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Message from the Chairwoman

Information technology has grown beyond the confines of its own industry to drive technological innovation and development across multiple domains. The extent to which a company, organization, or a country embraces digital technology will determine its future competitiveness. In order to enable digital transformation across all industries, drive stable development in the ICT ecosystem, and contribute to social progress, we must foster open collaboration with partners all along the value chain. Throughout this process, Huawei will remain true to its pipe strategy, focusing on ICT infrastructure development to create value for our customers.

Our society is evolving into an information society, and countless technological advancements are just on the horizon. These advancements include new materials like graphene and carbon nanotubes; Virtual Reality (VR) and Augmented Reality (AR), which will enable new forms of ergonomics and user experience; new manufacturing techniques empowered by smart robotics and 3D printing; as well as breakthroughs in Artificial Intelligence (AI) and biotechnology. Information technology is the foundation of these transformative advancements, having grown beyond the confines of its own industry to drive technological innovation and development across multiple domains. For the time being, the shape that information society will eventually take is still unclear, but we are certain about one thing: We are heading in the right direction, as connectivity has become a basic human right.

Bridging the digital divide

The digital divide remains enormous—a fact we cannot ignore. According to a 2015

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report by the International Telecommunication Union (ITU), 4.2 billion people are still unable to connect to the Internet. The rate of Internet penetration is less than 10% in the 48 least-developed countries identified by the UN. Of these, penetration falls below 2% in the six least-developed countries. We still have a long way to go before we truly bridge the digital divide. Recognizing this, the UN has set Connecting the Unconnected as one of the main goals in its 2030 Agenda for Sustainable Development.

With a long-term commitment to innovation, Huawei continues to plug away behind the scenes, serving over one-third of the world's population and doing our part to bridge the divide. Today, mobile communications cover every inch of our planet, reaching the very tip of Mountain Everest, and even the icy regions of the North Pole. There are still major gaps, however, in broadband penetration and ubiquitous connectivity. At this very moment, Huawei is driving innovation in technologies and products such as LTE, Narrowband Internet of Things (NB-IoT), and 5G to bridge these gaps and build a Better Connected World.

Accelerating digital transformation

The extent to which a company, organization, or a country embraces digital technology will determine its future competitiveness. This is common knowledge—if not common sense. Many countries are thus using the Internet, cloud computing, IoT, Big Data, and other technologies to make their industries, governments, and enterprises smarter, thereby future-proofing the competitiveness of physical industry and real economy. Digital infrastructure, as the foundation of all these applications, is critical to their success.

In an effort to expand digital infrastructure, Huawei looks to partner up with carriers. By fully leveraging each other's strengths in technology and services, we can set a new benchmark for public cloud services used in verticals and large enterprises, and help carriers transform their business more efficiently. In addition, Huawei collaborates with customers from a number of other industries, such as public security, finance, transport, energy, and manufacturing, providing the technological foundation for their smart city, smart finance, smart transport, smart grid, and smart manufacturing initiatives. By doing so, we enable their digital transformation and help ensure that they remain competitive in future markets.

At Huawei, we are well aware that customers need commercially viable solutions. And when developing these solutions, no company can meet customer needs on its own—we must join forces with industry partners to build an open ecosystem. We continue to hold fast to our pipe strategy, focusing on ICT infrastructure development; we will not touch applications or data. To meet these needs, we have forged extensive partnerships with consulting firms, app developers, system integrators, and channel partners. And through this commitment to openness, collaboration, and shared success, we will create value for our customers, enable digital transformation across all industries, contribute to a healthy ICT ecosystem, and drive social progress.

Continuously improving corporate governance

Effective governance ensures our ability to undertake strategic initiatives and make our corporate vision a reality. By staying customer-centric and inspiring dedication, we are making continuous improvements in our corporate governance structure, organizations, processes, and appraisal systems. This serves to increase customer satisfaction and helps us stay on track for long-term, positive growth. In 2015, Huawei's Board of Directors carefully reviewed a number of important items, including the company's annual business plan and mid- to long-term development plan, further defining our strategic objectives and key initiatives for the future.

Adhering to operational integrity and compliance

We conduct business in an ethical manner, complying with international treaties, applicable laws and regulations in the countries where we operate. This is the cornerstone of operational compliance at Huawei, and has long been a core belief of our management team. To ensure the integrity of our operations, we benchmark our work against best industry practices. We integrate compliance requirements into our corporate policies, systems and processes, and have set up professional teams to ensure that all of these requirements are met. In business areas where regulatory compliance is especially critical, such as trade compliance (export control) and cyber security, we have established an operational compliance system that conforms to industry standards and undergoes regular third-party audits.

Huawei actively communicates with local authorities on compliance-related requirements, obtaining approval and licenses wherever necessary. Furthermore, we regularly communicate with third-party stakeholders on matters of regulatory compliance to further increase transparency, enhance mutual understanding and trust, and foster a sound business environment based on strict adherence to business ethics and regulations.

Fulfilling our social responsibility

Huawei is committed to growing together with local communities. Leveraging our ICT expertise and management experience, we engage in a number of public service activities with governments, customers, and non-profit organizations. We support ICT innovation; participate in green initiatives and traditional cultural events; promote the development and training of local ICT talent; and provide many different forms of support to charitable organizations and underprivileged groups within the community.

In the Philippines, Bangladesh, Cameroon, Botswana, Saudi Arabia, Belarus, and other countries and regions, we fund ICT knowledge contests and provide scholarships to promote more inclusive education. In remote areas, we donate computers, tablets, and mobile phones to schools, young students, and girls to give them equal access to the Internet. In addition, we continue to implement our flagship CSR program, Seeds for the Future, to facilitate global knowledge transfer, support local training, and increase digital inclusion. Thus far, we have partnered with more than 150 universities to implement the program in 67 countries. About 15,000 students from five different continents have benefited from the program, including more than 1,700 who studied at Huawei's headquarters in China. The most outstanding participants have since joined the ICT industry, and are actively contributing to its development.

Focus, perseverance, and technological breakthrough

At Huawei, we focus on strategic opportunities, patiently investing in future technological breakthroughs. We reject short-term opportunism, and do not waste our strategic resources on non-core areas of business. We are fortunate to find ourselves in a time of rapid ICT growth. In spite of the many opportunities that surround us, however, we remain focused, never taking shortcuts nor allowing ourselves to get distracted by irrelevant areas of potential growth. Only through solid work, moving forward one step at a time, have we managed to arrive where we are today. This has been a long and difficult process of ongoing effort, but today we look upon success and see our path forward with the utmost clarity.

Sun Yafang

Chairwoman of the Board

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