Huawei Investment & Holding Co., Ltd. 2017 Annual Report

2017: Creating value, driving growth

Revenue
603,621
CNY Million
15.7% YoY
Net profit
47,455
CNY Million
28.1% YoY
Cash flow from operating activities
96,336
CNY Million
95.7% YoY

Unit: CNY Million

Business highlights in 2017

Carrier business: Moving from the investment-driven to value-driven network construction model

  • We deployed over 500,000 base stations around the world, with more than 10 million commercial connections, and worked with over 1,000 ecosystem partners to build the ecosystem.
  • We have signed over 350 NFV and 380 SDN commercial contracts around the world and deployed more than 30 CloudAIR commercial networks with wireless air interfaces.
  • We conducted 5G pre-commercial tests with over 30 leading carriers in more than 10 cities around the world.

Enterprise business: Enabling digital transformation across all industries

  • We continued to enhance product and solution innovations in cloud, big data, campus networks, data centers, IoT, and other domains. We also worked to promote the extensive application of our innovative products and solutions in smart city and safe city projects, as well as in the finance, energy, transportation, manufacturing, and other sectors.
  • We worked to build platforms for customer and partner platforms, cultivate a fertile environment in which a robust ecosystem will grow, and build symbiotic relationships founded on shared success.
  • 197 Fortune Global 500 companies – 45 of which are Fortune 100 companies – have chosen Huawei as their partner for digital transformation.

Consumer business: Building a world-class smart device brand

  • A synergy was created between our Huawei and Honor brands. In 2017, Huawei shipped a total of 153 million smartphones (including Honor phones). We are firmly positioned among the top three phone makers in the world.
  • We released the HUAWEI Mate 10 – the first smartphone with an embedded AI chipset.
  • Our global brand awareness increased to 86%. The number of consumers considering a Huawei device in non-Chinese markets saw a year-on-year increase of 100%, which put Huawei among the top three global vendors in this category for the first time.

Huawei Cloud: Building open, trustworthy cloud platforms

  • Huawei set up a Cloud BU. Our cloud service portfolio consisted of 99 services across 14 major categories, including over 50 solutions.
  • We launched the Enterprise Intelligence (EI) platform to deliver a one-stop AI platform as services.
  • We continued to build an open, collaborative cloud ecosystem that will thrive on shared success. The total number of our cloud service partners has exceeded 2,000.

Business results by region

China

Based on ongoing 4G network rollout, sustained growth in the smartphone sector, and our growing capabilities in enterprise and industry solutions, our revenue from the Chinese market increased by 29.0% year-on-year.

Asia Pacific

Due to the accelerated pace of digital transformation amongst enterprises and a growing share of the smartphone market, Huawei maintained its growth momentum in the Asia-Pacific Region and our revenue increased by 10.3% year-on-year.

EMEA

Due to the accelerated pace of digital transformation amongst enterprises and a growing share of the smartphone market, our revenue from Europe, the Middle East, and Africa (EMEA) increased by 4.7% year-on-year.

Americas

In the Americas, affected by fluctuations in telco investment cycles in Latin America, Huawei's revenue from this region decreased by 10.9% over 2016.

Translating leading technologies into better and more competitive products and solutions that help our customers succeed

Continuing to invest in R&D and promoting open innovation

  • Approximately 80,000 employees were engaged in R&D, comprising 45% of our total workforce.
  • Huawei's R&D expenditures totaled CNY89.7 billion in 2017, accounting for 14.9% of the company's total revenue. We have spent more than CNY394 billion on R&D over the past decade.
  • Total number of patents granted to Huawei: 74,307

Pursuing joint innovation on a global scale to drive industry development

  • The Huawei Innovation Research Program (HIRP) has involved over 400 research institutions and 900 companies in more than 30 different countries and regions.
  • We collaborate on joint innovation projects relating to 5G algorithms, AI technology, network intelligence, nanomaterials, and other cutting-edge technologies. These efforts in technological innovation helped us make breakthroughs and drive industry development and business success.

Actively driving ecosystem development and cultivating a fertile environment

  • We cultivate a fertile business environment, remain as an enabler, and stay committed to openness, collaboration, and shared success.
  • Huawei is an active member of 360+ standards organizations, industrial alliances, and open source communities where we hold more than 300 key positions. We are a member of the board or executive committee in many organizations like the IIC, IEEE-SA, BBF, ETSI, TMF, and WFA.

Dissolving boundaries and working together with partners

Standards organizations

  • Actively contribute to key standards organizations

Industry alliances

  • Accelerate industry development

Developer ecosystem

  • Constantly hone open platform capabilities

Business alliances

  • Develop customer-facing business solutions

Open source communities

  • Embrace open source and promote community integration

Technological innovation

  • Promote closer collaboration with industry and academia and cultivation of ICT talent

Government advisory

  • Help drive economic growth with new technology

Actively fulfilling our social responsibility and driving social sustainability

Bridging the Digital Divide

  • Huawei's Three-Star site solutions drove development of mobile broadband in Africa
  • The Huawei RuralStar 2.0 solution connected remote areas with mobile signals and fueled local economic growth
  • Deployed smart city solutions in more than 120 cities across over 40 countries
  • Ran the Seeds for the Future Program in 108 countries and regions to promote ICT development and a prosperous industry

Supporting Network Stability and Security and Protecting Privacy

  • Supported the stability of over 1,500 customer networks
  • Guaranteed network stability during over 200 key events and natural disasters worldwide
  • Submitted 186 security standard proposals to 3GPP SA3
  • Delivered privacy awareness training to all employees

Promoting Environmental Protection

  • Energy efficiency of major products increased by 20% on average, making our products among the most energy-efficient in the industry
  • Received the UL110 highest-level green certification for 5 mobile phones
  • Suppliers reduced carbon emissions by 63,000 tons via pilot energy conservation projects, driving a green supply chain
  • Introduced 932 million kWh of clean energy, equivalent to a carbon emissions reduction of 450,000 tons

Building a Healthy Ecosystem

  • Invested more than CNY12 billion in employee benefits
  • EHS audits on more than 4,100 sites worldwide
  • Convened the Huawei Global Supplier Sustainability Conference with nearly 210 attendees
  • Launched approximately 200 community support programs in more than 100 countries and regions