Professional Documents
Culture Documents
www.huawei.com
Contents
24 Looking Forward
29 Corporate Citizenship
Contents
24 Looking Forward
29 Corporate Citizenship
30 Financial Report
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Financial Highlights
Huawei Technologies Corporation
and Subsidiary Companies
USD in millions
708
6,000
5,982 700 681 700
624
CAGR:27% CAGR:28% 600 CAGR:36%
600
5,000
500 500
4,000 3,827
396
400 384 400 385
3,000 311
2,694
300 300
2,290 2,128 258
2,000 204
200 200
1,000 108
100
100
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
0 0 0
1 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 2
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Financial Highlights
Huawei Technologies Corporation
and Subsidiary Companies
USD in millions
708
6,000
5,982 700 681 700
624
CAGR:27% CAGR:28% 600 CAGR:36%
600
5,000
500 500
4,000 3,827
396
400 384 400 385
3,000 311
2,694
300 300
2,290 2,128 258
2,000 204
200 200
1,000 108
100
100
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
0 0 0
1 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 2
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
The Year
Jan
supporting the new WiMAX / IEEE On June 9, the UMTS 3G network enabled Huawei to become the the InfoVision Awards Ceremony at On November 14, Huawei signed a
802.16 standards and specifications. built by Huawei Technologies for major supplier for KPN in the optical the Broadband World Forum Europe Strategic Partnership Agreement
On January 27, CAT Telecom Public SUNDAY of Hong Kong was put into market. (BBWF) in Madrid, Spain. with Telefonica for 3G and broad-
Company Limited, one of the two On April 29, MTN and Huawei commercial application. The network band innovations. The two parties
largest state-owned telecom carriers signed an equipment purchasing and consists of more than 1300 base On October 18, Huawei launched its will also develop the Latin American
in Thailand, awarded Huawei a
contract worth US$187 million to
service provisioning framework
contract. MTN will purchase
stations covering the entire Hong
Kong region.
Jul leading 40Gbps per wavelength
DWDM transmission system for
market together.
On July 1, Huawei Technologies was
expand its nationwide CDMA 2000 Huawei’s mobile communications awarded 'Honorary Investment global telecom carriers. The new On November 21, Huawei signed a
3G network. equipment, SDH products and On June 15, Huawei was selected by Advisor' at the Thailand-China system allows operators to transmit Global Framework Agreement with
services for the entire southern Frost & Sullivan as 'Wireless Investment Seminar held in Beijing, large-capacity and long-haul DWDM Vodafone and became an Approved
African region. Infrastructure Vendor of the Year signals securely and flexibly. Supplier for Vodafone’s Global
Feb
for its continuous investment in
2005', 'NGN Infrastructure Vendor of Thailand. Supply Chain.
On February 9, the eve of China’s the Year 2005', and 'Optical Vendor On October 19, Huawei opened its
Spring Festival, the softswitch May of the Year 2005', for its outstanding first inTouch Lab Experience Center
network that Huawei constructed for On May 16, Huawei established its performance in the telecommunica-
tions and broadband industry in the
Aug dedicated to creating a dynamic
marketplace of services and applications
Dec
China Mobile successfully handled UK training center to provide overall On August 22, Huawei won China On December 22, Huawei signed a
peak traffic of more than three times training services across Europe, Asia Pacific market. Mobile’s CNGI project to build the for telecom operators. In addition, contract with British Telecom (BT) for
its usual traffic and delivered together with its existing training world’s largest IPv6 commercial Huawei developed the Huawei the deployment of its multi-service
communications for 200 million centers in France, Romania and On June 18, Huawei ranked in the network. inTouch Lab Partnership Plan. access network (MSAN) and
users, proving its stability, quality, Germany. Huawei now has training top five with 5% of the total number transmission equipment for BT’s
and reliability. centers in all of its global regions. of UMTS Essential Patents, according On August 24, China Telecom, At the PT/EXPO COMM China 2005 21CN network.
to ETSI statistics. Zhejiang announced that Huawei in Beijing, Huawei launched its
At the 24th 3GPP GERAN conference Technologies was chosen for its end-to-end HSDPA commercial On December 29, Huawei won one
held in Ireland in May, four proposals switching network intelligence solution. million ADSL lines in China Telecom’s
submitted by Huawei and three project for the entire province. The 2006 framework contract with its
other members (Siemens, Sagem, project is the largest of its kind in leading SmartAX MA5600, DSLAM
and the Standard Institute of MII) China to establish network intelligence equipment based on the full GE
related to GSM trunking were using softswitch. architecture.
accepted without objection.
On December 29, Huawei signed a
Apr formally registered to focus on commercial contract with Huawei for partner in wireless network, fixed
Award 2005 in honor of its innovative fixed network operator in Germany,
technical, management and cultural a CWDM/DWDM project, which network, optical transmission and
contribution to progress in the Arcor, chose Huawei to build its next
On April 19, Huawei Technologies included access layer CWDM value-added services and applications.
training for customers, Huawei information industry, which was generation SDH transmission
and Intel announced that they would covering the whole of the Nether- Together, the two parties will
management executives and employees presented by the International network.
cooperate in building carrier-class lands and the national backbone develop the Portuguese telecoms
worldwide. Engineering Consortium (IEC) during
wireless broadband networks DWDM. The success of this project market.
3 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 4
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
The Year
Jan
supporting the new WiMAX / IEEE On June 9, the UMTS 3G network enabled Huawei to become the the InfoVision Awards Ceremony at On November 14, Huawei signed a
802.16 standards and specifications. built by Huawei Technologies for major supplier for KPN in the optical the Broadband World Forum Europe Strategic Partnership Agreement
On January 27, CAT Telecom Public SUNDAY of Hong Kong was put into market. (BBWF) in Madrid, Spain. with Telefonica for 3G and broad-
Company Limited, one of the two On April 29, MTN and Huawei commercial application. The network band innovations. The two parties
largest state-owned telecom carriers signed an equipment purchasing and consists of more than 1300 base On October 18, Huawei launched its will also develop the Latin American
in Thailand, awarded Huawei a
contract worth US$187 million to
service provisioning framework
contract. MTN will purchase
stations covering the entire Hong
Kong region.
Jul leading 40Gbps per wavelength
DWDM transmission system for
market together.
On July 1, Huawei Technologies was
expand its nationwide CDMA 2000 Huawei’s mobile communications awarded 'Honorary Investment global telecom carriers. The new On November 21, Huawei signed a
3G network. equipment, SDH products and On June 15, Huawei was selected by Advisor' at the Thailand-China system allows operators to transmit Global Framework Agreement with
services for the entire southern Frost & Sullivan as 'Wireless Investment Seminar held in Beijing, large-capacity and long-haul DWDM Vodafone and became an Approved
African region. Infrastructure Vendor of the Year signals securely and flexibly. Supplier for Vodafone’s Global
Feb
for its continuous investment in
2005', 'NGN Infrastructure Vendor of Thailand. Supply Chain.
On February 9, the eve of China’s the Year 2005', and 'Optical Vendor On October 19, Huawei opened its
Spring Festival, the softswitch May of the Year 2005', for its outstanding first inTouch Lab Experience Center
network that Huawei constructed for On May 16, Huawei established its performance in the telecommunica-
tions and broadband industry in the
Aug dedicated to creating a dynamic
marketplace of services and applications
Dec
China Mobile successfully handled UK training center to provide overall On August 22, Huawei won China On December 22, Huawei signed a
peak traffic of more than three times training services across Europe, Asia Pacific market. Mobile’s CNGI project to build the for telecom operators. In addition, contract with British Telecom (BT) for
its usual traffic and delivered together with its existing training world’s largest IPv6 commercial Huawei developed the Huawei the deployment of its multi-service
communications for 200 million centers in France, Romania and On June 18, Huawei ranked in the network. inTouch Lab Partnership Plan. access network (MSAN) and
users, proving its stability, quality, Germany. Huawei now has training top five with 5% of the total number transmission equipment for BT’s
and reliability. centers in all of its global regions. of UMTS Essential Patents, according On August 24, China Telecom, At the PT/EXPO COMM China 2005 21CN network.
to ETSI statistics. Zhejiang announced that Huawei in Beijing, Huawei launched its
At the 24th 3GPP GERAN conference Technologies was chosen for its end-to-end HSDPA commercial On December 29, Huawei won one
held in Ireland in May, four proposals switching network intelligence solution. million ADSL lines in China Telecom’s
submitted by Huawei and three project for the entire province. The 2006 framework contract with its
other members (Siemens, Sagem, project is the largest of its kind in leading SmartAX MA5600, DSLAM
and the Standard Institute of MII) China to establish network intelligence equipment based on the full GE
related to GSM trunking were using softswitch. architecture.
accepted without objection.
On December 29, Huawei signed a
Apr formally registered to focus on commercial contract with Huawei for partner in wireless network, fixed
Award 2005 in honor of its innovative fixed network operator in Germany,
technical, management and cultural a CWDM/DWDM project, which network, optical transmission and
contribution to progress in the Arcor, chose Huawei to build its next
On April 19, Huawei Technologies included access layer CWDM value-added services and applications.
training for customers, Huawei information industry, which was generation SDH transmission
and Intel announced that they would covering the whole of the Nether- Together, the two parties will
management executives and employees presented by the International network.
cooperate in building carrier-class lands and the national backbone develop the Portuguese telecoms
worldwide. Engineering Consortium (IEC) during
wireless broadband networks DWDM. The success of this project market.
3 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 4
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Message from the Company represented the majority of our contract sales,
accounting for US$4.8 billion, or 58% of our
total sales.
Through the hard work of our employees worldwide, coexistence and jointly create maximum value for our
Huawei‘s contract sales reached US$8.2 billion in 2005, a customers.
47% year on year increase. 2005 also marked the first year
that Huawei’s international sales exceeded domestic sales, Given our achievements and progress thus far, we feel a
comprising 58% (US$4.8 billion) of our total contract greater sense of obligation toward our customers. We will
sales. As a result, the international market is becoming embrace the challenges ahead in order to meet our
increasingly important to us, giving more balance to the customers’ expectations and strengthen our relationships
company’s revenue distribution. Huawei is now a major with them. Huawei will also continue to develop and
global mobile equipment provider, with the proportion of improve, while sustaining the operation of our customers’
revenue from our mobile product line steadily on the rise. existing networks and ensuring their evolution.
By the end of 2005, Huawei’s products and solutions had In the midst of convergence and transformation, the
been deployed in over 100 countries with 28 of the global telecoms industry is faced with great challenges
world’s top 50 operators choosing Huawei as their and opportunities. We will continue to innovate in order
partner. Moreover, Huawei’s products and solutions now to support network transformation and offer competitive
serve more than one billion users around the world. services to our customers. In addition, we will be increasingly
Huawei has also successfully passed strict authentication focused on our customers and globalization efforts,
procedures from leading operators including BT, Vodafone maintaining our sustainable development and accumulating
and FT, winning their recognition and in turn demonstrating our expertise. By growing together with our customers
that Huawei’s corporate governance is on a par with and partners, we hope to create a harmonious business
international best practices. For the progress that Huawei environment.
has made so far, we would like to extend our sincere
gratitude for your support throughout our development. In 2006, Huawei will continue to innovate and invest,
focusing on ALL IP and FMC solutions. We will also carry
When Huawei was established 18 years ago, we had on with management transformation to establish
minimal technology, talent and resources to leverage on. process-driven structures, refine our marketing system to
But we had a belief. Our belief in always putting our better meet customers’ requirements and improve our
customers first with an emphasis on continuous innovation service network while upgrading our service capabilities to
has kept our growth on the fast track. Undeterred by the provide our customers with quality delivery of products
difficulties and challenges that we encountered along the and solutions.
way, we persevered and increasingly won the trust of
customers and partners around the world. We firmly believe that serving our customers is the only
reason Huawei exists. Customer demand is the fundamental
In 1996, we embarked on our globalization strategy. driving force of our development. Together with our
Despite encountering many challenges and setbacks, we customers, we will embrace the future with an unwavering
were determined to succeed in our global efforts. After spirit of hard work. Through our quality products and
ten years of hard work and perseverance, our efforts have services, we aim to continuously create long-term value
paid off with breakthrough achievements. Throughout for you and enrich people’s life through communication.
our international expansion, we have continued refining
processes within our company by cooperating with top
consultancies to introduce best practices guided by
customer demand. By learning from the West with an Executive Management Team
open mind, we try to build a future-oriented, win-win Huawei Technologies Co., Ltd.
business model that is based on the oriental wisdom of
“harmony with diversity” to nurture harmonious
5 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 6
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Message from the Company represented the majority of our contract sales,
accounting for US$4.8 billion, or 58% of our
total sales.
Through the hard work of our employees worldwide, coexistence and jointly create maximum value for our
Huawei‘s contract sales reached US$8.2 billion in 2005, a customers.
47% year on year increase. 2005 also marked the first year
that Huawei’s international sales exceeded domestic sales, Given our achievements and progress thus far, we feel a
comprising 58% (US$4.8 billion) of our total contract greater sense of obligation toward our customers. We will
sales. As a result, the international market is becoming embrace the challenges ahead in order to meet our
increasingly important to us, giving more balance to the customers’ expectations and strengthen our relationships
company’s revenue distribution. Huawei is now a major with them. Huawei will also continue to develop and
global mobile equipment provider, with the proportion of improve, while sustaining the operation of our customers’
revenue from our mobile product line steadily on the rise. existing networks and ensuring their evolution.
By the end of 2005, Huawei’s products and solutions had In the midst of convergence and transformation, the
been deployed in over 100 countries with 28 of the global telecoms industry is faced with great challenges
world’s top 50 operators choosing Huawei as their and opportunities. We will continue to innovate in order
partner. Moreover, Huawei’s products and solutions now to support network transformation and offer competitive
serve more than one billion users around the world. services to our customers. In addition, we will be increasingly
Huawei has also successfully passed strict authentication focused on our customers and globalization efforts,
procedures from leading operators including BT, Vodafone maintaining our sustainable development and accumulating
and FT, winning their recognition and in turn demonstrating our expertise. By growing together with our customers
that Huawei’s corporate governance is on a par with and partners, we hope to create a harmonious business
international best practices. For the progress that Huawei environment.
has made so far, we would like to extend our sincere
gratitude for your support throughout our development. In 2006, Huawei will continue to innovate and invest,
focusing on ALL IP and FMC solutions. We will also carry
When Huawei was established 18 years ago, we had on with management transformation to establish
minimal technology, talent and resources to leverage on. process-driven structures, refine our marketing system to
But we had a belief. Our belief in always putting our better meet customers’ requirements and improve our
customers first with an emphasis on continuous innovation service network while upgrading our service capabilities to
has kept our growth on the fast track. Undeterred by the provide our customers with quality delivery of products
difficulties and challenges that we encountered along the and solutions.
way, we persevered and increasingly won the trust of
customers and partners around the world. We firmly believe that serving our customers is the only
reason Huawei exists. Customer demand is the fundamental
In 1996, we embarked on our globalization strategy. driving force of our development. Together with our
Despite encountering many challenges and setbacks, we customers, we will embrace the future with an unwavering
were determined to succeed in our global efforts. After spirit of hard work. Through our quality products and
ten years of hard work and perseverance, our efforts have services, we aim to continuously create long-term value
paid off with breakthrough achievements. Throughout for you and enrich people’s life through communication.
our international expansion, we have continued refining
processes within our company by cooperating with top
consultancies to introduce best practices guided by
customer demand. By learning from the West with an Executive Management Team
open mind, we try to build a future-oriented, win-win Huawei Technologies Co., Ltd.
business model that is based on the oriental wisdom of
“harmony with diversity” to nurture harmonious
5 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 6
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Vision
• To enrich life through communication
Mission
• To focus on our customers’ challenges and needs by providing
excellent communications network solutions and services in
order to consistently create maximum value for customers.
Strategy
• Serving our customers is the only reason Huawei exists;
Customer demand is the fundamental driving force of our
Customer Focus Steady and Sustainable development
• The radiating shapes of our logo are focused toward the Growth
center of the icon, indicating Huawei's customer-centric • High quality, excellent service, low operating costs, and giving top
strategy and commitment to creating long-term value for • A confident and optimistic symbol, the new logo conveys
our customers. a sense of maturity and steadiness in a professional and priority to meeting customer requirements to enhance their
international manner. competitiveness and profitability
7 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 8
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Vision
• To enrich life through communication
Mission
• To focus on our customers’ challenges and needs by providing
excellent communications network solutions and services in
order to consistently create maximum value for customers.
Strategy
• Serving our customers is the only reason Huawei exists;
Customer demand is the fundamental driving force of our
Customer Focus Steady and Sustainable development
• The radiating shapes of our logo are focused toward the Growth
center of the icon, indicating Huawei's customer-centric • High quality, excellent service, low operating costs, and giving top
strategy and commitment to creating long-term value for • A confident and optimistic symbol, the new logo conveys
our customers. a sense of maturity and steadiness in a professional and priority to meeting customer requirements to enhance their
international manner. competitiveness and profitability
7 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 8
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Customer Focus
Serving our customers is the only reason Huawei exists. At Huawei, we strongly believe in being customer oriented
Customer demand is the fundamental driving force of our and ensuring a service culture of integrity. We work closely
development. Huawei focuses on our customers’ with and continuously strive to satisfy our customers, and
challenges and needs by providing competitive communications support our market development in order to achieve
network solutions and services in order to consistently long-term mutual gains. By constantly stressing our belief
create maximum value for our customers. that “serving our customers is the only reason Huawei
exists,” we encourage our employees to provide excellent
In 2005, we reinforced our strategy and marketing system customer service. By creating an evaluation system that
to enhance its ability to guide Huawei’s overall development. includes a positive incentive system and takes into some of them already in upper-management level
We established process-based, systematic management consideration our employees’ responsibilities and achieve- positions, supervising local branch offices and areas such
systems that allow us to gain deeper insight into customers’ ments, we aim to achieve goals that are in line with our as sales and services.
requirements. Our marketing framework has been customers’ requirements. Through a series of process-based
extended to our regional offices, enabling us to have more training capabilities, which gives us differentiated service organizational frameworks and standardized operations, As a result of these efforts, our products and solutions
interaction with the strategy & planning, R&D and procurement advantages. Huawei has already established 72 technical Huawei takes every measure to guarantee customer have achieved wide success in international markets, for
departments of support platforms satisfaction, thereby creating a customer-focused and example:
our customers in and 85 country- highly-efficient professional culture which strengthens our • 19 UMTS commercial networks had been deployed by
order for us to We emphasize a culture of sincerity and customer level spare parts core competitive edge. the end of 2005
understand their orientation, working closely with customers to centers worldwide, • Huawei is the No.1 NGN provider in the global VoIP
needs more precisely providing our Huawei achieved a breakthrough in terms of our international market with 29.3% of market share in terms of port
and rapidly. This
realize long-term mutual gains, striving to meet customers with business in 2005, with international sales occupying 58% shipments (Dittberner, 3Q05)
is done with the customer needs and achieve market development. round-the-clock of our total contract sales. We successfully passed strict • No.2 in the global DSLAM market with 16.9% of market
help of processes service while strictly and thorough authentication procedures from top-tier share, and No.1 in the global IP DSLAM market with
such as IPD complying with operators such as BT (British Telecom), Vodafone, Italia 32% market share (Infonetics, 3Q05)
(Integrated Product Development), MM (Marketing customers’ service level agreements (SLA) to successfully Telecom, Royal KPN, and Telefonica, enabling us to • No.1 provider in MSAN with 32.3% of market share in
Management), OR (Offering Requirement) and CCM fulfill the diverse and specific needs of our customers. become their partners in both European and global terms of port shipments (Infonetics, 3Q05)
(Customer Commitment Management). By integrating Support systems including logistics, procurement, and markets. Our products and solutions have been commercially • No.2 in the global optical network market with 10.3%
customer requirements into our product development and finance are also being adopted rapidly by our regional deployed in over 100 countries, and serve 28 of the of market share (Ovum-RHK, 4Q04-3Q05)
business roadmap planning, Huawei is able to help offices in order to provide better service to our customers. world’s top 50 operators, as well as over one billion • No.1 in the global long-haul DWDM market with 15.9%
customers swiftly roll out new products and services. subscribers worldwide. of market share (Ovum-RHK, 4Q04-3Q05)
We fully understand that our relationship with our • No.3 in the global carrier-router market (Gartner, 2Q05)
Huawei has established an inclusive sales and service customers is not merely contractual in nature. Rather, our Huawei has also made great progress in our localization • No.1 in terms of the number of users of intelligent
system which includes 8 regional headquarters, 85 branch customers need complete end-to-end services, consulting endeavors, and our local employees are a strong driving network products with 21.6% of market share (Ovum-RHK)
offices worldwide, and a three-tier service system services in particular. Huawei has already formed our own force of Huawei’s service culture. Out of over 10,000
(headquarters, regional & local). This comprehensive marketing management consulting team which provides overseas Huawei employees, more than 60% were
system allows us to deliver stronger technical support and services including business consultation, network recruited locally. Through a variety of training programs
services. We also have a dedicated and professional planning, solutions, special maintenance, management of and cross-cultural exchanges, Huawei helps our local
service team committed to providing quality service. In daily operations, database design and management, and employees understand and adapt to our customer-centric
addition, we have set up an excellent integrated service joint marketing. Furthermore, we research OPEX and corporate culture. The company also provides local
platform armed with professional maintenance and develop corresponding solutions to enable customers to employees with favorable career development paths, with
reduce their OPEX.
9 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 10
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Customer Focus
Serving our customers is the only reason Huawei exists. At Huawei, we strongly believe in being customer oriented
Customer demand is the fundamental driving force of our and ensuring a service culture of integrity. We work closely
development. Huawei focuses on our customers’ with and continuously strive to satisfy our customers, and
challenges and needs by providing competitive communications support our market development in order to achieve
network solutions and services in order to consistently long-term mutual gains. By constantly stressing our belief
create maximum value for our customers. that “serving our customers is the only reason Huawei
exists,” we encourage our employees to provide excellent
In 2005, we reinforced our strategy and marketing system customer service. By creating an evaluation system that
to enhance its ability to guide Huawei’s overall development. includes a positive incentive system and takes into some of them already in upper-management level
We established process-based, systematic management consideration our employees’ responsibilities and achieve- positions, supervising local branch offices and areas such
systems that allow us to gain deeper insight into customers’ ments, we aim to achieve goals that are in line with our as sales and services.
requirements. Our marketing framework has been customers’ requirements. Through a series of process-based
extended to our regional offices, enabling us to have more training capabilities, which gives us differentiated service organizational frameworks and standardized operations, As a result of these efforts, our products and solutions
interaction with the strategy & planning, R&D and procurement advantages. Huawei has already established 72 technical Huawei takes every measure to guarantee customer have achieved wide success in international markets, for
departments of support platforms satisfaction, thereby creating a customer-focused and example:
our customers in and 85 country- highly-efficient professional culture which strengthens our • 19 UMTS commercial networks had been deployed by
order for us to We emphasize a culture of sincerity and customer level spare parts core competitive edge. the end of 2005
understand their orientation, working closely with customers to centers worldwide, • Huawei is the No.1 NGN provider in the global VoIP
needs more precisely providing our Huawei achieved a breakthrough in terms of our international market with 29.3% of market share in terms of port
and rapidly. This
realize long-term mutual gains, striving to meet customers with business in 2005, with international sales occupying 58% shipments (Dittberner, 3Q05)
is done with the customer needs and achieve market development. round-the-clock of our total contract sales. We successfully passed strict • No.2 in the global DSLAM market with 16.9% of market
help of processes service while strictly and thorough authentication procedures from top-tier share, and No.1 in the global IP DSLAM market with
such as IPD complying with operators such as BT (British Telecom), Vodafone, Italia 32% market share (Infonetics, 3Q05)
(Integrated Product Development), MM (Marketing customers’ service level agreements (SLA) to successfully Telecom, Royal KPN, and Telefonica, enabling us to • No.1 provider in MSAN with 32.3% of market share in
Management), OR (Offering Requirement) and CCM fulfill the diverse and specific needs of our customers. become their partners in both European and global terms of port shipments (Infonetics, 3Q05)
(Customer Commitment Management). By integrating Support systems including logistics, procurement, and markets. Our products and solutions have been commercially • No.2 in the global optical network market with 10.3%
customer requirements into our product development and finance are also being adopted rapidly by our regional deployed in over 100 countries, and serve 28 of the of market share (Ovum-RHK, 4Q04-3Q05)
business roadmap planning, Huawei is able to help offices in order to provide better service to our customers. world’s top 50 operators, as well as over one billion • No.1 in the global long-haul DWDM market with 15.9%
customers swiftly roll out new products and services. subscribers worldwide. of market share (Ovum-RHK, 4Q04-3Q05)
We fully understand that our relationship with our • No.3 in the global carrier-router market (Gartner, 2Q05)
Huawei has established an inclusive sales and service customers is not merely contractual in nature. Rather, our Huawei has also made great progress in our localization • No.1 in terms of the number of users of intelligent
system which includes 8 regional headquarters, 85 branch customers need complete end-to-end services, consulting endeavors, and our local employees are a strong driving network products with 21.6% of market share (Ovum-RHK)
offices worldwide, and a three-tier service system services in particular. Huawei has already formed our own force of Huawei’s service culture. Out of over 10,000
(headquarters, regional & local). This comprehensive marketing management consulting team which provides overseas Huawei employees, more than 60% were
system allows us to deliver stronger technical support and services including business consultation, network recruited locally. Through a variety of training programs
services. We also have a dedicated and professional planning, solutions, special maintenance, management of and cross-cultural exchanges, Huawei helps our local
service team committed to providing quality service. In daily operations, database design and management, and employees understand and adapt to our customer-centric
addition, we have set up an excellent integrated service joint marketing. Furthermore, we research OPEX and corporate culture. The company also provides local
platform armed with professional maintenance and develop corresponding solutions to enable customers to employees with favorable career development paths, with
reduce their OPEX.
9 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 10
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Continuous Innovation
hold leading positions in areas such as mobile softswitch, of our broad and shared platforms. Through the
UMTS, super-long-haul DWDM, MSTP, NGN, MSAN, IP Marketing-PMT-IPMT-IRB framework, Huawei changed
telecom network, IP DSLAM, intelligent network and our product development and planning process, and
Not only do customers need products and technology, but signaling network. Huawei has also become one of the gradually solved challenges involving the effectiveness of
more importantly, they need solutions that can bring them leading providers in CDMA, 3G terminals, intelligent decision-making. Using CBB (a hardware and software
success in their business. Huawei has already made the optical network ASON, core routers and switching. In sharing module), we established a technology sharing
transition from being technology-oriented to being driven addition, we have invested heavily in the development of system that comprises various layers such as system
by customer requirements, from solely providing products our ASIC chips. At present, we have developed over 100 design, platform, modules and components. With the
to offering complete end-to-end solutions, allowing the types of ASIC chips including UMTS baseband and HSDPA experience gained from eight years of CMM implementation,
development of our products to be driven by our customers’ chips, optical network chips, router chips, and broadband we established a large and sophisticated software
success. access chips, greatly improving the system’s capabilities engineering management system. Meanwhile, we also
team, we are able to make our international R&D strategy and thus enabling us to offer unique advantages at a introduced the fundamental ideas of CMM into our
We continuously work towards improving our ability to a reality. In fact, our R&D institutes in Bangalore, Nanjing, lower cost. hardware quality management system. Most of our
innovate based on our customers’ needs. Huawei has Shenzhen and Shanghai have all achieved CMM-level 5 software development research institutes have already
been investing a minimum of 10% of our annual revenue certification, demonstrating that Huawei’s software Huawei has formed numerous partnerships with leading passed CMM level-5 certification.
into R&D, with 10% of that investment used for management and quality control have already reached the companies, and cooperates with them on the foundation
pre-research to stay at the forefront of new technologies highest level in the industry. of our self-developed technologies. We work closely with Huawei also promotes standardized, component-based
and breakthroughs. leading multinationals such as TI, Motorola, IBM, Intel, and platform-specific management in our research and
At present, Huawei By the end of Agere, ADI, Altera, SUN, Microsoft, Oracle and HP to development, and simplified the structure of our systems
has already success-
We have a global R&D strategy. Huawei has set up 2005, Huawei had improve the time to market of our products, and to and organizational framework to prevent the leakage of
fully rolled out research institutes in Stockholm in Sweden, filed over 11,000 incorporate the latest technologies and best management technology. With an asynchronous development method,
products and
solutions in areas
Bangalore in India, Dallas and the Silicon Valley in patent applications, practices into our company. we coordinate development progress at various levels,
1,844 of which manage the time-to-market of our products and speed up
including FMC, the USA and Moscow in Russia, as well as had been approved. We are introducing the world’s best R&D management our response time to market demands.
IMS, WiMAX and China-based institutes. In 2005, Huawei models into our company and strengthening the support
IPTV. applied for over Data Centre, Huawei Industrial Base, Shenzhen
3,600 patents. By the end of 2005, we had applied for
In addition, we have re-structured the organizational over 3,000 UMTS patents and held 5% (69 patents) of the
framework of our product line, in anticipation of future world’s UMTS essential patents, ranking amongst the top
network convergence and industry transformation. five in the world. Huawei actively participates in over 70
Huawei provides complete end-to-end solutions in areas international standardization organizations including ITU,
including the service and application layer, core layer, 3GPP, 3GPP2, IEEE, IETF, ETSI, OMA, TMF, FSAN and DSLF,
bearer layer, access layer, and terminals, thereby offering and contributed over 1,000 articles in 2005 alone. Mean-
our customers distinct advantages to face network while, Huawei’s representatives have been elected to
convergence. positions in various organizations, including vice president
of ITU-T SG11, president of ITU-R 8F Technology Group, vice
Furthermore, Huawei has a global R&D strategy. We have president of 3GPP TSG SA2, vice president of OMA MCC as
set up research institutes in Stockholm in Sweden, Bangalore well as vice president of OMA GS.
in India, Dallas and the Silicon Valley in the USA and
Moscow in Russia, as well as China-based institutes in By focusing on key network technologies, Huawei has
Shenzhen, Shanghai, Beijing, Nanjing, Xi’an, Chengdu, formed core technology systems for systems architecture,
and Wuhan. Through the cooperation of our multicultural hardware, software and ASIC design. Also, we currently
11 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 12
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Continuous Innovation
hold leading positions in areas such as mobile softswitch, of our broad and shared platforms. Through the
UMTS, super-long-haul DWDM, MSTP, NGN, MSAN, IP Marketing-PMT-IPMT-IRB framework, Huawei changed
telecom network, IP DSLAM, intelligent network and our product development and planning process, and
Not only do customers need products and technology, but signaling network. Huawei has also become one of the gradually solved challenges involving the effectiveness of
more importantly, they need solutions that can bring them leading providers in CDMA, 3G terminals, intelligent decision-making. Using CBB (a hardware and software
success in their business. Huawei has already made the optical network ASON, core routers and switching. In sharing module), we established a technology sharing
transition from being technology-oriented to being driven addition, we have invested heavily in the development of system that comprises various layers such as system
by customer requirements, from solely providing products our ASIC chips. At present, we have developed over 100 design, platform, modules and components. With the
to offering complete end-to-end solutions, allowing the types of ASIC chips including UMTS baseband and HSDPA experience gained from eight years of CMM implementation,
development of our products to be driven by our customers’ chips, optical network chips, router chips, and broadband we established a large and sophisticated software
success. access chips, greatly improving the system’s capabilities engineering management system. Meanwhile, we also
team, we are able to make our international R&D strategy and thus enabling us to offer unique advantages at a introduced the fundamental ideas of CMM into our
We continuously work towards improving our ability to a reality. In fact, our R&D institutes in Bangalore, Nanjing, lower cost. hardware quality management system. Most of our
innovate based on our customers’ needs. Huawei has Shenzhen and Shanghai have all achieved CMM-level 5 software development research institutes have already
been investing a minimum of 10% of our annual revenue certification, demonstrating that Huawei’s software Huawei has formed numerous partnerships with leading passed CMM level-5 certification.
into R&D, with 10% of that investment used for management and quality control have already reached the companies, and cooperates with them on the foundation
pre-research to stay at the forefront of new technologies highest level in the industry. of our self-developed technologies. We work closely with Huawei also promotes standardized, component-based
and breakthroughs. leading multinationals such as TI, Motorola, IBM, Intel, and platform-specific management in our research and
At present, Huawei By the end of Agere, ADI, Altera, SUN, Microsoft, Oracle and HP to development, and simplified the structure of our systems
has already success-
We have a global R&D strategy. Huawei has set up 2005, Huawei had improve the time to market of our products, and to and organizational framework to prevent the leakage of
fully rolled out research institutes in Stockholm in Sweden, filed over 11,000 incorporate the latest technologies and best management technology. With an asynchronous development method,
products and
solutions in areas
Bangalore in India, Dallas and the Silicon Valley in patent applications, practices into our company. we coordinate development progress at various levels,
1,844 of which manage the time-to-market of our products and speed up
including FMC, the USA and Moscow in Russia, as well as had been approved. We are introducing the world’s best R&D management our response time to market demands.
IMS, WiMAX and China-based institutes. In 2005, Huawei models into our company and strengthening the support
IPTV. applied for over Data Centre, Huawei Industrial Base, Shenzhen
3,600 patents. By the end of 2005, we had applied for
In addition, we have re-structured the organizational over 3,000 UMTS patents and held 5% (69 patents) of the
framework of our product line, in anticipation of future world’s UMTS essential patents, ranking amongst the top
network convergence and industry transformation. five in the world. Huawei actively participates in over 70
Huawei provides complete end-to-end solutions in areas international standardization organizations including ITU,
including the service and application layer, core layer, 3GPP, 3GPP2, IEEE, IETF, ETSI, OMA, TMF, FSAN and DSLF,
bearer layer, access layer, and terminals, thereby offering and contributed over 1,000 articles in 2005 alone. Mean-
our customers distinct advantages to face network while, Huawei’s representatives have been elected to
convergence. positions in various organizations, including vice president
of ITU-T SG11, president of ITU-R 8F Technology Group, vice
Furthermore, Huawei has a global R&D strategy. We have president of 3GPP TSG SA2, vice president of OMA MCC as
set up research institutes in Stockholm in Sweden, Bangalore well as vice president of OMA GS.
in India, Dallas and the Silicon Valley in the USA and
Moscow in Russia, as well as China-based institutes in By focusing on key network technologies, Huawei has
Shenzhen, Shanghai, Beijing, Nanjing, Xi’an, Chengdu, formed core technology systems for systems architecture,
and Wuhan. Through the cooperation of our multicultural hardware, software and ASIC design. Also, we currently
11 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 12
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Management
Transformation
For years, Huawei has been working with leading development. With the help of the Investment Review Financial Management
consultancies such as IBM, the Hay Group, PwC and FhG Board (IRB), Marketing Management Team, Product Huawei has established a financial management and
to carry out management transformation in order to keep System Management Team, Operation & Delivery monitoring system, implemented and unified financial
abreast with international industrial benchmarks. In terms Management Team and various other supporting teams, regulations, procedures, codes and monitoring, and
of Integrated Product Development (IPD), Integrated Huawei has ensured the efficient implementation of an established a system for worldwide financial monitoring
Supply Chain (ISC), human resources management, financial overall strategy that is driven by customer needs. and management. We have built the Shenzhen Capital
management and quality control, we have undergone Management Center and Hong Kong Capital Management
comprehensive transformation, introduced the industry’s Quality Control and Production Center, and have also established partnerships with
best practices, and established IT-supported management Process more than 20 banks to meet the capital requirement
platforms. Huawei’s production process system including the 3D for our company’s business development. In addition,
continuous development of our business, it has also warehouse, the automatic warehouse and the entire Huawei has created an independent auditing system,
Through consistent implementation of management gained worldwide recognition from our global customers production line layout was designed by FhG of Germany. and we are currently constructing a 3-level monitoring
transformation, and partners, thereby The new system reduced the need for transportation of system that covers external auditing, internal control
we have gradually Through many years of development, we have gradually providing strong materials and decreased production time, thereby increasing and business auditing to minimize our financial and
perfected our support for our the all-round efficiency and quality of production. operation risks.
operation and perfected our operation and management processes in company’s global
management accordance with international standards. endeavors.
Human Resource Management
processes. In
In addition to setting up a cohesive and efficient human
addition, we have
resource team, Huawei is gradually working towards
managed to strike a balance between our company’s size,
business profitability, and cultivating our expertise.
Process Realignment developing an impeccable HR system. Through cooperation
With the introduction of practical industry benchmarks with the Hay Group, we improved our methods for evaluating
that are implemented through processes such as Marketing employee performance, set up a remuneration framework
Business Model Management (MM), Integrated Product Development which includes remuneration regulation, and introduced
In Huawei’s macro business model, product development (IPD), Integrated Supply Chain (ISC) and Customer the KPI system. We continuously improved performance
is inspired by our customers’ needs, and the goal of Relationship Management (CRM), complemented by the management by introducing the caliber model to refine
management is to establish a process-based organization transformation of our financial management and human the process of staff recruitment and development. In
structure. We have worked with IBM, Hay Group, KPMG, resources management (Hay Group), we have completely addition, we set up management systems in terms of
PwC, FhG, Mercer and Gallup to implement the best industry transformed our business processes and established an IT positions, remuneration, performance, competency, and
practices in terms of management and methodology. Moreover, platform to support such transformation. staff training. We also developed hierarchical performance
we have carried out thorough and organized transformation management systems such as the work reporting system,
in business processes, organization, quality control, Organization Transformation PBC system and an appraisal system. These systems are
human resources, financial management, and customer Starting from the product lines, Huawei’s Executive inspired by our customers’ requirements and measured by
satisfaction in order to create value for our customers. Management Team and “Strategy and Customer Standing responsibility results, key events and behavior processes.
Through continuous improvement, our management Committee” strengthened the decision-making ability of
system has now reached international standards. Not only the marketing system for understanding customer requirements
has our management system withstood the rapid and and planning Huawei’s strategic direction and business
13 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 14
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Management
Transformation
For years, Huawei has been working with leading development. With the help of the Investment Review Financial Management
consultancies such as IBM, the Hay Group, PwC and FhG Board (IRB), Marketing Management Team, Product Huawei has established a financial management and
to carry out management transformation in order to keep System Management Team, Operation & Delivery monitoring system, implemented and unified financial
abreast with international industrial benchmarks. In terms Management Team and various other supporting teams, regulations, procedures, codes and monitoring, and
of Integrated Product Development (IPD), Integrated Huawei has ensured the efficient implementation of an established a system for worldwide financial monitoring
Supply Chain (ISC), human resources management, financial overall strategy that is driven by customer needs. and management. We have built the Shenzhen Capital
management and quality control, we have undergone Management Center and Hong Kong Capital Management
comprehensive transformation, introduced the industry’s Quality Control and Production Center, and have also established partnerships with
best practices, and established IT-supported management Process more than 20 banks to meet the capital requirement
platforms. Huawei’s production process system including the 3D for our company’s business development. In addition,
continuous development of our business, it has also warehouse, the automatic warehouse and the entire Huawei has created an independent auditing system,
Through consistent implementation of management gained worldwide recognition from our global customers production line layout was designed by FhG of Germany. and we are currently constructing a 3-level monitoring
transformation, and partners, thereby The new system reduced the need for transportation of system that covers external auditing, internal control
we have gradually Through many years of development, we have gradually providing strong materials and decreased production time, thereby increasing and business auditing to minimize our financial and
perfected our support for our the all-round efficiency and quality of production. operation risks.
operation and perfected our operation and management processes in company’s global
management accordance with international standards. endeavors.
Human Resource Management
processes. In
In addition to setting up a cohesive and efficient human
addition, we have
resource team, Huawei is gradually working towards
managed to strike a balance between our company’s size,
business profitability, and cultivating our expertise.
Process Realignment developing an impeccable HR system. Through cooperation
With the introduction of practical industry benchmarks with the Hay Group, we improved our methods for evaluating
that are implemented through processes such as Marketing employee performance, set up a remuneration framework
Business Model Management (MM), Integrated Product Development which includes remuneration regulation, and introduced
In Huawei’s macro business model, product development (IPD), Integrated Supply Chain (ISC) and Customer the KPI system. We continuously improved performance
is inspired by our customers’ needs, and the goal of Relationship Management (CRM), complemented by the management by introducing the caliber model to refine
management is to establish a process-based organization transformation of our financial management and human the process of staff recruitment and development. In
structure. We have worked with IBM, Hay Group, KPMG, resources management (Hay Group), we have completely addition, we set up management systems in terms of
PwC, FhG, Mercer and Gallup to implement the best industry transformed our business processes and established an IT positions, remuneration, performance, competency, and
practices in terms of management and methodology. Moreover, platform to support such transformation. staff training. We also developed hierarchical performance
we have carried out thorough and organized transformation management systems such as the work reporting system,
in business processes, organization, quality control, Organization Transformation PBC system and an appraisal system. These systems are
human resources, financial management, and customer Starting from the product lines, Huawei’s Executive inspired by our customers’ requirements and measured by
satisfaction in order to create value for our customers. Management Team and “Strategy and Customer Standing responsibility results, key events and behavior processes.
Through continuous improvement, our management Committee” strengthened the decision-making ability of
system has now reached international standards. Not only the marketing system for understanding customer requirements
has our management system withstood the rapid and and planning Huawei’s strategic direction and business
13 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 14
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Supply Chain
Huawei has developed a flexible supply chain, which has enhanced our
Partnership
competitiveness in terms of providing fast, cost-effective and quality supply.
Huawei believes that cooperating with customers, suppliers Together with 3Com, we have established a data
We have also formulated pertinent supply guarantee strategies and built
and leading players in the industry to face challenges communications joint venture and developed a distribution
flattened manufacturing organizations that allow us to meet market
together through a win-win strategy is essential in today’s system which has helped our data communications
demands efficiently and flexibly. In addition, we carried out transformation
business world. We strive to build more stable partnerships services grow rapidly. In 2005, based on the joint venture
of the Integrated Supply Chain (ISC) to ensure that new processes and
with our customers and suppliers and reinforce strategic agreement, 3Com bought an additional 2% worth of
systems were implemented effectively, and also introduced quality
cooperation with international and domestic mainstream shares from Huawei, resulting in 3Com holding 51% of
engineering technologies to continuously improve supply chain capabilities
operators. Furthermore, we will enhance our position in the stock. The joint venture is currently making good
and customer service. We have also developed partnerships with principal
key international markets, strengthen partnerships with progress.
suppliers, enhanced purchase performance management, and carried out
major suppliers, and improve our response speed and
supplier certification procedures based on the industrial benchmark,
service advantages in our supply chain. We have also set up a joint venture with Siemens which
TQRDCE.
focuses on the research, production, sales and services of
In addition, we will further cooperate with our industry TD-SCDMA in order to further advance its development.
Internal Staff Shareholding System peers on many levels to set up a future-oriented, secure,
At Huawei, we have an internal staff shareholding system. With the help of and win-win development framework. Through this, we We have also announced the establishment of a joint
international human resource consulting firms, we implemented the virtual aim to create greater value for our global customers. venture with Nortel to combine our expertise in products
limited share system, virtual share option plan and MBO virtual share plan, and technology in order to develop ultra-broadband
which have enhanced our incentive plan. Our staff shareholding system has In the past few years, we have also initiated multi-level access solutions for the global market and provide better
helped to support the company’s development through the provisioning of cooperation in several fields including technology, products service to our customers.
effective, long-term incentives for our staff. and marketing in order to face risks and challenges
together.
15 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 16
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
• Customer Focus
• Continuous Innovation
2005 Driving Forces • Management Transformation
• Partnership
Supply Chain
Huawei has developed a flexible supply chain, which has enhanced our
Partnership
competitiveness in terms of providing fast, cost-effective and quality supply.
Huawei believes that cooperating with customers, suppliers Together with 3Com, we have established a data
We have also formulated pertinent supply guarantee strategies and built
and leading players in the industry to face challenges communications joint venture and developed a distribution
flattened manufacturing organizations that allow us to meet market
together through a win-win strategy is essential in today’s system which has helped our data communications
demands efficiently and flexibly. In addition, we carried out transformation
business world. We strive to build more stable partnerships services grow rapidly. In 2005, based on the joint venture
of the Integrated Supply Chain (ISC) to ensure that new processes and
with our customers and suppliers and reinforce strategic agreement, 3Com bought an additional 2% worth of
systems were implemented effectively, and also introduced quality
cooperation with international and domestic mainstream shares from Huawei, resulting in 3Com holding 51% of
engineering technologies to continuously improve supply chain capabilities
operators. Furthermore, we will enhance our position in the stock. The joint venture is currently making good
and customer service. We have also developed partnerships with principal
key international markets, strengthen partnerships with progress.
suppliers, enhanced purchase performance management, and carried out
major suppliers, and improve our response speed and
supplier certification procedures based on the industrial benchmark,
service advantages in our supply chain. We have also set up a joint venture with Siemens which
TQRDCE.
focuses on the research, production, sales and services of
In addition, we will further cooperate with our industry TD-SCDMA in order to further advance its development.
Internal Staff Shareholding System peers on many levels to set up a future-oriented, secure,
At Huawei, we have an internal staff shareholding system. With the help of and win-win development framework. Through this, we We have also announced the establishment of a joint
international human resource consulting firms, we implemented the virtual aim to create greater value for our global customers. venture with Nortel to combine our expertise in products
limited share system, virtual share option plan and MBO virtual share plan, and technology in order to develop ultra-broadband
which have enhanced our incentive plan. Our staff shareholding system has In the past few years, we have also initiated multi-level access solutions for the global market and provide better
helped to support the company’s development through the provisioning of cooperation in several fields including technology, products service to our customers.
effective, long-term incentives for our staff. and marketing in order to face risks and challenges
together.
15 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 16
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
17 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 18
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
17 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 18
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
19 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 20
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
19 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 20
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
21 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 22
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
21 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 22
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Looking Forward
Wireless Terminals:
The telecoms industry is undergoing great changes with content & media and consumer electronics industries),
building an end-to-end the constant development of technology, especially IT and service convergence (including voice, data, multimedia
IP technologies. There is also increasing convergence and content), network convergence (including a unified
solution between industries such as telecommunications, IT, media
and consumer electronics. The next few years will be a
service network, a unified control network, a unified
packet switched bearing network and a unified BOSS) and
In 2005, Huawei sold over 10 million wireless terminal critical time for the transformation of the telecoms industry the convergence of terminals (such as dual-mode terminals
products, with a year-on-year increase of more than as broadband, packetization, convergence and mobility and intelligent terminals). FMC is not simply a technology
100%. Huawei’s UMTS and HSDPA data cards were widely become widely recognized as the main trends of the or a characteristic. ALL IP and FMC encompass the
adopted by mainstream European carriers, and specifically future. transformation and upgrade of an entire network, requiring
used by Vodafone in large quantities. In addition, overall end-to-end considerations.
Huawei’s UMTS handsets have entered the Asia Pacific From the network perspective, ALL IP and FMC will be key
and European markets. Our CDMA handsets have trends in the next three to five years. The telecommunications From the service perspective, the main services that
achieved great success in Asia Pacific, Latin America and network will be undergoing end-to-end changes in all carriers provide today such as bandwidth leasing (e.g.
China, and were deployed by many leading carriers including layers including the service layer, control layer, bearer wholesale and leased lines) and voice services cannot
TATA of India. Huawei’s CDMA handset, C218, was well network, access network and terminals. Even carriers’ meet the requirements of future customer demands and
received in the market and achieved a total sales volume positioning and business models may need to change. market competition. With development of globalization of
of over 2 million units in 2005. information, carriers need to focus on new services,
The development towards ALL IP architecture will gradually namely multi-play services for consumers and ICT services
In June 2005, Huawei’s first commercial 3G handset, the Posts and Telecommunications News, an authoritative change the “vertical network,” characterized by technologies for business users. IPTV is currently the most promising
U626, won “Best 3G Handset” awarded by the Charlton media in China’s telecommunications industry. such as PSTN, SDH, ATM and FR, and services such as technology to enter the individual consumer market, while
Media Group in Singapore. Huawei also won the “Most voice, data and Internet, into a flattened, “horizontal the ability to provide integrated solutions which include
Promising Vendor for 3G Terminals” award from People’s In 2006, Huawei will make further investments in wireless network.” The most direct driver of FMC originates from solution design, service hosting, service outsourcing,
terminals, and strengthen R&D capabilities and the the need to upgrade the customer experience so access to service consulting and business process outsourcing will
marketing network to reinforce its leading position. the same experience can be achieved via any terminal be a key area of concern for future business users. Mean-
Huawei expects its total sales volume of wireless terminals from any location at any time. while, the business model of carriers will change from the
to exceed 25 million units in 2006. “Bit Pipe” model to “Service” provisioning. During this
FMC also lowers OPEX and improves efficiency. FMC transformation, openness, cooperation and value chain
includes industry convergence (including the telecoms, IT, integration will be crucial for success.
23 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 24
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
Looking Forward
Wireless Terminals:
The telecoms industry is undergoing great changes with content & media and consumer electronics industries),
building an end-to-end the constant development of technology, especially IT and service convergence (including voice, data, multimedia
IP technologies. There is also increasing convergence and content), network convergence (including a unified
solution between industries such as telecommunications, IT, media
and consumer electronics. The next few years will be a
service network, a unified control network, a unified
packet switched bearing network and a unified BOSS) and
In 2005, Huawei sold over 10 million wireless terminal critical time for the transformation of the telecoms industry the convergence of terminals (such as dual-mode terminals
products, with a year-on-year increase of more than as broadband, packetization, convergence and mobility and intelligent terminals). FMC is not simply a technology
100%. Huawei’s UMTS and HSDPA data cards were widely become widely recognized as the main trends of the or a characteristic. ALL IP and FMC encompass the
adopted by mainstream European carriers, and specifically future. transformation and upgrade of an entire network, requiring
used by Vodafone in large quantities. In addition, overall end-to-end considerations.
Huawei’s UMTS handsets have entered the Asia Pacific From the network perspective, ALL IP and FMC will be key
and European markets. Our CDMA handsets have trends in the next three to five years. The telecommunications From the service perspective, the main services that
achieved great success in Asia Pacific, Latin America and network will be undergoing end-to-end changes in all carriers provide today such as bandwidth leasing (e.g.
China, and were deployed by many leading carriers including layers including the service layer, control layer, bearer wholesale and leased lines) and voice services cannot
TATA of India. Huawei’s CDMA handset, C218, was well network, access network and terminals. Even carriers’ meet the requirements of future customer demands and
received in the market and achieved a total sales volume positioning and business models may need to change. market competition. With development of globalization of
of over 2 million units in 2005. information, carriers need to focus on new services,
The development towards ALL IP architecture will gradually namely multi-play services for consumers and ICT services
In June 2005, Huawei’s first commercial 3G handset, the Posts and Telecommunications News, an authoritative change the “vertical network,” characterized by technologies for business users. IPTV is currently the most promising
U626, won “Best 3G Handset” awarded by the Charlton media in China’s telecommunications industry. such as PSTN, SDH, ATM and FR, and services such as technology to enter the individual consumer market, while
Media Group in Singapore. Huawei also won the “Most voice, data and Internet, into a flattened, “horizontal the ability to provide integrated solutions which include
Promising Vendor for 3G Terminals” award from People’s In 2006, Huawei will make further investments in wireless network.” The most direct driver of FMC originates from solution design, service hosting, service outsourcing,
terminals, and strengthen R&D capabilities and the the need to upgrade the customer experience so access to service consulting and business process outsourcing will
marketing network to reinforce its leading position. the same experience can be achieved via any terminal be a key area of concern for future business users. Mean-
Huawei expects its total sales volume of wireless terminals from any location at any time. while, the business model of carriers will change from the
to exceed 25 million units in 2006. “Bit Pipe” model to “Service” provisioning. During this
FMC also lowers OPEX and improves efficiency. FMC transformation, openness, cooperation and value chain
includes industry convergence (including the telecoms, IT, integration will be crucial for success.
23 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 24
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
25 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 26
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
25 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 26
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
27 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 28
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
27 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 28
Financial Highlights The Year Message from the Company Vision, Mission and Strategy 2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial Report
It has always been one of Huawei’s core values to contribute million (US$2.42 million) worth of emergency communications
to countries and communities in which we operate. As equipment and an additional RMB 20 million (US$2.42
part of our efforts to fulfill our responsibility as a corporate million) in cash to affected countries including Indonesia,
citizen, Huawei has joined the Global Compact, an initiative Thailand, Sri Lanka and India.
advocated by the United Nations to promote corporate
citizenship worldwide. The ten principles of the Global From 2002 to 2005, Huawei donated over RMB 21.29
Compact on human rights, labor rights, environmental million (US$2.66 million) in cash, along with hundreds of
protection and anti-corruption are now an integral part of computers and 750 boxes of clothing, to schools in
Huawei’s corporate culture. poverty-afflicted regions in China.
In July 2005, an unprecedented flood struck the Chinese In August 1998, Huawei donated remote wireless access
province of Guangdong. In response, Huawei employees equipment worth RMB 25 million (US$3.02 million) to
donated RMB 3.8 million (US$475,000) in cash to help relief efforts for the strongest flood to hit China in over a
people severely affected by the disaster rebuild their lives. hundred years. The equipment was used to support rescue
efforts and restore communication infrastructure
Our overseas offices are also actively engaged in disaster-relief damaged by the flood. In addition, Huawei and its
efforts. At the end of 2005, each employee from Huawei’s employees donated RMB 15 million (US$1.82 million) in
representative office in India made a donation of half a cash to rebuild schools in areas hit by the flood.
day’s pay to Parikrma, a non-governmental organization
that helps needy children gain access to education. In our Huawei has also voluntarily set up a total of five Hope
North American office, employees donated to hurricane Schools in Ansai County of Shaanxi and Yongjing County
Katrina victims through the American Red Cross in November of Gansu to help provide education to less privileged
of 2005. children. In addition, Huawei has donated RMB 25 million
(US$3.02 million) to the National Education Commission
Huawei also participated in disaster-relief efforts in the of China for the establishment of the “Huawei Education
aftermath of the devastating tsunami which struck Southeast Fund”, which provides needy students with an
Asia on December 26, 2004. Huawei was the first Chinese undergraduate education.
company to respond to the disaster, donating RMB 20
Huawei has continuously contributed to the countries and
communities where we operate and strongly encourages
employees to give back to society. Huawei has established
an employee organization known as the “Association of
Care”, in which members actively participate in community
service activities during their free time. Through various
means, Huawei employees actively contribute to a sustainable
and harmonious environment
29 Huawei Technologies Annual Report 2005 Huawei Technologies Annual Report 2005 30
Financial Highlights The Year Message from the Company Vision, Mission and Strategy
Note:
• All financial data are quoted from the unqualified auditors reports of KPMG which are presented in accordance
with International Financial Reporting Standards.
• Solely for the convenience of the readers, the consolidated financial statement of 2005 has been converted to
United States dollars at the rate of US$1.00=RMB8.0702 ( 2004: US$1.00=RMB8.2765)
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