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Entries in Huawei (38)


Huawei brandishes its CSR credentials

Huawei was out selling its corporate social responsibility (CSR) programme this week. Cue eyes rolling in the Pentagon.

There's nothing unusual about CSR for western corporations, but among private sector Chinese companies it's still quite rare.

About 120 large Chinese firms have signed the UN Global Compact, which was set up in 2000 to encourage the corporate to adopt sustainable business practices. But almost all of them are state-owned, like China Mobile, ZTE, and oil companies Sinochem and CNOOC.

They’re probably following a state policy, but the UNGC is problematic for companies operating in China, both local and foreign. The first principle - to take one random example – is to “respect the protection of internationally-proclaimed human rights.” 

At a media lunch in Hong Kong, PR vice-president Scott Sykes said Huawei’s CSR was not about improving its image abroad but was “the right thing to do.” 

Still, most of Huawei’s CSR work is conducted outside China.The single biggest part, an ICT skills development scheme called Telecom Seeds, operates solely offshore, although CSR head Holy Ranaivozanany says the company is weighing whether to set it up at home.

Telecom Seeds is in 18 countries, mostly in the developing world, but will also be expanded to Japan, Spain and Australia in the coming year.

When it comes to supply chain management – the tricky area of labour standards that has caught up Apple, Samsung and others – Huawei audits all of its suppliers and, according to Ranaivozanany, has won a UN Global Compact award for best practice in the supply chain.

Ranaivozanany did disclose that Huawei sources as many components from the US as it does from China – 30%. Which presumably makes it as much a threat to Chinese national security as to the USA’s.

There's nothing special about Huawei's CSR programme, other than the fact it has one and is promoting it. 

For most people it's a Rorsach test. Those who believe Huawei is a PLA wormhole into the west's secrets will see it as a feint; those who think it's a company put-upon by protectionist scaremongerers likewise will see it as no different from any other CSR scheme.



Behind Huawei's handset numbers

Huawei made an eye-catching improvement in the handset rankings in the last quarter, but it has still fallen short of its own hefty expectations.

The Chinese firm ranked no. 3 in smartphones and no. 5 overall in IDC’s latest quarterly survey of mobile phone sales. It shipped 10.8m smartphones in the fourth quarter, 90% more than it sold in Q4 2011, and 15.8m phones in total, 13.7% higher.

But even though it improved full-year sales by 9.3% to $7.8 billion,  the consumer division still missed its full-year target of $9 billion. And it looks like it will struggle to meet the $15 billion sales goal for 2015 that the unit set last year.

Richard Yu, the head of Huawei’s consumer business, told Chinese business news site operating profit was up 40% but “we missed the target we set at the beginning of the year.”

And while Huawei's Ascend smartphone brand is getting traction, Yu’s team appears still focused on the ODM and operator white labal markets.

One un-named executive is quoted as saying “we need to clearly recognise that commercial success is the key, instead of illusory pursuit of the so-called ‘global brand.’”

For all this, let's bear in mind that Huawei only made the top end of the table in the final quarter of 2012. It ranks outside the top five in both smartphones and handsets for the full year. There's a lot riding on how it stacks up in this quarter.


Huawei up, ZTE down, NSN turns a corner

A busy day for vendors: Huawei expects a profit, ZTE a loss, and the bloom could be returning to Nokia Siemens.

Huawei has defied the tough telecom gear market to report expected 33% higher income of 15.4bn yuan ($2.48bn), with sales up 8% to 220.2bn yuan ($35bn).

It has forecast revenue to rise 10-12% in 2013.

The non-core divisions maintained their contributions. While the telco business accounted for 72.8% in sales (up 6.8% over 2011), the consumer division - which includes handsets and modems – made up 22.0% (up 9.3%) and the enterprise group 5.2% (up 25%).

Offshore sales accounted for 66% of total sales, down from 67.9% in 2011.

CFO Cathy Meng said the company had had kept general expenses under control, allowing it to “allocate more resources to bolster the front line and ensure continuous improvements on customer delivery and service quality.”

ZTE‘s expected loss wasn’t such a huge surprise, given its trying year, although investors still marked its stock down 1.63%.

ZTE said it expects a full-year loss of 2.5bn-2.9bn yuan ($379m-$439m). Operating revenue fell 18% in the last quarter and margin shrank by 11 points as a result of it chasing low-margin contracts in Africa, South America, Asia, and China.

As in previous quarters ZTE attributes the loss to an array of factors, “including postponed execution of systems contracts, decrease in revenue from terminals in the domestic market, and delayed progress of international projects.”

Meanwhile, Nokia Siemens is planning a bond issue in the next quarter – its first ever foray into the public finance markets, reports.

It aims to raise as much as €700m ($932m) with high-yield bonds to pay down bank debt and fund future investment, paper says.

The move is significant given the potential for a future flotation of the business, which has been recently rejuvenated by its parents. Nokia and Siemens talked to private equity groups about a sale of NSN last year but failed to strike a deal, forcing the groups to bolster its balance sheet with a further €1bn of equity.

Helped by that equity injection, steep cost cuts and asset sales, NSN has tallied “three consecutive quarters of underlying profitability for the first time in its history. That has led to renewed talk among financiers about a potential flotation or sale next year.”


Huawei's Ren vows: 'Our gear will be the world's safest'

Huawei’s publicity-shy CEO Ren Zhengfei has made his first public remarks since a Congressional committee labeled the company a security threat.

And while he did not address the committee’s claims directly, Ren said Huawei was “determined to make internal adjustments to ensure that our equipment is the most secure, transparent, high-quality equipment in the world.”

Ren’s rare public disclosure was posted by Huawei cyber security chief John Suffolk on his personal blog following a private meeting between the two. Ren gave his permission for his comments to be published.

The 68-year-old former PLA officer has never been interviewed by the foreign media and has not talked to the Chinese press for more than a decade, although his remarks at internal staff meetings are sometimes relayed to the Chinese media.

Despite his long public silences, Ren’s role in creating China’s largest private-sector business has made him one of the country’s most feted business leaders. In contrast, his refusal to attend the recent Washington hearings sharpened the image of Huawei as a firm operating in the Chinese shadows, unwilling or unable to explain itself.

In the event, Ren did not elaborate on how the vendor would improve security, but Suffolk cited the company’s existing policies - for example, ensuring equipment is “transparent so people can inspect what is passing through,” and that hardware was interchangeable so customers can mix and match with vendor software.

Unlike his boss, Suffolk, a former UK government CIO, was not afraid to make a political point:

We hope that those who wish to close markets, stop competition and innovation under the false banner of national security will take the strategic customer focused lead of Mr Ren and pour their energies into creating a free market with substantial competition and innovation so all citizens can benefit.



Whoa, Huawei & ZTE say they're not spies

Who saw this coming? Huawei and ZTE appeared before a Congress committee and denied spying on the US.


Here's the money quote from Mike Rogers, chair of the House of Reps intelligence committee:


"Our sources overseas have told us that there is a reason to question whether the companies are tied to the Chinese government or whether their equipment is as what it appears," he said.


Not only does he have no specific information, he doesn't even have a specific allegation. The phrasing puts as much distance as possible between himself and an actual position. This is a guy with the world's largest intelligence-gathering machine at his disposal.


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