  • Page 43
    ... World by sharing insights into ICT advances. Specifically, we: â- high quality of service (QoS) in data centers, won high acclaim from academics. â- Worked extensively with many prestigious universities, companies focused on technological innovation, and open source organizations in...

  • Page 44
    ... by OPNFV and became a key controller platform of the OPNFV community. â- Guided the direction of IP technology development by continuously investing in the IETF. We are an active player in open source communities. Specifically, we: â- toward digital operations recognized in the industry, and...

  • Page 45
    Cyber Security The new generation of network and information technologies (e.g., Big Data, cloud computing, IoT, and the mobile Internet) are driving the convergence of cyberspace and the physical world. Cyber security is a growing global challenge, and is exerting a profound and far-reaching impact...

  • Page 46
    ... EastWest Institute (EWI) in New York and delivered a keynote speech expressing our willingness to collaborate with stakeholders to address cyber security issues. Huawei, Microsoft, and The Open Group co-lead the Breakthrough Group on Increasing the Global Availability and Use of Secure ICT Products...

  • Page 47
    .... In 2015, over 46,000 employees received R&D cyber security training. â- We have controlled our supply system from start to finish to ensure end-to-end security. We have improved suppliers' delivery quality and compliance with security agreements and urged them to promptly provide solutions and...

  • Page 48
    ... 500 enterprise cloud partners and over 10,000 public cloud partners, and have created a FusionSphere open cloud computing alliance. By opening up our agile networks at all layers, we have developed more than 200 ecosystem partners in the areas of agile campuses, agile data centers, and agile IoT...

  • Page 49
    ... future technologies, research and innovation, and R&D platform and capability improvements, the R&D expense ratio rose by 0.9 percentage points. Despite the increasing investment in brand marketing and management transformation, the company benefited from higher efficiency and increased revenue. As...

  • Page 50
    ... markets. Financial Position CNY Million Non-current assets Current assets Total assets Among which: Cash and short-term investments Trade receivables Inventories Non-current liabilities Among which: Long-term borrowings Current liabilities Among which: Short-term borrowings Trade payables Owner...

  • Page 51
    ... management policies and processes to further enhance the company's ability to withstand financial risks and better support its business development. Liquidity Risk Liquidity Trends Huawei has continuously refined its cash flow planning, CNY Million 2015 2014 YoY budgeting, and forecasting system...

  • Page 52
    ... credit management policies, processes, IT systems, and credit risk assessment tools. It has established dedicated credit management organizations across all regions and business units, and established centers of expertise specializing in credit management in Europe and the Asia Pacific. The company...

  • Page 53
    ... 31, 2015. We have issued an unqualified audit report dated March 12, 2016 on the audited consolidated financial statements of the Group for the year ended December 31, 2015. Our responsibility is to express an opinion on the Huawei Investment & Holding Co., Ltd. is not a public company and is...

  • Page 54
    ... and other investments Deferred tax assets and liabilities Inventories Trade and bills receivable Other assets Cash and cash equivalents Loans and borrowings Trade and bills payable Other payables Provisions Operating leases Capital commitments Contingencies Related parties Group enterprises 67 68...

  • Page 55
    ...) 27,866 Note Revenue Cost of sales Gross Profit Research and development expenses Selling and administrative expenses Other income/(expenses), net Operating profit before financing costs Finance income and expenses Share of associates' and joint ventures' results (post tax) Profit before taxation...

  • Page 56
    ... assets Inventories Trade and bills receivable Other current assets Short-term investments Cash and cash equivalents Current assets Total assets Equity Equity attributable to equity holders of the Company Non-controlling interests Total equity Liabilities Loans and borrowings Long-term employee...

  • Page 57
    Consolidated Statement of Cash Flows 2015 Note Cash flows from operating activities Cash receipts from goods and services Cash paid to suppliers and employees Other operating cash flows Net cash generated from operating activities 424,413 (411,482) 36,384 49,315 321,097 (321,201) 41,859 41,755 CNY ...

  • Page 58
    ... registered office is at Huawei Industrial Base, Bantian Longgang, Shenzhen, PRC. The Company and its subsidiaries (the Group) principally provide end to end Information Communication and Technology solutions. This includes the research, design, manufacture and marketing of telecom network equipment...

  • Page 59
    ...control or joint control, over its management, including participation in the financial and operating policy decisions. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire. Financial assets and financial liabilities are A joint venture...

  • Page 60
    ... (see note 3(g)). Financial assets at fair value through profit or loss Financial assets are classified as at fair value through profit or loss if they are classified as held-for-trading or are designated as such on initial recognition, and remeasured to fair value at each reporting period. Gains...

  • Page 61
    ... Amortisation is charged to profit or loss on a straight-line basis over the period of the rights generally no more than 50 years. Both the period and method of amortisation are reviewed annually and revised when necessary. (iv) Research and development Research and development costs comprise...

  • Page 62
    ... is objective evidence that a financial asset or a group of financial assets is impaired the Group recognises an impairment loss using an allowance account representing the difference between the carrying amount and the present value of estimated future cash flows, discounted at the financial assets...

  • Page 63
    ...is the total estimated future cash flows from the asset or, where the asset does not generate independent cash flows independent of other assets, a group of assets, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and...

  • Page 64
    ... for each plan by estimating the total amount of future benefit that employees have earned in return for their service in the current and prior periods which is then discounted to present value. The calculation is performed by management using the projected unit credit method. Service cost and...

  • Page 65
    ... a liability in the amount of such costs when revenue is recognised. Warranty costs generally include parts, labour costs and service centre support. Factors that affect the Group's warranty liability include the number of installed units, historical and anticipated rates of warranty claims. The...

  • Page 66
    ... time when the services are provided. No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due, associated costs or the possible return of goods. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts...

  • Page 67
    ...dates the fair value was measured. 4 Changes in accounting policies The IASB has issued the following amendments to IFRSs that are first effective for the current accounting period of the Group. â- Amendments to IAS 19, Employee Benefits: Defined benefit plans: Employee contributions â- Annual...

  • Page 68
    ... and supportable assumptions and projections of production volume, sales price, amount of operating costs, discount rate and growth rate. (f) Income tax (c) Net realisable value of inventories The net realisable value of inventories is the estimated selling price in the ordinary course of business...

  • Page 69
    ... right to use assets held under operating leases, and a liability for its obligations to make payments under such leases. IFRS 16 is effective from January 1, 2019. The Group is considering how to apply these new standards but has yet to determine the financial impacts. Other changes to accounting...

  • Page 70
    ... carrier software and core network, as well as services solutions to telecommunications operators. â- Enterprise The Enterprise segment develops integratable ICT products and solutions including enterprise network infrastructure, cloud-based green data centres, enterprise information security and...

  • Page 71
    ... China Americas Asia Pacific Europe, the Middle East and Africa Others Total 167,690 38,976 50,527 128,016 9,800 395,009 108,674 30,844 42,409 100,674 5,596 288,197 8 Revenue 2015 CNY million Sale of goods and provision of services Rental income (note 28(b)) 394,922 87 395,009 2014...

  • Page 72
    ...concerned. TUP TUP is a profit-sharing and bonus plan based on employee performance for all eligible employees (recipients) in the Group. Under TUP, time-based units (TBUs) are granted to recipients for a period of five years which entitle them to receive an annual cash incentive based on an annual...

  • Page 73
    ... financial assets stated at fair value, net Gain from other financial assets, net Dividend income Finance income Interest expense Net foreign exchange loss Impairment loss on equity securities Bank charges Interest cost on defined benefit obligations No borrowing costs were capitalised during 2015...

  • Page 74
    ... operations - The Group - Share of associates and joint ventures 1,050 (6) 1,044 2,231 - - - (341) 1,050 (6) 1,044 1,890 175 (1) 174 (240) - - - 48 175 (1) 174 (192) (b) Components of other comprehensive income, including reclassification adjustments 2015 CNY million Available-for-sale investments...

  • Page 75
    ...assets Goodwill CNY million Cost: At January 1, 2014 Exchange adjustments Additions Acquisition of subsidiaries Disposals At December 31, 2014 At January 1, 2015... 135 (722) 9,044 Software CNY million Patents CNY million Trademark and others CNY million Total CNY million Amortisation and impairment...

  • Page 76
    ... cash-generating units (CGU) or group of CGUs, which is not larger than an operating segment and is expected to benefit from the synergies of the acquisition, as follows: 2015 CNY million Sectors under Enterprise business group Beijing Huawei Longshine Information Technology Company Limited (Beijing...

  • Page 77
    ...Buildings Motor vehicles Construction in progress Investment property Total CNY million Cost: At January 1, 2014 Exchange adjustments Additions Transfer from construction in progress Acquisition of subsidiaries Transfer from investment property Disposals At December 31, 2014 At January 1, 2015...

  • Page 78
    ... as at December 31, 2015 is estimated by management to be CNY147 million (2014: CNY 71 million). The fair value of investment property is determined by the Group internally with reference to market conditions and discounted cash flow forecasts, taking into account current lease agreements on an arm...

  • Page 79
    ... (c) Note (a): TD Tech's principal activity is research and development, production and sale of TD-SCDMA telecommunication products. Note (b): Tianwen Digital Media's principal activity is development, publication and operation of digital media related services. In 2015, the Group disposed of 25...

  • Page 80
    ... in the consolidated financial statements, is as follows: TD Tech 2015 CNY million Gross amounts of the associates' Current assets Non-current assets Current liabilities Non-current liabilities Equity Revenue Profit (note a) Total comprehensive income (note a) Reconciled to the Group's interest in...

  • Page 81
    ... 2015 CNY million Gross amounts of the joint ventures' Current assets Non-current assets Current liabilities Non-current liabilities Equity 729 31 (519) (14) 227 734 16 (598) (19) 133 2014 CNY million Included in the above assets and liabilities: Cash and cash equivalents 176 107 Revenue Profit...

  • Page 82
    ... Fixed deposits (i) (i) Investment funds comprise short-term investments in wealth management products and money market funds. (ii) As at December 31, 2015 and 2014, certain of the Group's other investments were individually determined to be impaired on the basis of a material decline in value...

  • Page 83
    ... and equipment Provision for impairment losses Tax losses Undistributed profits of subsidiaries Unrealised profit Fair value adjustments on acquisition of subsidiaries Others Total Reconciliation to the consolidated statement of financial position 2015 CNY million Net deferred tax assets recognised...

  • Page 84
    ... 21 Trade and bills receivable 2015 CNY million 2014 CNY million Note Trade receivables Trade receivables due from third parties Trade receivables due from related parties 31 92,030 395 92,425 75,018 827 75,845 Bills receivable Bank acceptance bills Commercial acceptance bills Letter of credit...

  • Page 85
    ... receivables due from third parties Impairment losses in respect of trade receivables due from third parties are recorded using an allowance account unless the Group is satisfied the possibility of recovery is remote, in which case the receivables are written off (see note 3(k)). The movement in...

  • Page 86
    ... related parties The Group monitors the trade receivables due from related parties on an ongoing basis considering the financial results of the related parties and repayments made by the related parties. As at December 31, 2015, allowance for doubtful debts in respect of trade receivables due from...

  • Page 87
    ... any time without any interest penalty, and money market funds that comprise investments in short-term debt securities which have constant net asset values. As at December 31, 2015, cash and cash equivalents of CNY653 million (2014: CNY1,010 million) were held in countries where exchange controls or...

  • Page 88
    ... used to meet its day to day cash requirements and also to economically hedge foreign exchange rate movements arising from foreign currency cash flows. The facilities allows participating subsidiaries to place deposits and borrow funds from the counterparty banks, in substance to hold long and...

  • Page 89
    ... above loans and borrowings approximates to their fair value. Certain of the Group's banking facilities are subject to compliance with normal covenants relating to certain of the borrower's statement of financial position ratios. If the Group were to breach the covenants, the drawn down facilities...

  • Page 90
    ... Proven Honour Capital Limited issued a corporate bond with a principal amount of CNY1,600 million with three years maturity at an annual interest rate of 4.55%. This corporate bond is fully guaranteed by the Company. 25 Trade and bills payable 2015 Note Trade payables Trade payables due to related...

  • Page 91
    ...) Provisions utilised At December 31, 2015 3,662 (67) 5,558 (3,870) 5,283 Onerous contracts CNY million 1,001 - 1,874 (1,013) 1,862 Provision for product sales CNY million 605 (1) 3,137 (1,900) 1,841 Other provisions CNY million 3,551 (83) (869) (452) 2,147 Total CNY million 8,819 (151) 9,700...

  • Page 92
    ...and 2014, the total future minimum lease payments under non-cancellable operating leases are payable as follows: 2015 CNY million Within 1 year After 1 year but within 5 years After 5 years 2,082 2,339 268 4,689 2014 CNY million 1,471 1,935 341 3,747 The Group leases a number of warehouses, factory...

  • Page 93
    ...District of Delaware against Huawei Tech, Futurewei, and Huawei Device USA Inc. (USA Device), another wholly-owned subsidiary of the Company. The complaints further alleged that the sales of certain 3G and 4G wireless devices sold by the said subsidiaries within the United States had infringed three...

  • Page 94
    ... to the electronic products concerned. Huawei Tech was named as one of the thirteen companies. On August 21, 2012, the USITC decided to institute Section 337 investigation in relation to the electronic products concerned. TPL also filed another complaint before the United States District Court...

  • Page 95
    31 Related parties Transactions with associates and joint ventures 2015 (CNY million) Purchases Sales and processing expenses TD Tech Huawei Marine Chinasoft International Technology Services Ltd iSoftStone Technology Service Company Limited 786 258 - - 1,044 517 877 - - 1,394 29 25 - - 54 - 8 - - 8...

  • Page 96
    Balances with associates and joint ventures December 31, 2015 (CNY million) Trade receivables TD Tech Huawei Marine Chinasoft International Technology Services Ltd. iSoftStone Technology Service Company Limited 254 141 - Other receivables 360 41 - Trade payables 392 346 182 Other payables 1 13 - - ...

  • Page 97
    ... & Holding Co., Ltd.. (b) Major subsidiaries Proportion Place of Name of subsidiary incorporation and business 2015 Huawei Technologies Co., Ltd. PRC 100% 2014 100% Development, manufacture and sale of telecommunication and related products and provision of support and maintenance services. Huawei...

  • Page 98
    ...) in cash. Aspiegel is based in Dublin, Ireland, and develops software-defined networking (SDN) technology to allow network administrators to manager network services through abstraction of higher-level functionality. The acquisition of Aspiegel gives the Group improved access to the SDN market. 96

  • Page 99
    ... business models for cloud services are evolving rapidly. CT players are now finding themselves competing with IT players. Based on the COSO framework, ISO 31000 risk management standards, and its organizational structure and operating model, Huawei has developed an ERM system, released ERM policies...

  • Page 100
    ... a business continuity management system in the procurement, manufacturing, supply, global technical services, and other domains. This system covers the end-to-end process from suppliers to Huawei and then to customers. Under this system, we have established management organizations, developed...

  • Page 101

  • Page 102
    ...' Commission 102 Board of Directors and Committees 107 Supervisory Board 107 Rotating CEOs 108 Members of the Board of Directors, the Supervisory Board, and the BOD Committees 114 Independent Auditor 114 Business Structure 115 Improving the Management System 117 Improving the Internal Control System

  • Page 103
    ... Human Resources Joint Committee of Regions Finance PR & GR Corporate Development Legal Affairs Strategy Marketing Internal Audit Quality, BP & IT Engineering Inspection Cyber Security & User Privacy Protection Ethics & Compliance 2012 Laboratories Chief Supply Chain Officer Products & Solutions...

  • Page 104
    ... compensation of other members of senior management. Approve the corporate-level HR planning and major HR policies. â- At present, current members of the Commission are Ms. Sun Yafang, Mr. Guo Ping, Mr. Xu Zhijun, Mr. Hu â- Houkun, Mr. Ren Zhengfei, Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, Ms...

  • Page 105
    ..., and Ms. Meng Wanzhou. In 2015, the Executive Committee held 12 meetings. Effectively examined internal and external developments in HR management; formulated the Human Resources Committee The Human Resources Committee (HRC) manages and optimizes core corporate elements such as organization...

  • Page 106
    ...'s resources and resource acquisition capabilities. â- Set financial objectives for the growth and investment projects of the company and each responsibility center; and determine the standards, structure, and pace for resource investments. â- Measure the monetary value of key strategies...

  • Page 107
    ... and management system structures, quality policies, etc. Review the company's business portfolios to ensure investments are made in strategic domains. â- Strategy & Development Committee The Strategy & Development Committee (SDC) develops, sets, and executes the company's strategic directions...

  • Page 108
    ... AC holds quarterly meetings and convenes special sessions as necessary. Business executives and various experts are invited to attend as non-voting participants. The committee held six meetings in 2015. Focusing on topics such as risk management, the development of the internal control system, and...

  • Page 109
    ...Hua, Mr. Zhou Daiqi, Mr. Ren Shulu, and Mr. Yin Xuquan. In 2015, the Executive Committee held four meetings. Rotating CEOs Huawei implements the rotating CEO system under the BOD's leadership. As the primary owner of the company's operations and crisis management during the tenure, the Rotating and...

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    ... Training Center, President of the Procurement Dept, General Manager of the Wuhan Office, President of the Marketing & Sales Dept, Chair of the Human Resources Committee, Chair of the Business Transformation Executive Steering Committee (BT-ESC), Chair of the Strategy and Customer Standing Committee...

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    ... the Global Sales Dept, Chief Sales & Service Officer, Chief Strategy & Marketing Officer, Chairman of the Global Cyber Security and User Privacy Protection Committee (GSPC), Chairman of the BOD of Huawei USA, Deputy Chairman of the Board, Rotating CEO, and Chairman of the HRC. Mr. Ren Zhengfei Born...

  • Page 112
    ... Technical Sales Dept, President of the Wireless Network Product Line, President of the European Area, Chief Strategy & Marketing Officer, Chairman of Huawei Device, and CEO of the Consumer BG. Mr. Li Yingtao Born in 1969, Mr. Li holds a doctorate degree from Harbin Institute of Technology. Mr. Li...

  • Page 113
    ... the Xi'an Research Center, and Director of the HR Branch of Products & Solutions. Currently, Mr. Zhou serves as Chief Ethics & Compliance Officer, Director of the Corporate Committee of Ethics and Compliance, and member of the Audit Committee. Mr. Ren Shulu (Steven Ren) Born in 1956, Mr. Ren holds...

  • Page 114
    ... as R&D Project Manager, Department Manager at Huawei Technologies India Private Limited, Deputy Chief of the Beijing Research Center, Director of the R&D Dept of the Data Communications Product Line, Director of the HR Branch of Products & Solutions, Vice President of the Human Resource Mgmt Dept...

  • Page 115
    ...and Pilot (D&P) Dept, Manager of the Manufacturing Dept, Executive Vice President of Huawei Electric, Director of the Assembly Business Dept, Deputy Director of the Supply Chain Mgmt Dept, Director of the Board Design Engineering Dept under the Central Research & Development Unit (CRDU), Director of...

  • Page 116
    ..., regional organizations have helped the company sustain growth. Business Structure Group Functions provide business support, services, The company has established a business structure that focuses on three dimensions: customers, products, and regions. All organizations jointly create value for and...

  • Page 117
    ...and supporting processes. The process system incorporated requirements for quality, internal controls, cyber security, information security, business continuity, EHS, and CSR into multiple business domains, including marketing, R&D, delivery and service, supply chain, and procurement. From Strategy...

  • Page 118
    ...-to-end product management system that integrates product-related business processes and supports market-based innovation. The new process will support the effective operations of corporate-level emerging business opportunities (EBOs), preliminarily build an open innovation ecosystem, continuously...

  • Page 119
    ... technologies such as mobility, cloud computing, and Big Data; it has also cloudified the key functions of software packages, and is thus a half-step ahead of others in developing IT capabilities. Huawei will use globally available advanced software packages to build its own secure and high-quality...

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    ... committees, group functions, and multi-level management teams. Huawei clearly defines the roles and responsibilities of its organizations to ensure the effective separation of rights and responsibilities. The CFO of Huawei is in charge of internal controls. The business control department reports...

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    ... available to all employees. The company has established a mechanism for process owners at all levels to regularly communicate with each other, review the execution of internal controls, and follow up on internal control issues. Monitoring Huawei has established an internal complaint channel, an...

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    Students attending a lesson in a Huawei computer room at a school in Delhi Sustainable Development 121 Introduction of Sustainability at Huawei 123 Sustainability Management 124 Sustainable Operations 129 Sustainable Products and Services 131 Sustainable World

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    .... At present, ICT is helping to transform every industry. New technologies - such as cloud computing, Internet of Things, artificial intelligence, and 3D printing - will provide greater opportunities that enhance business efficiency and enrich people's lives. They will drive the global economy...

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    ...ICT technologies to address global challenges. â- Huawei establishes training centers and launches joint teaching initiatives to develop local talent, transfer knowledge, and increase people's engagement in the digital society. â- Huawei provides customized ICT applications and solutions that suit...

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    ... of the new UN Sustainable Development Goals with 40 experts from different industries and sectors. â- In June 2015, Huawei and CSR Europe cohosted a sustainability conference with the theme The Future of Sustainable Supply Chains: From Compliance to Innovation. This event brought together...

  • Page 126
    ... insurance packages for all employees around the world. In 2015, our investment in global employee benefits totaled CNY9,240 million, up over 25% year-on-year. With a presence in over 170 countries and regions, Huawei gives employees fair access to work, learning, and promotion opportunities...

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    ...and network recovery efforts. International SOS doctor giving a training course on first aid Safe Operations In all countries where Huawei operates, we have implemented an environment, health, and safety (EHS) management system, and established a manager accountability system and a safety incident...

  • Page 128
    ...dangerous areas No drunk or fatigued driving or speeding Fall protection for working at height Wear a seat belt when driving or riding in a vehicle Safety training for all Green Operations While using ICT to help society reduce energy consumption, Huawei also makes great efforts to minimize the...

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    ... heat recovery from the ventilation air Rainwater harvesting system 13 Sustainable Supply Chain In 2015, Huawei launched the Quality First strategy and fully embedded it into our procurement strategy, procurement process, and supplier management. To urge our suppliers to continuously improve, we...

  • Page 130
    ... Supply Chain In 2014, Huawei and the Human Settlements and Environment Commission of Shenzhen jointly launched the Greener Supply Chain Pilot Project. As an experiment in a new public-private partnership model of environmental governance, this project uses the procurement power of large companies...

  • Page 131
    ... Association Labs (ICSA Labs); and the Protocol of Security Development Assurance (PSDA) stamp from Telefónica. Greener Products and Services Huawei's approach to environmental production is based on the Circular Economy concept, which helps to constantly improve resource and energy efficiency and...

  • Page 132
    ... Belgium Safe Products Huawei has put in place a rigorous product safety control mechanism. Through various research and innovation initiatives, we have continuously increased the safety and reliability of the products and services we provide to our consumers and customers. Reducing electromagnetic...

  • Page 133
    ... engineering delivery and user habits. Our innovative scenario-based design approach has ensured that our products are easy to install and use, with significantly reduced health or safety risks. User scenarios analyzed by Huawei globally 120 100 80 60 40 20 0 106 112 95 2013 2014 2015 Number...

  • Page 134
    ... to increase access to high-speed networks and contribute to socioeconomic progress in local countries where we operate. Download the white paper at www.huawei.com/minisite/digital-enablement. Offering Broadband Access for the First Time to Households in Sri Lanka In March 2015, Huawei announced...

  • Page 135
    ...-quality education. Huawei helps health institutions to go digital, so as to increase efficiency, reduce costs, and improve health outcomes. Our products and solutions enable better storage and analysis of crucial data and better use of scarce health expertise between institutions. Huawei's mobile...

  • Page 136
    ... third parties (e.g., universities and developers) in our R&D activities. In 2015, we opened our new R&D campus in India with a capacity of holding 5,000 engineers, twice the number in our old center. Network Stability Huawei is dedicated to supporting stable network operations - even in extreme...

  • Page 137
    ...the local carrier's equipment room within 20 minutes of the earthquake. They knew they had to work with the customer to keep the network operational. Back at the office, Huawei launched a business continuity management mechanism and emergency response plan, set up a disaster recovery team, issued an...

  • Page 138
    ... potential to hold global CO 2 emissions at 2015 levels - and also to reduce the consumption of scarce resources - by 2030. As part of our commitment to building a greener world, Huawei has continuously explored innovative ways to reduce the energy used in our network equipment and data centers. Our...

  • Page 139
    ..., we initiate charity projects with governments, customers, and non-profit organizations. These include supporting ICT innovation and start-ups; facilitating local communities' green initiatives, and cultural, sports, and traditional events; enabling ICT talent education; offering support to local...

  • Page 140
    ... unleash their potential and contribute to global progress. Huawei is committed to doing its part to shape the future." Program participants studying ICT knowledge Program participants taking a photo For further details, please see the complete Huawei 2015 Corporate Sustainability Report . 138

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    ... Business Support System Competency & Qualification Compound Annual Growth Rate Communication-Based Train Control Common Criteria China Communications Standards Association Customer Experience Management Chief Executive Officer Customer Experience Transformation Center cash-generating unit Cloud...

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    ... High Definition Huawei Developers Congress Huawei AppStore Huawei Innovation Research Program Huawei Network Congress Human Resources Committee Infrastructure as a Service International Accounting Standards Board International Computer Security Association Information and Communications Technology...

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    ... Management Software-defined Networking Service Delivery Platform Service Provider Operations Lab Shared Services Center Solid State Disk Security, Trust & Assurance Registry time-based unit Time Division-Synchronous Code Division Multiple Access TeleManagement Forum Transport-SDN Time-based Unit...

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    ... © 2016 HUAWEI INVESTMENT & HOLDING CO., LTD. All Rights Reserved. GENERAL DISCLAIMER THE INFORMATION IN THIS DOCUMENT MAY CONTAIN PREDICTIVE STATEMENTS INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE FUTURE FINANCIAL AND OPERATING RESULTS, FUTURE PRODUCT PORTFOLIO, NEW TECHNOLOGY, ETC...