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Huawei Investment & Holding Co., Ltd.
2012 Annual Report

Table of contents

  • Page 1
    Huawei Investment & Holding Co., Ltd. 2012 Annual Report

  • Page 2
    ... Ocean. The New Year Message, "Focus on Strategy, Simplify Management, Increase Efficiency", from our Rotating and Acting CEO, clearly presents our objectives for the new year. We must focus on our strengths, fully leverage the capabilities of our organization, tap into the selfmotivation and...

  • Page 3
    ... Acting CEO Business Highlights in 2012 Five-Year Financial Highlights Letter from the Chairwoman 7 8 32 36 37 Brand Promise and Brand Attributes Management Discussion and Analysis Market Trends Independent Auditor's Report Consolidated Financial Statements Summary and Notes 80 82 84 104 Company...

  • Page 4
    ... in sales revenue and CNY15.38 billion (US$2.47 billion) in net profit in fiscal year 2012, steadily increasing operating performance. Our Carrier Network Business Group (BG) further consolidated its position in the industry: Our wireless business maintained steady growth. Our fixed network products...

  • Page 5
    ..., multiple services, and zero wait time is our mission and responsibility. We will continue to increase strategic investments in the pipe business. Our aim is to make information pipes "wider, faster, and larger" and develop Huawei into one of the great companies that lead the ICT industry. As...

  • Page 6
    ... investments in key ICT fields. We are dedicated to providing broader, smarter, and more energy-efficient pipes while working closely with partners from the industry, academia, and research institutes. Our goal is to take the lead in research, innovation, and implementation of future networks...

  • Page 7
    Five-Year Financial Highlights 4 Five-Year Financial Highlights CNY 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 2012 (USD Million)* 35...

  • Page 8
    ... and work. A digital society comprised of digital citizens and digital enterprises is taking shape. These trends will surely lead both ICT and social transformations. Based on our insights into future trends, Huawei is committed to helping customers build an increasingly efficient and integrated...

  • Page 9
    ... extended to our customers over the years. In 2012, we released Huawei Cyber Security White Paper globally, calling on all stakeholders, including governments and industries, to become aware that cyber security is a global issue and needs to be addressed through risk-based approaches, best practices...

  • Page 10
    ... suppliers, and customize our offerings for local tastes and needs. Open We are active listeners and contributors internally and externally. We always bring a unique point of view, listen to others' suggestions for how we can improve, and share knowledge and insights to help the industry and key...

  • Page 11
    ... Data era Integrating resources for efficient collaboration Rapid delivery of innovative services Innovation of services and business models Inspired Experience Simplified and personalized service experience True-to-life and diversified Zero wait time and rich communication Creating value through...

  • Page 12
    ... expect services to be simple, easy to use, and true to life, with zero wait time. Huawei will strengthen its research in such areas as video, audio, touch control, image processing, and emotional experience algorithms, promote user centric design (UCD), and provide users with a collaborative and...

  • Page 13
    Management Discussion and Analysis 10 Business Review 2012 Sales revenue 220,198 CNY Million In 2012, Huawei's well-balanced presence worldwide helped the company achieve rapid and healthy growth in the carrier network, enterprise, and consumer businesses. Annual sales revenue totaled CNY220,198...

  • Page 14
    ... routers, Huawei led the development of routing technologies. Huawei also maintained its leading position in offering broadband network gateway (BNG), LTE, and IP mobile backhaul solutions for multi-service support over metropolitan area networks (MANs). In the transport field, Huawei was awarded...

  • Page 15
    ... to grow and develop an open, harmonious, and flourishing mobile ecosystem with our industry chain partners. Fixed Networks Sales revenue from our fixed network equipment totaled CNY48,452 million in 2012. With rapid developments in cloud computing and OTT video services, applications are migrating...

  • Page 16
    ... traffic analysis system is well positioned to help carriers provide efficient services, increase revenue, and improve their profitability. By the end of 2012, Huawei's fixed network products and solutions had been deployed by 45 of the world's top 50 carriers. Our routers were used by more than 20...

  • Page 17
    ... than 260 data center projects, and provided green energy services for more than 18,000 sites of 310 carriers in more than 150 countries by the end of 2012. In the network construction and maintenance field, in 2012, Huawei delivered wireless products to 430,000 sites, fixed network products to 790...

  • Page 18
    ... create value. Carrier Software & Core Networks Sales revenue in Huawei's carrier software and core network business totaled CNY18,891 million in 2012. We focused on strategic transformation towards "service + product" solutions and were committed to such fields as BSS, fixed mobile convergence...

  • Page 19
    ... in China's science and technology arena. In the hybrid video field, Huawei maintained its leading market share and was granted the Best Multiscreen TV Solution award at the IP&TV World Forum 2012. New VoLTE Product Launch and Best Innovative New Service Launch Enabled by IMS. In the data center...

  • Page 20
    ..., guaranteeing the secure and reliable operation of ICT services. In the site field, Huawei's full portfolio of efficient power solutions meet customer needs for power supply to main equipment rooms; modernizing energy systems of indoor sites; transformation of indoor to outdoor sites, and...

  • Page 21
    ... business models. In 2012, Huawei focused on ICT infrastructure and high-value customers/industries. We adopted an open and cooperative approach. By adhering to a strategy of cooperation and integration with partners, we worked with partners to provide products, solutions, and services to customers...

  • Page 22
    ... the finance and healthcare industries. In the enterprise wireless broadband field, Huawei was awarded 12 contracts for network construction projects, including eWBB LTE commercial networks and contracts, and our solutions were widely applied in the transportation, government, and energy industries...

  • Page 23
    ... devices, offering products and services that deliver the inspired experience to consumers everywhere. In 2012, with the rapidly growing popularity of smart devices, Huawei's consumer business increased steadily, earning global sales revenue of CNY48,376 million - an increase of 8.4% year-on-year...

  • Page 24
    ... power, and other industries, and tapped into the new Blue Ocean markets. In the home device field, Huawei strengthened its investments in connected home solutions that concentrate on access center, media center, automation center, open service cloud, and efficient management cloud. Huawei added...

  • Page 25
    ... access the Internet. This development will give Huawei's consumer business even more room for growth. Along with ICT convergence, smart mobility will help enhance Huawei's competitive edge. By relying on a proven track record in radio-frequency technology, low power consumption, high-quality...

  • Page 26
    ... Sales revenue in 2012 amounted to CNY220,198 million, which represents an increase of 8.0% year-onyear. Net profit grew by 32.1% year-on-year to CNY15,380 million. Total Operating Expenses and Other Income CNY Million Research and development expenses - as % of revenue Selling and administrative...

  • Page 27
    ...8.3% Cash and short-term investment balances as of December 31, 2012 rose by 14.9% year-on-year to CNY71,649 million. Trade receivable balances increased by 10.5% year-on-year. As sales revenue grew steadily, the company continuously refined the management and structure of trade receivables. Huawei...

  • Page 28
    ... to the cash flow from operating activities. â- Financial Risk Management In 2012, Huawei continuously amended and improved its financial risk management policies and processes to further enhance the company's capability to withstand financial risks and better support its business development.

  • Page 29
    ... gaining access to adequate and committed credit facilities. In 2012, cash and shortterm investments increased by 14.9% year-on-year to CNY71,649 million, representing 34.1% of the total assets. An adequate capital reserve and a stable cash flow from operating activities enabled Huawei to manage its...

  • Page 30
    ... tools. In addition, dedicated credit management organizations have been established across all regions and business units. The company has used risk assessment models to determine customer credit ratings and credit limits. It has also implemented risk control points over key processes along the end...

  • Page 31
    ... CEO. In 2012, following the strategies and objectives set out in the Statement on Establishing a Global Cyber Security Assurance System, we have continuously incorporated cyber security elements into our core business processes (including R&D, supply chain, service delivery, HR management, supplier...

  • Page 32
    ... through multiple platforms, organizations, and channels. In 2012, we continued to improve the security management, technical work force, and organization building for all teams at different levels. We carried out systematic cyber security awareness education for all Huawei staff and contractors...

  • Page 33
    ... economic conditions that may affect a customer's ability to pay. The company's provisions for doubtful accounts charged to the income statement were CNY3,416 million and CNY1,481 million for fiscal years ended December 31, 2012 and December 31, 2011, respectively. If key customers' creditworthiness...

  • Page 34
    ... 12 months. The company accrues for warranty costs as part of cost of sales based on historical expenditure on material costs, technical support labor costs, and associated overheads. The warranty provisions accrued for fiscal years ended December 31, 2012 and December 31, 2011 were CNY2,844 million...

  • Page 35
    ... for letters to arrive, people now contact others in real time via email, instant messaging, and social networking. Likewise, people can read the news online anytime, anywhere, rather than clinging to their TVs or radios. Wikipedia and other interactive platforms allow people to easily find answers...

  • Page 36
    ... operations. Rather than being tools or support components, ICT will become integral to production, decisionmaking, customer relationship management, service provisioning, marketing, and logistics. ICT will be employed in the building of end-to-end systems that work in real time, playing a role in...

  • Page 37
    ...when its storage is centralized. To drive this migration, ubiquitous networking with greater bandwidth is required to support data upload and data usage. Ubiquitous broadband makes cloud computing accessible. Devices across the entire industry chain, including content creation devices (video cameras...

  • Page 38
    ... a pipe strategy that covers cloud-based data center infrastructure (used for information storage and processing), infrastructure networks (used for information transmission and delivery), and intelligent terminals (used for information creation and consumption). Huawei has also set up its 2012...

  • Page 39
    ... statements") for the financial year ended December 31, 2012. We have issued an unqualified audit report dated March 15, 2013 on the audited consolidated financial statements of the Group for the financial year ended December 31, 2012. Huawei Investment & Holding Co., Ltd. is not a public company...

  • Page 40
    ... and Notes Consolidated Financial Statements Summary and Notes Consolidated Income Statement 2012 Note CNY'million 2011 CNY'million Revenue Cost of sales Gross profit 2 220,198 132,621 87,577 203,929 127,481 76,448 Research and development expenses Selling and administrative expenses Other...

  • Page 41
    ...assets Other non-current assets Non-current assets Other Investments Inventories Trade receivables Bills receivable Other receivables Cash and cash equivalents Assets held for sale Current assets Total assets Equity Equity attributable to equity holders of the Company Non-controlling interests Total...

  • Page 42
    39 Consolidated Financial Statements Summary and Notes Consolidated Statement of Cash Flow 2012 Note CNY'million 2011 CNY'million Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Other operating cash flows Net cash from operating activities ...

  • Page 43
    ... financial and operational information. The intended users of the consolidated financial statements summary can obtain access to the audited consolidated financial statements for the year ended December 31, 2012 upon consent of the Group's Management through the email address, [email protected]...

  • Page 44
    ... is reclassified to profit or loss. (d) Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an...

  • Page 45
    ... interests that meets the definition of a financial liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiary's net identifiable assets. Non-controlling interests are presented in the...

  • Page 46
    ... controlled entity is accounted for in the consolidated financial statements under the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Group's share of the acquisition-date fair values of the investee's identifiable net assets...

  • Page 47
    Consolidated Financial Statements Summary and Notes 44 Depreciation is calculated to write off the cost of buildings, less their estimated residual value (5%), using the straight line method over their estimated useful life of 20 years. (h) Other property, plant and equipment i) Recognition and ...

  • Page 48
    ... for use and their estimated useful lives are as follows: Software Patents Trademark 3 years 3 - 22 years 10 years Both the period and method of amortisation are reviewed annually. Intangible assets are not amortised while ii) Research and development Research and development costs comprise...

  • Page 49
    ...-for-sale securities are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events: â- significant financial...

  • Page 50
    ... value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities are not reversed. is made collectively where financial assets carried at amortised cost share...

  • Page 51
    ... losses are credited to profit or loss in the year in which the reversals are recognised. Calculation of recoverable amount The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are...

  • Page 52
    ...to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs...

  • Page 53
    ... benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine the present value and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on high quality corporate bonds that...

  • Page 54
    ... warranty on its products for a period typically covers 12 to 24 months. The warranty generally includes parts, labour and service centre support. The Group estimates the costs that may be incurred under its warranty obligations and records a liability in the amount of such costs at the time revenue...

  • Page 55
    Consolidated Financial Statements Summary and Notes 52 of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. All deferred tax liabilities, and all deferred tax assets to the extent that it is ...

  • Page 56
    ... earned. (v) Finance income and expenses Finance income comprises dividend and interest income on funds invested (including available-for-sale financial assets), gains on the disposal of available-for-sale financial assets, and changes in the fair value of financial assets held for trading. Interest...

  • Page 57
    ...Excess of carrying amount of trade receivables over cash received from the banks or financial institutions arising from factoring without recourse is included in the "other operating expenses" of the consolidated income statement. (x) Non-current assets held for sale The capitalisation of borrowing...

  • Page 58
    ...held for sale, the non-current asset is not depreciated or amortised. 2. Revenue (y) Segment reporting Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group's most senior executive...

  • Page 59
    ... of China (the "PRC") (2011: CNY1,097,720,000). These grants were directly recognised as other income. For the year ended December 31, 2012, the Group received grants of CNY523,296,000 (2011: CNY575,649,000) which were conditional upon completion of certain research and development projects. These...

  • Page 60
    57 Consolidated Financial Statements Summary and Notes 5. Net finance expenses 2012 CNY'million 2011 CNY'million Interest income Net gain on disposal of wealth management products Interest expense Net foreign exchange loss Others (844) (785) 1,758 1,085 415 1,629 (376) (391) 1,398 4,876 390 5,...

  • Page 61
    ...("ICT") products and solutions including enterprise network infrastructure, cloud-based green data centers, enterprise information security and unified communication & collaboration, and delivers these solutions to vertical industries such as governments, public utilities, enterprises, energy, power...

  • Page 62
    ... Financial Statements Summary and Notes 8. Property, plant and equipment Machinery, electronic equipment and other equipment CNY'million Decoration and leasehold improvements CNY'million Freehold land and buildings CNY'million Motor vehicles Construction in progress Investment properties Total...

  • Page 63
    ... 31, 2012 is CNY149,274,000 (2011: CNY278,153,000). The fair value of investment properties as of December 31, 2012 is estimated The fair value of investment property is determined by the Group internally by reference to market conditions and discounted cash flow forecasts. The Group's current...

  • Page 64
    61 Consolidated Financial Statements Summary and Notes 9. Intangible assets and goodwill Goodwill Software Patents Trademark Total CNY'million CNY'million CNY'million CNY'million CNY'million Cost: At January 1, 2011 Additions Disposals Exchange adjustment At December 31, 2011 (restated) - 221 - ...

  • Page 65
    ...-tax rates and reflect specific risks relating to the respective CGU. Cash flow projections are based on fiveyear, eight-year and six-year financial budgets approved by management for Enterprise business group, ITS Bahrain and Beijing Huawei Longshine, respectively based on their industry expertise...

  • Page 66
    ... Group has the following significant investment in associates: Ownership percentage 2012 2011 Name of associate Form of business structure Country/region Principal activity TD Tech Holding Limited ("TD Tech") Incorporated Hong Kong, PRC 49% 49% Research and development, production and sale...

  • Page 67
    ...% 49% Investment, lease of property and machinery, developments of high technology products and provision of related services, sales of telecommunication and electronic products In March 2012, the Group acquired additional 49% and 48% equity interests in Huawei Digital Technologies (Hong Kong) Co...

  • Page 68
    ... Current assets Equity securities - held for trading Investment in wealth management products - available-for-sale 13 4,456 4,469 26 5,124 5,150 Cost of individually impaired available-for-sale equity securities 37 44 As at December 31, 2012 and 2011, the Group's available-for-sale equity and...

  • Page 69
    ...tax assets and liabilities 2012 CNY'million 2011 CNY'million Accrual and provision Property, plant and equipment Impairment Unrealised profit Tax losses Undistributed profits of subsidiaries Other deductible differences Other taxable differences Fair value adjustments on business combinations Total...

  • Page 70
    67 Consolidated Financial Statements Summary and Notes 13. Inventories 2012 CNY'million 2011 CNY'million Raw materials Work in progress...,013 509 99,522 14. Trade receivables 2012 CNY'million 2011 CNY'million Trade receivables due from related parties Trade receivables due from third parties 525...

  • Page 71
    Consolidated Financial Statements Summary and Notes 68 (a) Ageing analysis The ageing analysis of trade receivables due from third parties at the balance sheet date is: 2012 CNY'million 2011 CNY'million Not past due Less than 90 days past due 90 days to 1 year past due 1 year and above past due ...

  • Page 72
    69 Consolidated Financial Statements Summary and Notes 15. Other receivables 2012 CNY'million 2011 CNY'million Advance payments to suppliers Indirect taxes Pledged deposits Gross amount due from third-party customers for contract work Others 2,388 4,797 1,832 1,340 5,457 15,814 2,065 4,397 1,...

  • Page 73
    ... completed by the end of March 2013. Neither a gain nor a loss was recognised on reclassifying the non-current assets as held for sale during the year. 18. Borrowings 2012 CNY'million 2011 CNY'million Non-current liabilities Unsecured bank loans Intra-group guaranteed bank loans Corporate bond 786...

  • Page 74
    71 Consolidated Financial Statements Summary and Notes Terms and debt repayment schedule Terms and conditions of outstanding loans were as follows: Total CNY'million 1 year or less CNY'million 1 to 5 years CNY'million Intra-group guaranteed bank loans: CNY - variable at 6.35% EUR - variable at 1....

  • Page 75
    ... 29,364 All of the trade payables are expected to be settled within one year or are repayable on demand. 20. Other payables 2012 CNY'million 2011 CNY'million Interest payable Advances received Accrued expenses Gross amount due to third-party customers for contract work Others 1,174 8,661 26,264...

  • Page 76
    ... similar products and services and anticipated rates of warranty claims for its products. The Group expects to settle majority of the liability within the next twelve months. (b) Litigation i) In July 2011, InterDigital Corporation ("IDC") filed a complaint with the United States International Trade...

  • Page 77
    Consolidated Financial Statements Summary and Notes 74 royalty rate licensed to Huawei Tech for IDC's Chinese essential standard patents in wireless communication should not exceed 0.019% of the actual sales prices of Huawei Tech's wireless devices. The hearing of the first complaint filed by IDC ...

  • Page 78
    75 Consolidated Financial Statements Summary and Notes The Group leases a number of warehouses, factory facilities, office premises and staff apartments under operating leases. The leases typically run for an initial period of between one and five years. None of the leases includes contingent ...

  • Page 79
    ... - 25 2011 CNY'million 3,336 40 462 3,838 25. Group enterprises (a) Control of the Group The Group's ultimate controlling party is the Union of Huawei Investment & Holding Co., Ltd. (the "Union"). (b) Major subsidiaries Place of incorporation PRC PRC PRC PRC PRC PRC PRC PRC PRC Hong Kong Hong Kong...

  • Page 80
    ...-owned subsidiary of the Company. Huawei Digital HK is a Hong Kong-based joint venture established by Huawei Tech Investment and Symantec Hardware in 2008. Huawei Digital HK is principally engaged in research and development, production and sale of network storage and security products. In the post...

  • Page 81
    ... 2012 Huawei Beijing Huawei Digital HK Longshine CNY'million Note 25(c)(i) CNY'million Note 25(c)(ii) 2011 ITS Bahrain CNY'million (restated) Note 25(c)(iii) Property, plant and equipment Available-for-sale investments Intangible assets Trade and other receivables Inventories Cash and cash...

  • Page 82
    ..." in the consolidated income statement. The goodwill is attributable mainly to the skills and technical talent of Huawei Digital HK's work force, and the synergies expected to be achieved from integrating the company into the Group's existing security and storage technology business. None of the...

  • Page 83
    ... the Oscars of the data center industry) for the Desktop Cloud Container Data Center project at the first Datacenter Dynamics Greater China Awards. On November 21, 2012, Huawei won the Best Use of Traffic Management for Improving Customer Experience award for our VGS at the 2012 annual summit of the...

  • Page 84
    ...East technology landscape, Huawei was distinguished as Managed Services Provider of the Year in Telecoms during the Network World Middle East Awards 2012. On April 10, 2012, Huawei won Certificate of Merit for excellent site solution designs in "Best in Class Site Design" Beauty Contest organized by...

  • Page 85
    ... plans and execution. Strategic Risks Intense competition: The markets in which Huawei operates are highly competitive in terms of price, functionality, and service quality, as well as the timing of new product and service development. In certain geographical markets, our main competitors may offer...

  • Page 86
    ... and conduct audits on our suppliers, and initiate product replacements or redesign. Rising labor costs: Increasing labor costs in China may offset the company's efforts to improve efficiency and ultimately affect our profitability. Information security: While Huawei has judiciously Trade barriers...

  • Page 87
    ... Executive Committee Finance Committee Strategy & Development Committee Supervisory Board Audit Committee CEO/EVPs Group Functions HR  JCR Finance Corporate Development Strategy Marketing BP&IT Cyber Security PR&GR Legal Affairs Internal Audit Ethics & Compliance Service BG (SBG) 2012...

  • Page 88
    ... corporate strategy and management. The BOD guides and oversees the overall business operations and makes decisions on significant strategic issues. The BOD has established the Human Resources Committee, the Finance Committee, the Strategy & Development Committee, and the Audit Committee to assist...

  • Page 89
    ... Human Resources Committee manages and improves organizational capabilities such as organization, talent, and culture. This committee establishes key HR management policies under the authorization of the BOD and oversees the execution of these policies. To support the company's business development...

  • Page 90
    ... key roles and responsibilities of the Finance Committee include: Aligning resources with business needs based on the company's resources and resource acquisition capabilities. Setting financial objectives for the growth and investment projects of the company and responsibility centers; determining...

  • Page 91
    ... key strategic products. Managing the company's medium-to-longterm technology development plan, standards and patent strategy, and major technology investments. Managing the company's medium-to-long-term business transformation strategy, process and management system structure, and quality policies...

  • Page 92
    ... the internal audit plan of the year; reviewing the scope of the internal audit plan, resources required for its execution, and the results of the execution. Approving corporate policies related to internal control management; approving the company's internal control development plan and key...

  • Page 93
    ... take turns to act as the rotating and acting CEO for a tenure of six months. In 2012, the acting tenures for the three rotating CEOs are as follows: Mr. Hu Houkun: October 1, 2011 - March 31, 2012 Mr. Xu Zhijun: April 1, 2012 - September 30, 2012 Mr. Guo Ping: October 1, 2012 - March 31, 2013

  • Page 94
    ... Committees Members of the Board of Directors From the left in the first row: Mr. Hu Houkun, Ms. Sun Yafang, Mr. Guo Ping, Ms. Chen Lifang, Mr. Xu Wenwei From the left in the second row: Mr. Zhang Ping'an, Mr. Yu Chengdong, Mr. Xu Zhijun, Mr. Ren Zhengfei, Mr. Ding Yun, Ms. Meng Wanzhou, Mr. Li...

  • Page 95
    ... in China, President of the Latin America Region, President of the Global Sales Dept, Chief Sales & Service Officer, Chief Strategy & Marketing Officer, Chairman of the Corporate Global Cyber Security Committee, Chairman of the BOD of Huawei USA, Corporate EVP, and Chairman of the Human Resources...

  • Page 96
    ... Xu joined Huawei in 1991 and has served as President of the International Technical Sales & Marketing Dept, President of the European Area, Chief Strategy & Marketing Officer, Chief Sales & Service Officer, President of the Joint Committee of Regions, and CEO of the Enterprise BG. Mr. Li Jie (Jason...

  • Page 97
    ... Huawei in 1996 and has served as President of the Terminal Product Line, President of the Optical Network Product Line, President of the Supply Chain Mgmt Dept, President of the Procurement Qualification Mgmt Dept, Chief Operations & Delivery Officer, President of the Integrated Business Services...

  • Page 98
    ... an 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, Deputy Director of the HR Branch of Products & Solutions, Vice President of the Human Resource Mgmt...

  • Page 99
    ... Technology Office of Products & Solutions, President of the Central Research & Development Unit, President of the 2012 Laboratories, Director of the Integrated Technology Management Team, member of the Human Resources Committee, and member of the SDC. Mr. Yang Yuefeng Born in 1971, Mr. Yang holds...

  • Page 100
    ... Network Business Unit, member of the Human Resources Committee, and member of the SDC. Mr. Hou Jinlong Born in 1970, Mr. Hou holds a bachelor's degree from Shanghai Jiaotong University. Mr. Hou joined Huawei in 1996 and has served as an R&D project manager, Director of the Wireless Technical Sales...

  • Page 101
    ... and Technology. Mr. Peng joined Huawei in 1997 and has served as a transmission product engineer in the Technical Service Dept in the South China Area, Transmission Product Project Manager and a business expansion engineer at the Russia Representative Office, Transmission Product Project Manager at...

  • Page 102
    ...course of the financial audits with the Audit Committee. KPMG has been Huawei's independent auditor since 2000. Business Structure The company has established three BGs: the Carrier Network BG, the Enterprise BG, and the Consumer BG. Each BG is a responsibility center for the endto-end operations in...

  • Page 103
    ... streamline processes end-to-end, Huawei incorporated requirements associated with quality, internal controls, Environment, Health, and Safety (EHS), cyber security, and CSR into marketing, R&D, supply chain, procurement, delivery, service, and other business domains. Huawei also promoted continuous...

  • Page 104
    ... by customers are handled effectively and managed in a closed loop. Continuous Integrated Financial Services (IFS) Transformation: Huawei is building a global financial management system to facilitate the company's sustainable and profitable growth through data-based management. To date, Huawei has...

  • Page 105
    ... and 22 Shared Service Centers (SSCs) across 13 countries to support the company's globalization strategy and operational excellence. Huawei is operating and improving its COEs and SSCs in terms of finance, service resource delivery, and procurement fulfillment worldwide. Huawei has also established...

  • Page 106
    ...BCG. The Internal Audit Dept reports the audit and investigation results to the Audit Committee and senior management. and communication channels to ensure timely acquisition of information related to customers and suppliers, as well as other information. Huawei has established an online forum that...

  • Page 107
    ... network operations, and prioritize network stability and security over Huawei's commercial interests. Promote environmental protection by providing energy-efficient green ICT solutions that reduce carbon emissions and drive cyclical economic growth. Seek win-win development by caring for employees...

  • Page 108
    ... 100G networks connect people at high speeds. London Paris Berlin Moscow Istanbul Case: Telecom Seeds for the Future Program As a key Huawei ICT talent development project, the Telecom Seeds for the Future Program aims to cultivate ICT talent for local communities, transfer knowledge, develop...

  • Page 109
    ... of customers Network Stability Huawei is committed to safeguarding the stability of customer networks and business activities. To that end, we have established a comprehensive assurance system supported by product designs, solutions, and network assurance systems. We have also developed efficient...

  • Page 110
    ...Integration of Cyber Security into Business Processes Huawei integrates security assurance activities into all business processes relating to R&D, supply chain, market & sales, project delivery, and technical services. Such integration, as the fundamental requirement of the quality management system...

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    ...a platform for sharing and mutual assistance. Based on this platform, Huawei pursues continuous innovations and sets standards together with industry peers. In so doing, we ensure that the integrity and security of our network solutions and services reach or exceed customer needs, and help customers...

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    ...of such devices as mobile phones, mobile broadband products, and home devices. We have released assessment reports for the carbon footprint of ten select products. Seeking Win-Win Development To care for employees and offer varied career paths that help realize their individual value To proactively...

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    ... activity, take up a hobby, and read a thought-provoking book), which proved good for their physical and mental health. R&D 45.36% Delivery and Service 22.81% Others 13.40% Sales 10.51% Manufacturing and Supply Chain 7.76% Strategy Marketing 0.16% Workforce Allocations to Each Operational Area

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    ... education Angola Supported the E-Net Project that provides free Internet access to youngsters Tunisia Sponsored the Chinese Bridge Competition to promote cultural exchanges Nigeria 1. Granted scholarships to ICT students at the University of Lagos 2. Supported the Nungtso Charity Foundation South...

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    Sustainable Development 112 Russia Established an ICT Training laboratory India 1. Continued support for the E-Hope Program 2. Supported students enrolled in Chinese universities through the Huawei Maitree Scholarship Program UAE Continued efforts in the Huawei Undergraduate Work Experience ...

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    ...& Customs Compliance Committee and the Trade Compliance Office led by the Chief Legal Affairs Officer. These organizations approve and oversee the implementation of Huawei's trade compliance policies and ensure legal compliance to the greatest extent possible in terms of policies, organizations, and...

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    ...fixed stations, wireless access points (APs), wireless routers, and wireless base stations. These departments partner with product security certification organizations in key countries and regions around the world to ensure that our products meet all laws and regulations related to health and safety...

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    ... up the confidence of customers around the globe. The United Nations Global Compact China Network granted the "2012 CSR Best Practice" award to Huawei in recognition of our management initiatives in supply chain sustainability. Proportions of suppliers in key regions in 2012 Europe 22.62% Asia...

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    ...for Telecommunications Industry Solutions Asynchronous Transfer Mode Business Group Broadband Network Gateway Business Plan Business Process Owner Business Support System Bring Your Own Device Compound Annual Growth Rate Code Division Multiple Access Customer Relationship Management Corporate Social...

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    ... System Optical Transport Network Optical Transmission Technology Patent Cooperation Treaty Percentage of Completion Research and Development Radio Access Network Rich Communication Suite Service Service Business Group Service Database Software Defined Networking Service Delivery Platforms Strategic...

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    ... current investments Working capital Net profit plus depreciation, amortization, Current assets less current liabilities Liability ratio Liability expressed as a percentage of total assets Days of sales outstanding (DSO) Exchange rates Trade receivables at the end of the year divided by revenue, and...

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    ... © 2013 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...