Huawei – Empowering Digital Dividends

Beijing November 2016

www.huawei.com

Contents

1 Company Overview

2 Current Economic Challenges and the ICT Solution

3 Supporting Digital Dividends for All

Huawei, a private company, was founded by Ren Zhengfei and several other investors

with an investment of US$ 3,500 (21,000 yuan). At that time, the company was a reseller

of PBX switches of Hong Kong Hong Nian Company.

Huawei transformed itself from a CT company to an

ICT company and established three BGs: Carrier BG,

Enterprise BG, and Consumer BG.

Huawei set about tapping into

overseas markets.

1987

1990Huawei set out to develop PBX switches

on its own.

1993Huawei developed C&C08 digital switches, which were primarily

deployed in rural areas.

1997Huawei started engaging global top consulting firms, such as IBM, Hay Group,

and FhG, for management transformations so as to lay a solid foundation for

sustained growth and global expansion.

1999 Huawei established its first international R&D center

in Bangalore, India.

2000

2005Huawei became a preferred supplier for British Telecom and Vodafone.

Revenue from the overseas market exceeded that from the domestic

market for the first time.

2010

Some milestones in Huawei’s development

Globalized resource deployment and localized

business operations

Operations in 170+ countries and regions; 160+ nationalities; 30,000+ non-Chinese employees with

75%+ localization rate.

We have 21 R&D centers in countries that include Germany, Sweden, the US, France, Italy, Russia,

India, and China.

Huawei's global value chain allows fluid capability transfer across the globe, develops and retains talent

in local countries, and creates jobs and economic opportunities.

Today, Huawei is a leading ICT company

Carrier

Enterprise

Consumer

A leading global ICT solutions provider

A Fortune Global 500 company,

ranking No. 228 in 2015

Interbrand Top 100 Best Global Brands

170,000+ employees worldwide

79,000+ engaged in R&D, 45% of the total

workforce

LinkedIn World's 100 Most In Demand

Employers

Who is Huawei

US$60.8bn in revenue in 2015, up 37.1%

YoY

Providing professional services for

1,500+ networks in over 170 countries

and regions

Serving 1/3 of the world's population

Market Progress

Employees

Business Areas

Contents

1 Company Overview

2 Current Economic Challenges and the ICT Solution

3 Supporting Digital Dividends for All

The global economy is in trouble

Eight years after the Global Financial Crisis,

economic growth remains weak and much

below previous business cycles

The drop in productivity growth per hour

worked is especially worrying

Lots of reasons given as to why this has

happened

Normal delay from a global financial

crisis

Demographics (ageing society; taking

less risks)

Long-run trend of declining real interest

rates

Inequality

Lack of investment over last 30 years in

education and infrastructure

Less impactful invention and innovation

Government investment has been in decline since the financial

crisis

General government gross fixed capital formation as a share of GDP, %

Source: OECD; McKinsey Global Research Institute

While the US and Europe have substantial needs, the majority of this investment will be

required in emerging economies. China’s needs for the future remain vast, despite its recent

over-investment, according to McKinsey.

The current plans for investment will leave countries around

the world facing major gaps

The economic importance of ICT

Source: Hall, R., Caselli, F., 2016, London School of Economics

A 10 percent increase in broadband penetration

raises GDP per capita growth by 0.9 to 1.5

percentage points. (Czernich et al, 2009)

Across 120 low and middle countries, (2009) find that

a 10 percent increase in broadband penetration

yielded an additional 1.38 percent in GDP growth on

average. (Qiang and Rossotto 2009)

Over the last two decades – based on the

conclusions of 29 separate academic research

papers – there is evidence that an increase in ICT

investment by 10 percent resulted in average in

higher output growth of 0.5-0.6 percent, regardless of

the country studied. Moreover, based on more recent

research the growth effect appears to be increasing.

(Kretschmer, Cardona, Strobel, 2013)

Following mechanization, electrification, and automation, we have reached the doorstep of

the fourth industrial revolution – Intelligentization. Intelligence is embedded into everything

including business processes.

ICT technologies such as mobility, cloud, Big Data, and IoT form the foundation of

intelligentization.

ICT Enables the Fourth Industrial Revolution –

Intelligentization

Mechanization Electrification Automation

Intelligentization

Everything is intelligent

Everything is connected

5G Cloud Big DataIoT

App App App

Contents

1 Company Overview

2 Current Economic Challenges and the ICT Solution

3 Supporting Digital Dividends for All

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A significant digital divide remains

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6 Billion people without BROADBAND

4 Billion people without INTERNET

2 Billion people without MOBILE PHONES

0.4 Billion without A DIGITAL SIGNAL

1

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Digital technologies have inherent biases

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2

Productivity Skills Transparency

Source: WDR 2016 Team based on Research ICT Africa and ITU Data

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Digital technologies can lead to benefits as well as risks

Innovation Efficiency Inclusion

Digital

Technologies

Lead To More…

Concentration Inequality Control

with supportive

policies and

environment

without

supportive

policies and

environment

3

Long-term investment in innovation…

…not concentration – open collaboration with global

partners

Communications and broadband for all

Huawei built 2G and 2.5G networks in remote areas of many countries (e.g., India, Ghana, Azerbaijan) to allow more people to enjoy the convenience of mobile communicationsProvided better connectivity in Africa by deploying:

• Over50% of wireless base stations

• Over70% of LTE networks

• Over50,000 km optical fiber

We built 500 new base stations reaching households of which 80% had never accessed broadband before…

Offering broadband access for the first time to households in Sri Lanka

5GB data packageUS$27

5GB data

package

US$4

The service costs as little as US$4 per month for 5GB of data and a voice line. (the initial connection fee was US$27 for the same service)

More affordable!

Efficiency not inequality

Common perception that Digital Economy is

job-destroying or creates information

asymmetries, but not always the case.

Apple’s App Store is estimated to have created

500,000 jobs in the USA alone.

In Honduras, farmers who got market price

directly on their mobile phones reported an

increase in average sales prices of 12.5%.

In China, over 10 million jobs have been created

producing goods directly or indirectly for sale over

the e-commerce platforms Alibaba and Taobao.

“Phone Ladies” – Huawei in collaboration with

Bangladesh’s biggest network operator. 280,000

jobs created – the phone ladies receive three

times the average income in typical rural areas.

Sustainability networks and initiatives

Global e-Sustainability

InitiativeBroadband Commission

CSR Europe BSRQuEST Forum

UN Global Compact

Huawei is a member of:

UN Broadband Commission for Digital

Development

UN Global Compact

GeSI, QuEST Forum

Business for Social Responsibility (BSR)

CSR Europe,

and other regional and global

organizations.

Huawei actively collaborates with

partners, customers, and other

stakeholders to improve sustainability

across our industry.

Our participation in these organizations

allows us to share best practices,

explore areas for collaboration, and

improve standards.

Green pipe: efficiency improvements

Adopting green ICT technologies

• Increased the energy efficiency of wireless base stations

and core routers by 20% and 25% respectively

• Provide energy-saving features and solutions to carriers

worldwide

Best of Show Award for the Huawei NE5000E Core Router

Product environment report

Huawei calculates the carbon and water footprint of many

of our products. During product design and manufacturing,

we use this information to analyze how to minimize

resource consumption and environment pollution.

P8 water footprint

Cyber security and user’s privacy protection

Management Focus on Cyber Security &

Privacy Protection

The Global Cyber Security & User Privacy

Protection Committee is the highest committee in

Huawei responsible for cyber security and privacy

protection and is chaired by the Deputy Chairman of

Huawei’s Board of Directors.

On this Committee sits the main board members and the

global process owners, each of whom ensure that cyber

security requirements are embedded in all processes,

policies, and standards and that they are executed

effectively.

Huawei senior executives have stated Huawei’s position

and commitments in cyber security and privacy protection

on various occasions. For example, in 2011, Ren Zhengfei,

the founder and CEO of Huawei, signed off on the

Statement on Establishing a Global Cyber Security

Assurance System.

Supplier cyber security management

Communication is also a key method to enhance suppliers’ cyber security awareness. In 2015, we organized training for senior managers of 116suppliers.

Huawei introduced the cyber security requirementsto suppliers in engineering supplier conference