华为2005年年报

Contents2Financial Highlights3The Year5Message from the Company8Vision, Mission and Strategy92005 Driving Forces17Performance in BusinessWireless Network: quickly becoming a world leading supplierFixed Network: leading network transformationOptical Network: a leading global supplierData Communications: leading in carrier-class IP networkApplication & Software: exploring new models for the futureWireless Terminals: building an end-to-end solution24Looking Forward29Corporate Citizenshipnetwork solutions for operators around the world. The company is dedicated to providing innovativeservices and solutions to create long-term value and potential growth forproducts andin over 100countries and serve 28 of the world’s top50 operators, as well as overFinancial Highlights The Year Message from the Company Vision, Mission and Strategy1Huawei T echnologies Annual Report 2005Note: (*) Excluding discontinuing operations.Huawei T echnologies Annual Report 2005 2The YearJanOn January 27, CAT Telecom Public Company Limited, one of the two largest state-owned telecom carriers in Thailand, awarded Huawei a contract worth US$187 million to expand its nationwide CDMA 2000 3G network.FebOn February 9, the eve of China’s Spring Festival, the softswitch network that Huawei constructed for China Mobile successfully handled peak traffic of more than three times its usual traffic and delivered communications for 200 million users, proving its stability, quality, and reliability.AprOn April 19, Huawei Technologies and Intel announced that they would cooperate in building carrier-class wireless broadband networks supporting the new WiMAX / IEEE802.16 standards and specifications.On April 29, MTN and Huaweisigned an equipment purchasing andservice provisioning frameworkcontract. MTN will purchaseHuawei’s mobile communicationsequipment, SDH products andservices for the entire southernAfrican region.MayOn May 16, Huawei established itsUK training center to provide overalltraining services across Europe,together with its existing trainingcenters in France, Romania andGermany. Huawei now has trainingcenters in all of its global regions.At the 24th 3GPP GERAN conferenceheld in Ireland in May, four proposalssubmitted by Huawei and threeother members (Siemens, Sagem,and the Standard Institute of MII)related to GSM trunking wereaccepted without objection.JunOn June 9, Huawei University wasformally registered to focus ontechnical, management and culturaltraining for customers, Huaweimanagement executives and employeesworldwide.On June 9, the UMTS 3G networkbuilt by Huawei Technologies forSUNDAY of Hong Kong was put intocommercial application. The networkconsists of more than 1300 basestations covering the entire HongKong region.On June 15, Huawei was selected byFrost & Sullivan as 'WirelessInfrastructure Vendor of the Year2005', 'NGN Infrastructure Vendor ofthe Year 2005', and 'Optical Vendorof the Year 2005', for its outstandingperformance in the telecommunica-tions and broadband industry in theAsia Pacific market.On June 18, Huawei ranked in thetop five with 5% of the total numberof UMTS Essential Patents, accordingto ETSI statistics.On June 24, Royal KPN signed acommercial contract with Huawei fora CWDM/DWDM project, whichincluded access layer CWDMcovering the whole of the Nether-lands and the national backboneDWDM. The success of this projectHuawei T echnologies Annual Report 20053Financial Highlights The Year Message from the Company Vision, Mission and StrategyOn November 14, Huawei signed a Strategic Partnership Agreement with Telefonica for 3G and broad-band innovations. The two parties will also develop the Latin American market together.On November 21, Huawei signed a Global Framework Agreement with Vodafone and became an Approved Supplier for Vodafone’s Global Supply Chain.DecOn December 22, Huawei signed a contract with British Telecom (BT) for the deployment of its multi-service access network (MSAN) and transmission equipment for BT’s 21CN network.On December 29, Huawei won one million ADSL lines in China Telecom’s 2006 framework contract with its leading SmartAX MA5600, DSLAM equipment based on the full GE architecture.On December 29, Huawei signed a Strategic Partnership Agreement with Sonaecom in Portugal. Huawei was chosen as Sonaecom’s strategic partner in wireless network, fixed network, optical transmission and value-added services and applications. Together, the two parties will develop the Portuguese telecoms market.enabled Huawei to become themajor supplier for KPN in the optical market.JulOn July 1, Huawei Technologies was awarded 'Honorary Investment Advisor' at the Thailand-ChinaInvestment Seminar held in Beijing, for its continuous investment in Thailand.AugOn August 22, Huawei won China Mobile’s CNGI project to build the world’s largest IPv6 commercial network.On August 24, China Telecom, Zhejiang announced that Huawei Technologies was chosen for its switching network intelligence project for the entire province. The project is the largest of its kind in China to establish network intelligence using softswitch.OctOn October 4, Huawei’s MSAN HONET UA5000 won the InfoVision Award 2005 in honor of its innovative contribution to progress in the information industry, which was presented by the InternationalEngineering Consortium (IEC) duringthe InfoVision Awards Ceremony at the Broadband World Forum Europe (BBWF) in Madrid, Spain.On October 18, Huawei launched its leading 40Gbps per wavelength DWDM transmission system for global telecom carriers. The new system allows operators to transmit large-capacity and long-haul DWDM signals securely and flexibly.On October 19, Huawei opened its first inTouch Lab Experience Center dedicated to creating a dynamicmarketplace of services and applications for telecom operators. In addition, Huawei developed the Huawei inTouch Lab Partnership Plan.At the PT/EXPO COMM China 2005 in Beijing, Huawei launched its end-to-end HSDPA commercial solution.NovOn November 10, the second largest fixed network operator in Germany, Arcor, chose Huawei to build its next generation SDH transmissionnetwork.2005 Driving Forces Performance in Business Looking Forward Corporate Citizenship Financial ReportHuawei T echnologies Annual Report 20054Message from the CompanyHuawei T echnologies Annual Report 20055Financial Highlights The Year Message from the Company Vision, Mission and StrategyDear customers, partners and peers,Through the hard work of our employees worldwide, Huawei‘s contract sales reached US$8.2 billion in 2005, a 47% year on year increase. 2005 also marked the first year that Huawei’s international sales exceeded domestic sales, comprising 58% (US$4.8 billion) of our total contract sales. As a result, the international market is becoming increasingly important to us, giving more balance to the company’s revenue distribution. Huawei is now a major global mobile equipment provider, with the proportion of revenue from our mobile product line steadily on the rise. By the end of 2005, Huawei’s products and solutions had been deployed in over 100 countries with 28 of the world’s top 50 operators choosing Huawei as their partner. Moreover, Huawei’s products and solutions now serve more than one billion users around the world. Huawei has also successfully passed strict authentication procedures from leading operators including BT, Vodafone and FT, winning their recognition and in turn demonstrating that Huawei’s corporate governance is on a par with international best practices. For the progress that Huawei has made so far, we would like to extend our sincere gratitude for your support throughout our development. When Huawei was established 18 years ago, we had minimal technology, talent and resources to leverage on. But we had a belief. Our belief in always putting our customers first with an emphasis on continuous innovation has kept our growth on the fast track. Undeterred by the difficulties and challenges that we encountered along the way, we persevered and increasingly won the trust of customers and partners around the world.In 1996, we embarked on our globalization strategy. Despite encountering many challenges and setbacks, we were determined to succeed in our global efforts. After ten years of hard work and perseverance, our efforts have paid off with breakthrough achievements. Throughout 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 open mind, we try to build a future-oriented, win-win business model that is based on the oriental wisdom of “harmony with diversity” to nurture harmonious coexistence and jointly create maximum value for our customers.Given our achievements and progress thus far, we feel a greater sense of obligation toward our customers. We will embrace the challenges ahead in order to meet our customers’ expectations and strengthen our relationships with them. Huawei will also continue to develop and improve, while sustaining the operation of our customers’ existing networks and ensuring their evolution.In the midst of convergence and transformation, the global telecoms industry is faced with great challenges and opportunities. We will continue to innovate in order to support network transformation and offer competitive services to our customers. In addition, we will be increasingly focused on our customers and globalization efforts, maintaining our sustainable development and accumulating our expertise. By growing together with our customers and partners, we hope to create a harmonious business environment.In 2006, Huawei will continue to innovate and invest, focusing on ALL IP and FMC solutions. We will also carry on with management transformation to establish process-driven structures, refine our marketing system to better meet customers’ requirements and improve our service network while upgrading our service capabilities to provide our customers with quality delivery of products and solutions.We firmly believe that serving our customers is the only reason Huawei exists. Customer demand is the fundamental driving force of our development. Together with our customers, we will embrace the future with an unwavering spirit of hard work. Through our quality products and services, we aim to continuously create long-term valueCustomer Focus• The radiating shapes of our logo are focused toward the center of the icon, indicating Huawei's customer-centric strategy and commitment to creating long-term value for our customers.Innovation• Vivacious and contemporary, the new logo indicates that Huawei will continue to provide innovative, customized and competitive products and solutions for our customers with an enterprising spirit, and jointly face the challenges and opportunities in the future together with our customers. Steady and Sustainable Growth• A confident and optimistic symbol, the new logo conveys a sense of maturity and steadiness in a professional and international manner.Harmony• Adopting a graduated tone while keeping symmetrical, the new logo looks more natural and compatible, and acts as a metaphor for Huawei’s open-minded attitude and partnership strategy, indicating that Huawei will maintain a healthy growth by creating a harmonious business environment.Huawei T echnologies Annual Report 20057Financial Highlights The Year Message from the Company Vision, Mission and StrategyVisionMissionStrategyHuawei T echnologies Annual Report 20058We emphasize a culture of sincerity and customer orientation, working closely with customers to realize long-term mutual gains, striving to meet customer needs and achieve market development.Customer FocusServing our customers is the only reason Huawei exists. Customer demand is the fundamental driving force of our development. Huawei focuses on our customers’ challenges and needs by providing competitive communications network solutions and services in order to consistently create maximum value for our customers.In 2005, we reinforced our strategy and marketing system to enhance its ability to guide Huawei’s overall development. We established process-based, systematic management systems that allow us to gain deeper insight into customers’ requirements. Our marketing framework has beenextended to our regional offices, enabling us to have more interaction with the strategy & planning, R&D and procurement departments of our customers in order for us to understand their needs more precisely and rapidly. This is done with the help of processes such as IPD (Integrated Product Development), MM (Marketing Management), OR (Offering Requirement) and CCM (Customer Commitment Management). By integrating customer requirements into our product development and business roadmap planning, Huawei is able to help customers swiftly roll out new products and services.Huawei has established an inclusive sales and service system which includes 8 regional headquarters, 85 branch offices worldwide, and a three-tier service system (headquarters, regional & local). This comprehensive system allows us to deliver stronger technical support and services. We also have a dedicated and professional service team committed to providing quality service. In addition, we have set up an excellent integrated service platform armed with professional maintenance and training capabilities, which gives us differentiated service advantages. Huawei has already established 72 technical support platforms and 85 country-level spare parts centers worldwide, providing ourcustomers withround-the-clock service while strictly complying with customers’ service level agreements (SLA) to successfully fulfill the diverse and specific needs of our customers. Support systems including logistics, procurement, and finance are also being adopted rapidly by our regional offices in order to provide better service to our customers. We fully understand that our relationship with ourcustomers is not merely contractual in nature. Rather, our customers need complete end-to-end services, consulting services in particular. Huawei has already formed our own marketing management consulting team which provides services including business consultation, network planning, solutions, special maintenance, management of daily operations, database design and management, and joint marketing. Furthermore, we research OPEX and develop corresponding solutions to enable customers toreduce their OPEX.Huawei T echnologiesAnnual Report 20059At Huawei, we strongly believe in being customer oriented and ensuring a service culture of integrity. We work closely with and continuously strive to satisfy our customers, and support our market development in order to achieve long-term mutual gains. By constantly stressing our belief that “serving our customers is the only reason Huawei exists,” we encourage our employees to provide excellent customer service. By creating an evaluation system thatincludes a positive incentive system and takes into consideration our employees’ responsibilities and achieve-ments, we aim to achieve goals that are in line with our customers’ requirements. Through a series of process-based organizational frameworks and standardized operations, Huawei takes every measure to guarantee customer satisfaction, thereby creating a customer-focused and highly-efficient professional culture which strengthens our core competitive edge.Huawei achieved a breakthrough in terms of our international business in 2005, with international sales occupying 58% of our total contract sales. We successfully passed strict and thorough authentication procedures from top-tier operators such as BT (British Telecom), Vodafone, Italia Telecom, Royal KPN, and Telefonica, enabling us to become their partners in both European and global markets. Our products and solutions have been commercially deployed in over 100 countries, and serve 28 of the world’s top 50 operators, as well as over one billion subscribers worldwide.Huawei has also made great progress in our localization endeavors, and our local employees are a strong driving force of Huawei’s service culture. Out of over 10,000 overseas Huawei employees, more than 60% were recruited locally. Through a variety of training programs and cross-cultural exchanges, Huawei helps our local employees understand and adapt to our customer-centric corporate culture. The company also provides local employees with favorable career development paths, with some of them already in upper-management level positions, supervising local branch offices and areas such as sales and services.As a result of these efforts, our products and solutions have achieved wide success in international markets, for example:• 19 UMTS commercial networks had been deployed by the end of 2005• Huawei is the No.1 NGN provider in the global VoIP market with 29.3% of market share in terms of port shipments (Dittberner, 3Q05)• No.2 in the global DSLAM market with 16.9% of market share, and No.1 in the global IP DSLAM market with 32% market share (Infonetics, 3Q05)• No.1 provider in MSAN with 32.3% of market share in terms of port shipments (Infonetics, 3Q05)• No.2 in the global optical network market with 10.3% of market share (Ovum-RHK, 4Q04-3Q05)• No.1 in the global long-haul DWDM market with 15.9% of market share (Ovum-RHK, 4Q04-3Q05)• No.3 in the global carrier-router market (Gartner, 2Q05)• No.1 in terms of the number of users of intelligent network products with 21.6% of market share (Ovum-RHK)Huawei T echnologies Annual Report 2005 10We have a global R&D strategy. Huawei has set up research institutes in Stockholm in Sweden,Bangalore in India, Dallas and the Silicon Valley in the USA and Moscow in Russia, as well as China-based institutes.Continuous InnovationNot only do customers need products and technology, but more importantly, they need solutions that can bring them success in their business. Huawei has already made the transition from being technology-oriented to being driven by customer requirements, from solely providing products to offering complete end-to-end solutions, allowing the development of our products to be driven by our customers’ success.We continuously work towards improving our ability to innovate based on our customers’ needs. Huawei has been investing a minimum of 10% of our annual revenue into R&D, with 10% of that investment used for pre-research to stay at the forefront of new technologies and breakthroughs. At present, Huaweihas already success-fully rolled out products andsolutions in areasincluding FMC, IMS, WiMAX and IPTV.In addition, we have re-structured the organizational framework of our product line, in anticipation of future network convergence and industry transformation. Huawei provides complete end-to-end solutions in areas including the service and application layer, core layer, bearer layer, access layer, and terminals, thereby offering our customers distinct advantages to face network convergence.Furthermore, Huawei has a global R&D strategy. We have set up research institutes in Stockholm in Sweden, Bangalore in India, Dallas and the Silicon Valley in the USA and Moscow in Russia, as well as China-based institutes in Shenzhen, Shanghai, Beijing, Nanjing, Xi’an, Chengdu, and Wuhan. Through the cooperation of our multiculturalteam, we are able to make our international R&D strategy a reality. In fact, our R&D institutes in Bangalore, Nanjing, Shenzhen and Shanghai have all achieved CMM-level 5 certification, demonstrating that Huawei’s software management and quality control have already reached the highest level in the industry.By the end of 2005, Huawei had filed over 11,000 patent applications, 1,844 of which had been approved. In 2005, Huawei applied for over3,600 patents. By the end of 2005, we had applied for over 3,000 UMTS patents and held 5% (69 patents) of the world’s UMTS essential patents, ranking amongst the top five in the world. Huawei actively participates in over 70 international standardization organizations including ITU, 3GPP , 3GPP2, IEEE, IETF, ETSI, OMA, TMF, FSAN and DSLF, and contributed over 1,000 articles in 2005 alone. Mean-while, Huawei’s representatives have been elected to positions in various organizations, including vice president of ITU-T SG11, president of ITU-R 8F Technology Group, vice president of 3GPP TSG SA2, vice president of OMA MCC as well as vice president of OMA GS.By focusing on key network technologies, Huawei has formed core technology systems for systems architecture, hardware, software and ASIC design. Also, we currentlyHuawei T echnologiesAnnual Report 200511hold leading positions in areas such as mobile softswitch, UMTS, super-long-haul DWDM, MSTP, NGN, MSAN, IP telecom network, IP DSLAM, intelligent network and signaling network. Huawei has also become one of the leading providers in CDMA, 3G terminals, intelligent optical network ASON, core routers and switching. In addition, we have invested heavily in the development of our ASIC chips. At present, we have developed over 100 types of ASIC chips including UMTS baseband and HSDPA chips, optical network chips, router chips, and broadband access chips, greatly improving the system’s capabilities and thus enabling us to offer unique advantages at a lower cost.Huawei has formed numerous partnerships with leading companies, and cooperates with them on the foundation of our self-developed technologies. We work closely with leading multinationals such as TI, Motorola, IBM, Intel, Agere, ADI, Altera, SUN, Microsoft, Oracle and HP to improve the time to market of our products, and to incorporate the latest technologies and best management practices into our company.We are introducing the world’s best R&D management models into our company and strengthening the support of our broad and shared platforms. Through the Marketing-PMT-IPMT-IRB framework, Huawei changed our product development and planning process, and gradually solved challenges involving the effectiveness of decision-making. Using CBB (a hardware and software sharing module), we established a technology sharing system that comprises various layers such as system design, platform, modules and components. With the experience gained from eight years of CMM implementation, we established a large and sophisticated software engineering management system. Meanwhile, we also introduced the fundamental ideas of CMM into our hardware quality management system. Most of our software development research institutes have already passed CMM level-5 certification.Huawei also promotes standardized, component-based and platform-specific management in our research and development, and simplified the structure of our systems and organizational framework to prevent the leakage of technology. With an asynchronous development method, we coordinate development progress at various levels, manage the time-to-market of our products and speed up our response time to market demands.Data Centre, Huawei Industrial Base, ShenzhenHuawei T echnologies Annual Report 200512Through many years of development, we have gradually perfected our operation and management processes in accordance with international standards. Management TransformationFor years, Huawei has been working with leading consultancies such as IBM, the Hay Group, PwC and FhG to carry out management transformation in order to keep abreast with international industrial benchmarks. In terms of Integrated Product Development (IPD), Integrated Supply Chain (ISC), human resources management, financial management and quality control, we have undergone comprehensive transformation, introduced the industry’s best practices, and established IT-supported management platforms.Through consistent implementation of management transformation, we have gradually perfected our operation and m a n a g e m e n t processes. In addition, we havemanaged to strike a balance between our company’s size,business profitability, and cultivating our expertise.Business Model In Huawei’s macro business model, product development is inspired by our customers’ needs, and the goal of management is to establish a process-based organization structure. We have worked with IBM, Hay Group, KPMG, PwC, FhG, Mercer and Gallup to implement the best industry practices in terms of management and methodology . Moreover, we have carried out thorough and organized transformationin business processes, organization, quality control, human resources, financial management, and customer satisfaction in order to create value for our customers. Through continuous improvement, our management system has now reached international standards. Not only has our management system withstood the rapid and continuous development of our business, it has alsogained worldwide recognition from our global customers and partners, thereby providing strong support for our company’s global endeavors.Process Realignment With the introduction of practical industry benchmarks that are implemented through processes such as MarketingManagement (MM), Integrated Product Development (IPD), Integrated Supply Chain (ISC) and Customer Relationship Management (CRM), complemented by the transformation of our financial management and human resources management (Hay Group), we have completely transformed our business processes and established an IT platform to support such transformation. Organization TransformationStarting from the product lines, Huawei’s Executive Management Team and “Strategy and Customer Standing Committee” strengthened the decision-making ability of the marketing system for understanding customer requirements and planning Huawei’s strategic direction and businessHuawei T echnologiesAnnual Report 200513development. With the help of the Investment Review Board (IRB), Marketing Management Team, Product System Management Team, Operation & Delivery Management Team and various other supporting teams, Huawei has ensured the efficient implementation of an overall strategy that is driven by customer needs.Quality Control and Production ProcessHuawei’s production process system including the 3D warehouse, the automatic warehouse and the entire production line layout was designed by FhG of Germany. The new system reduced the need for transportation of materials and decreased production time, thereby increasing the all-round efficiency and quality of production. Human Resource ManagementIn addition to setting up a cohesive and efficient human resource team, Huawei is gradually working towards developing an impeccable HR system. Through cooperation with the Hay Group, we improved our methods for evaluating employee performance, set up a remuneration framework which includes remuneration regulation, and introduced the KPI system. We continuously improved performance management by introducing the caliber model to refine the process of staff recruitment and development. In addition, we set up management systems in terms of positions, remuneration, performance, competency, and staff training. We also developed hierarchical performance management systems such as the work reporting system, PBC system and an appraisal system. These systems are inspired by our customers’ requirements and measured by responsibility results, key events and behavior processes. Financial ManagementHuawei has established a financial management and monitoring system, implemented and unified financial regulations, procedures, codes and monitoring, and established a system for worldwide financial monitoring and management. We have built the Shenzhen Capital Management Center and Hong Kong Capital Management Center, and have also established partnerships with more than 20 banks to meet the capital requirement for our company’s business development. In addition, Huawei has created an independent auditing system, and we are currently constructing a 3-level monitoring system that covers external auditing, internal control and business auditing to minimize our financial andoperation risks.Huawei T echnologies Annual Report 2005 14。