Huawei 2015 Annual Report Download - page 100

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Legal risks: The legal environments in some of the
regions where Huawei operates are rather complex.
We strive to fully comply with all local laws and
regulations; nevertheless, we may still be susceptible to
unforeseeable risks. As always, Huawei will proactively
assess risks and take preventative measures to address
such risks.
Trade barriers: Facing a flattening global trade, all
countries are going all out to boost domestic economy
and employment. As Huawei continues to grow, we
will face more and more increasingly complicated
challenges regarding global trade. As a global company,
Huawei supports global trade rules and pledges to place
trade compliance above its commercial interests. As
part of this commitment, we standardize our internal
business operations, build trust with governments, and
proactively apply for highest qualifications in terms
of customs in certain countries. In doing so, we aim
to become an accredited partner of governments in
countries where Huawei operates.
Natural disasters: Earthquakes, floods, epidemics,
and other natural disasters may impact certain areas
of Huawei's business operations. Supporting stable
network operations is our mission and primary social
responsibility. We have established a natural disaster
response mechanism and have improved our capabilities
in this regard. This has helped us ensure business
continuity, and has supported our customers' business
operations.
Country-specific risks: Huawei currently operates
in more than 170 countries and regions worldwide.
The complex international economic and political
landscape may expose Huawei to particular risks in
certain countries and regions, 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 possess a high
risk management aptitude. We must closely monitor
possible risks and environmental changes, and employ
prompt countermeasures to minimize any potential
business impact.
Operational Risks
Business continuity: As the division of labor becomes
highly globalized, Huawei must rely on third parties
(including companies and agencies) for manufacturing,
logistics, and services. Therefore, third party business
discontinuity may compromise Huawei's operations and
business performance, either directly or indirectly.
To ensure business continuity, Huawei has established
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 emergency
response and business continuity plans, provided
training, organized drills, raised employees' awareness
of business continuity, and improved emergency
response capabilities, thus effectively ensuring business
continuity.
In addition, we strive to avoid procuring from a single
supplier and select suppliers of key components with
multiple manufacturing sites. In terms of design, we
prepare alternative solutions for key components, in
order to minimize the impact on our product supply
and delivery if a single supplier suspends supply or
provides substandard products. We will continue to
regularly assess and audit our suppliers, assess and
identify material supply risks as early as possible, and
take preventative actions (e.g., component substitutes,
solution redesigns, inventory, and expanding production
capacity) to minimize supply risks and ensure supply
continuity.
Information security and IPR: While Huawei has
adopted stringent information security measures to
protect its IPR, it is impossible to completely prevent
other companies from improperly using our IPR. Even
when we can resort to intellectual property 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 49 to 50 of this Annual
Report.