Business Administration Department

South East Asian Institute of Technology, Inc.

National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

Part A

BACKGROUND OF THE COMPANY

Huawei Technologies is the world’s largest provider of

telecommunications technologies and China’s second largest privately held

corporation, with a vision “To enrich life through communication,” Huawei has

earned a reputation as one of the most dynamic, fastest growing, innovative

global technology companies today.

Their strategies have helped the company to gain a position as one of the

most important and recognized company around the world after Apple and

Samsung, furthermore their communication channel and logistics also had

contributing to the developing of Huawei and lend a hand to expand to new

markets. Huawei is a global Telecom solutions provider with main focus on

customer needs and innovation. Through its unique end-to-end offering of

equipment in Telecom Networks, Global Services and Devices, it had earned

global reputation in wireline, wireless and IP technologies, and had served nearly

one third of the global population.

Its vision was to enrich the lives of the customers through communication.

It had overtaken Ericsson, another global telecom player in its expansion

activities. But Huawei’s globalization efforts were marred by issues of security

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concerns expressed by countries that were skeptical over its lack of

transparency. US had vehemently opposed Huawei’s growth activities in its

country. To become a truly global company,

Huawei had to develop its market in the US. Against the backdrop of such

security concerns, the case study would analyze the growth of Huawei in its

home country, China, its international growth strategies and whether the hue and

cry raised by the US authorities on security concerns would really impede the

growth of Huawei globally.

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

Part B

FACTS AND CASE NARRATIVE

Huawei Technologies Co., Ltd. is a Chinese company. Nowadays, Huawei is

becoming a very recognized company worldwide, due to its high technological

quality products and innovation. These Chinese company is leading global

provider of information and communications technology infrastructure and smart

devices. With integrated solutions across four key domains, telecom networks,

IT, smart devices, and cloud services.

Huawei is committed to bring digital to every person, home and organization for a

fully connected, intelligent world. Our proposal is to analyze the international

strategies that Huawei have been applying to their success, what makes this

company different from competition? Why clients or customers would prefer

Huawei instead of other technological and recognized companies? and what can

they improve in order to acquire more clients and work further to get into new

markets and potentialized their products as the best ones.

A profound study is done on how Huawei Technologies had made

strategic choices to when and how to enter in an existing and highly competitive

market. Also, the study explores the important canvases of their business model,

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which includes the precise time of entry, market segmentation and pricing

strategy.

Huawei is a private company, they have more than 180,000 employees,

and operates in more than 170 countries around the world. Huawei is a leading

global provider of information and communication technology infrastructure and

smart devices, they provide telecom networks, IT, smart devices, and cloud

services. They aim that they are committed to bringing digital to every person,

home and organization for a fully connected intelligent world.

Their vision and mission is to bring digital to every person, home and

organization for a fully connected, intelligent world, and they are currently

focusing on ICT and intelligent devices.

In 2018 Huawei recorded a 21% growth and jumps to 68th place in

Interbrand International's list of top value companies around the world, according

to Interbrand International, a leading global brand consultancy. Huawei this year

jumped two places from last year's rankings and its brand value rose by 14%, an

estimated 7.6 billion US dollars

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Huawei's R&D centers is built in many countries, such as Silicon Valley

and Dallas in USA, Stockholm in Sweden, Moscow in Russia, Bangalore in India,

and Beijing, Shanghai, Nanjing, Shenzhen, Hangzhou, Guangzhou in China.

Part C

STATEMENT OF THE PROBLEM

This study aims to find out the challenges faced by Huawei

Telecommunications Company.

Specifically, it sights to answer the following questions;

1. What are the problems encountered by Huawei Telecommunications

Company in terms of:

a. Android Ban

b. Security Issues

c. 5G Technology Issue

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

Part D

OBJECTIVE OF THE PROBLEM

In this research the methodology is used for research is both

qualitative and quantitative Information that is required for the analysis is

found different research papers, journal, surveys annual reports etc. The

information that is intended to be shown in the following analysis

comprises a search for information on the Internet, whose component

corresponds mainly to the company's website, magazine and news, as

well as articles.

The researchers conduct this research to know the challenges

faced by Huawei Technologies and to develop innovative solutions on

problems stated above, this research aims to assign the significance to

the following:

Researchers. This study will help them to have an in-depth

knowledge about the situations and challenges about their study.

Future Researchers –this study will serve as reference for study

relative to this research paper.

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Part E

DATA COLLECTION

ENTRY MODE TO DIFFERENT MARKETS

Huawei have developed different entry modes depending in the

geographical distance of countries, different markets and different products,

thinking all the time in customers’ needs and what can they do in order to satisfy

those needs and make them possible to get for all the people around the world,

this means that Huawei also competes in price. Some of those special methods

are:

 Joint venture in Russian market. Huawei’s market selection strategy

targets market that have weak telecommunications infrastructure, but have great

development potential

 Export entry mode in countries such as south America , Asia and Africa,

Huawei use the export method as an input mode, due to factors of great

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South East Asian Institute of Technology, Inc.
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South Cotabato, Philippines

influence on both sides, these factors such as geographical distance and local

market conditions, within this point is important to highlight that in countries such

as Colombia, Huawei just offer smartphones and tablet, they have not exporting

laptops and some others products they use to offer, the price also plays an

important role within countries like Colombia, Ecuador and some others, because

the products are high quality ones and consider as luxury and they are not as

expensive as some others brand, so Huawei have gained lot of market within this

countries.

        There is a different entry mode for North America, Huawei had to face

some challenges in order to penetrate this market, so they decided to use the

same strategy to get into the American market as the one they use in west

Europe, this method include franchising, co-research, co-production (OEM) and

co-sales( helping each other to sell products in each of their own markets), the

table below reflects these alliances

Different entry modes for different products. Huawei also employs different

entry modes flexibly for different product specially the ones without advantages,

for instances in 2g mobile networks, Huawei use to cooperates with giants of this

area. Furthermore, for the product which they consider as advantageous ones,

with technological advantage and without market resource, it uses the method of

joint venture, franchising or co-research. Furthermore, a significant part of

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South East Asian Institute of Technology, Inc.
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South Cotabato, Philippines

Huawei’s leap from regional player to global leader has to do with its astute

strategy of brand partnerships throughout its development.

PROMOTIONAL CHANNELS

Services and products of Huawei are deployed in nearly one hundred and

forty countries across the globe and it serves five largest operators of the

telecom industry in the global market.

The company has 170,000 employees to provide efficient working and

out of these 76,000 are engaged to work in its research and development

division. Huawei has 21 institutes of R&D in various countries like China,

Canada, United States, Pakistan, Germany, Sweden, Colombia, Turkey, Russia

and others.

Distribution channels of Huawei has always been very effective. It believes

in developing joint ventures with local authorities and under this relationship it

provides dividends in exchange of using products from Huawei.  

Currently, brand Huawei does not deal directly with customers as it

believes in cultivating appropriate channel of distribution that includes

distributors, sales networking team, enterprise and consumers. Providing an

accurate number of products on a given day at a place has become very

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South East Asian Institute of Technology, Inc.
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South Cotabato, Philippines

important for the company. Place signifies location, market coverage, mobile

phones and online market. It has two vital channels. First is seller’s channel that

set up an office in target market for direct sales of products and second is a joint

venture for building further brand channels.

R&D MANAGEMENT SYSTEM

Huawei's innovation in management provides a solid foundation for all

other innovations. The company has introduced R&D management models and

strengthened the support of its shared platforms, which enables it to rapidly

capture the transient market opportunities. With CBB (a hardware and software

sharing module), Huawei has established a technology sharing system which

comprises various layers such as system design, platform, modules and

components. Huawei also promotes standardized, component-based and

platform-specific management in their research and development and simplifies

the structure of their systems and organizational framework to prevent the

leakage of technology. With an asynchronous new product development method,

Huawei coordinates development progress at various levels, manages the time-

to-market of products and speeds up their response time to market demands. It

can usually deliver the final product only four days after the contract has been

signed. Huawei reaches the top of its field by integrating innovations in various

areas as a key competence.

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Market Share of Huawei

After Surpassing Apple in 2018 ,Huawei  views for Smartphone Supremacy in

2019

> The global smartphone market in 2018

Rank Company 2018 2017 YoY

1 Samsung 290 316 -8%

2 Huawei 206 153 35%

3 Apple 205 216 -5%

4 Xiaomi 120 92 30%

5 Oppo 115 118 -2%

6 Vivo 104 95 9%

7 LG 45 56 -19%

8 Motorola 39 38 3%

9 TCL-Alcatel 17 21 -18%

10 Nokia 15 5 175%

Others 254 334 -24%

Total 1,410 1,444 -2%

Source: IHS Markit -Smartphone Intelligence Service

@2019 IHS Markit

Despite serious political, legal and economic headwinds, Huawei

managed to ship more than 200 million smartphones, slightly better than Apple,

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continuing its double -digit year on year growth (+35%)thanks to good results in

China, Europe, Middle East, and Africa.

With $52 billion in revenues in 2018, Huawei's CBG is the telecom giant's

largest unit, representing more than half of its $100 billion total revenues

expected—the first Chinese company to cross the $100 billion mark.

Part F

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

DATA ANALYSIS

Huawei’s mobile business growth hit a massive brick wall when Google

ceased to do business with the Chinese technology giant as a result of the latest

blacklist order. For those that don’t know, the Android ban means Huawei-

branded devices will not run Google services such as the Play Store, YouTube,

Gmail, and more, even though the company’s phones will still be a part of the

Android Open Source Project (AOSP). Following the ban, Huawei has issued its

first statement, revealing that the company is confident about its future, while

also leaving out a few details.

This equipment is critical to how the internet functions. It occupies every

step of the network chain between our laptops and phones through to the data

centres hosting the content we want to access.

Although it sells consumer devices such as laptops and phones too,

Huawei's equipment is especially prominent in the parts of the network closer to

the data centres, and it's this equipment which has been raising concerns.

The extensive debate about these concerns branches across a number of

topics, from Beijing's aggressive espionage activities through to the ongoing

trade war between China and the United States, something which Huawei argues

is actually motivating the actions against the company.

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Huawei designs and manufactures the kit that controls how and where

data is sent - network switches, gateways, routers, and bridges. These core

infrastructure devices touch everything traversing the internet and are critical to it

functioning properly.

It also makes radio equipment such as antennas which live at the very

edge of the telecommunications infrastructure, and are less critical to the

network, although part of the generational advantage of 5G is the increasing

amount of critical functionality which takes place at the edges.

Earlier this year officials in the UK granted the company restricted

access to build "non-core" infrastructure within Britain's 5G network, with the

proviso that it doesn't hold more than 35% of the market share - while blocking it

from involvement in the most sensitive areas of the network.

This decision was based on a judgement by the National Cyber Security

Centre that it would be able to manage any issues posed by the "high-risk

vendor" as it is officially designated.

However the NCSC was forced to reassess its previous decision that it

was able to manage the risks posed by the company's equipment following new

restrictions on Huawei announced by the US in May which would prevent

computer chips based on American designs from being used in any of its

equipment.

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South East Asian Institute of Technology, Inc.
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The deeply damaging measures threaten to cut off Huawei's supply of

semiconductors used across its product lines, from radio base stations to servers

and smartphones.

This could lead to the company beginning to use "untrusted" replacement

technologies within these products, increasing the amount of work which would

be needed to manage the risk these products introduced to the network.

Ban could cause "blackouts"

In the face of this criticism and suggestions of impropriety, the company

has consistently pointed out that there has never been any evidence suggesting

its equipment is more faulty or suspicious than that of its competitors.

Huawei was founded in China in 1987 by Ren Zhengfei, formerly an

engineer in the People's Liberation Army. His connections to the military and to

the Communist Party, alongside those of senior Huawei executives, have been

cited as a security concern for foreign customers.

Alongside this, even if there is no evidence of bad action from the

company on behalf of the Chinese state, Western security officials have been

especially wary of China's foreign policy, including its alleged ambitions to use

business ties in foreign countries as elements of warfare.

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South East Asian Institute of Technology, Inc.
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Much of this wariness can trace its origin to 1999, when two Chinese Air

Force colonels published a book of military strategy which was translated into

English as Unrestricted Warfare and which described the strategy needed to win

a conflict with the US.

It formulated the idea that non-military means can be used to challenge a

rival nation, including attacking telecommunications networks, or what might be

called cyber war.

Academics including Ofer Fridman, an expert in modern warfare, have

suggested that the translated title is more incendiary than the original Chinese

phrase - which could be read "warfare beyond boundaries" - but the assumed

sentiment has influenced Western thought about China.

Economic warfare also comprised a section of the book, and last

December, the Five Eyes alliance and others collectively condemned the

Chinese state for its active cyber espionage activities, declaring that it was

engaging in the hostile theft of intellectual property.

Part G

ETHICAL CONSIDERATIONS

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Ensuring Operational Compliance

We conduct business with integrity, adhere to common business ethics,

and observe all applicable laws and regulations in the countries and regions in

which we operate. This is a guiding principle for our management team. For

years, we have worked hard to build a compliance management system that

aligns with industry best practices and embeds compliance management into

every link of our business activities and processes. These efforts continue to this

day. Huawei values and works hard to create a culture of integrity, and requires

all employees to comply with its Business Conduct Guidelines (BCGs). Outside

of the organization, we openly engage and share experiences with our business

partners, giving them insights into our development of a global compliance

system.

Huawei has appointed a compliance officer for each of its subsidiaries

worldwide and established oversight-oriented subsidiary boards, which manage

and oversee the operational compliance of these subsidiaries.

 The company has incorporated compliance into the key performance

indicators (KPIs) of its subsidiaries, and established an award and disciplinary

mechanism to steer compliance management among subsidiaries.

 Under the guidance of the group's unified compliance requirements, all

subsidiaries set their own compliance management policies and systems with

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

reference to local laws and regulations, and ensure appropriate compliance

management in the countries and regions where we operate.

 Following thorough risk identification and assessment processes,

subsidiaries set annual compliance objectives, develop and implement control

measures, and regularly review progress, thereby ensuring compliance

objectives are achieved.

 Subsidiaries also perform self-checks, ad-hoc inspections, and

independent internal audits, and invite third parties to audit key compliance

areas, to ensure that compliance management is effective.

Huawei values and works hard to create a culture of integrity, and requires all

employees to comply with its BCGs. On this basis, each subsidiary has released

detailed employee behavior guidelines to ensure employees incorporate

compliance requirements into everything they do.

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 Business Administration Department
South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

Part H

INTERPRETATION OF RESULTS AND CONCLUSION

Although Huawei has achieved tremendous success in the past 30 years,

it has its own unique set of business challenges. Being in the digital and

technology sector where things are changing at an exceedingly rapid pace every

day, it still very important for Huawei to put innovation as part of its strategy.

Continuing the pace of innovation, Huawei still facing lot of challenges due

to the high competition that exists within this industry and the historical failure of

similar companies, history has shown that monopoly control is temporal, some

structural realities in every industry have and will continue to change as

illustrated by BlackBerry’s fall from their dominant heights. The biggest mistake

of successful companies is complacency. For Huawei, continuing to push forward

with R&D is insufficient. Nokia spent ten times more on R&D than Apple for

example for a long period, Nokia made a mistake building products to satisfy its

current key segment’s needs, ignoring the small number of consumers who

showed great interest in future touch-screens. Similarly, Huawei must continually

seek to satisfy and create future consumer needs rather than their current ones.

Furthermore, an advantage that Huawei nowadays has is that is an entirely

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
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employee-owned private company, it will certainly attract attention from investors

looking to latch on to its impressive growth.

An important point or challenge Huawei faced during its transition of a

Chinese technological company to a global one, was the brand image in the

United states of America, by far the most difficult challenge in Huawei’s global

strategy was in the U.S. where there is a smear campaign by the U.S.

government. Intelligence officials have recommended American firms not to do

business with Huawei due to potential Chinese state influence and security

concerns besides, this company has long been searching for an opportunity to

expand to North America, which accounts for about 20 % of global telecom

spending. Ever since a 2007 report highlighted the military background of CEO

Ren Zhengfei, Huawei has become a political target. Before he founded Huawei

in 1987, Ren was a civil engineering director for the Chinese military. Huawei

currently sells telecom equipment to major Internet carriers which, in turn, carry

data for practically every government agency. The U.S. intelligence committee

said that U.S. telecommunications firms should avoid business with Huawei

because of potential Chinese state influence and security threats.

In response, Huawei has started a charm offensive toward analysts,

reporters and politicians to shake suspicions. Huawei also disclosed the

members of its Board of Directors. These B2B challenges are partly why the

smartphone will likely be the key to Huawei’s growth in America. Huawei cannot

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
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admit defeat or forgo the U.S. completely as it comprises about 20% of global

telecom spending. While it does not need to be dominant in the U.S. market, it

must be accepted as it grows as a smartphone brand. If Huawei plays this out

well, it could be a significant showcase of citizenship and earn the brand a seat

at the table with the likes of other Asian technology brands in the United States

such as Samsung, Lenovo and LG. Moving ahead, Huawei must volunteer more

financial and corporate information for transparency.

Huawei company has started making a conscious effort to bring more

international and diverse experience in its managerial ranks, not only at Board

level but in multiple senior and mid-management roles, what actually had led the

company to a brand oriented global leadership, it has also started hiring high-

profile Western executives to diversify its senior management team. This strategy

should be followed and implemented in a comprehensive fashion so that diverse,

global thinking and experience permeate deep into the organization’s fabric. A

truly global senior management team is essential for Huawei’s success in foreign

markets.

  In conclusion, much of Huawei´s success has been due to the correct and

well selection strategy to enter to new markets and expand their company

worldwide. The strategic decision taken by the company, their policies and

practices in order to analyze and identify the advantages the company will have if

they use different entry modes to penetrate specific markets with a big Portafolio

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 Business Administration Department
South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
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of their products contribute to the rapidly growth of the company and turn it into

one of the most important and recognized brands in the technological sector

around the world. Something important to highlight, and what added value to

Huawei smartphones, due the ambition of the company with innovation pace,

was the partnership the company acquired with LEICA camera company and the

use of their technology to improve the camera of the Huawei´s smartphones, and

what they use in order to compete with products such as iPhone and Samsung

galaxy’s.  Leica and Huawei have a team of engineers dedicated to working

together to fine tune each of those items, make design decisions, and craft the

overall camera experience o Huawei phones.

Although the company has presented moments of difficulty and

challenges, one of the most relevant ones will be the American case, however,

the most important factors that contribute to the overcoming of this challenges

were the constant analyze of the environment and the well understand and know

of the industry and sector, makes the company improve their practices and solve

their situation.

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 Business Administration Department
South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

REFERENCES

• (cremer, 2018)
 cremer, D. d. (2018). Lesson from Huawei: When chinese companies go
global. London: London business school.
• (ESSAYS, 2016)

 ESSAYS, U. (5 de December de 2016). UK ESSAYS TRUSTED BY

STUDENTS. Obtenido de
https://www.ukessays.com/essays/management/analysis-of-huawei-and-
its-core-competencies-management-essay.php
• (blog, 2017)

 blog, B. (2017). Investigation on the Business Strategy of Huawei in

International Market.
• (Huawei, s.f.)

 Huawei. (s.f.). Huawei offical website. Obtenido de

https://www.huawei.com/es/
• (Euromonitor, s.f.)

 Euromonitor. (s.f.). Euromonitor International. Obtenido de

https://www.euromonitor.com/

 https://www.globaltimes.cn/content/1170267.shtml

 https://www.slideshare.net/MalikWahab3/huawei-technologies-problems-and-

solutions

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 https://carrier.huawei.com/en/technical-topics/carrier-software/big-data-

analytics/Huawei%20Universe%20Big%20Data%20Analytics%20Solution

 https://news.sky.com/story/huawei-the-company-and-the-security-risks-

explained-11620232

 https://www.huawei.com/en/sustainability/win-win-

development/develop_honesty

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South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
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APPENDICES

The company only exists to serve its customers. The purpose of growing

our harvest and increasing the fertility of our soil is to better serve our customers.

"Staying customer-centric and creating value for customers" are the company's

common values. The conferment of authority is required to drive the facilitation

and implementation of the company's common values. However, without

effective controls in place, authority un-checked will ultimately hinder such

common values. The company has a well-developed internal governance

structure, under which all governance bodies have clear and focused authority

and responsibility, but operate under checks and balances. This creates a closed

cycle of authority and achieves rational and cyclical succession of authority.

The company's fate cannot be tied to any single individual and the

governance bodies of the company shall follow a model of collective leadership.

This collective leadership model is created upon common values, focused

responsibility, democratic centralized authority, checks and balances, and growth

by self-reflection.

In addition, the company stays customer-centric, inspires dedication, and

continuously improves its governance structure, organizations, processes, and

appraisal systems to sustain its long-term and profitable growth.

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 Business Administration Department
South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
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The Shareholders' Meeting is the company's authoritative body, making

decisions on major issues such as the company's capital increase, profit

distribution, and selection of the members of the Board of Directors/Supervisory

Board.

The Board of Directors (BOD) is the highest body responsible for

corporate strategy, operations management, and customer satisfaction. The

BOD's mission is to lead the company forward. It exercises decision-making

authority for corporate strategy and operations management, and ensures

customer and shareholder interests are protected.

The BOD and its Executive Committee are led by rotating chairs. During

their terms, the rotating chairs serve as the foremost leader of the company.

The key responsibilities of the Supervisory Board include overseeing the

responsibility fulfillment of BOD members and senior management, monitoring

the company's operational and financial status, and supervising compliance.

KPMG has been Huawei's independent auditor since 2000. An

independent auditor is responsible for auditing a company's annual financial

statements. In accordance with applicable accounting standards and audit

procedures, the independent auditor expresses an opinion as to whether the

financial statements are true and fair.

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 Business Administration Department
South East Asian Institute of Technology, Inc.
National Highway, Brgy. Cr. Rubber, Tupi
South Cotabato, Philippines

GROUP FUNCTIONS

HUMAN CORPORATE PR & GR

FINANCE QUALITY BP & IT
RESOURCES DEVELOPMENT

CORPORATE LEADERSHIP LEGAL ETHICS AND COMPLIANCE

ETERNAL AUDIT
MANAGEMENT DEPT AFFAIRS

CYBER SECURITY AND USE INFORMATION SECURITY

CORPORATE STATEGY
PRIVACY PROTECTION

HUAWEI
2012 LABORATORIES SUPPLY CHAIN HUAWEI
INTERNAL SEVICE
UNIVERSITY

CONSUMER OUTLINE AND

ICT INTRASTRUCTURE MANAGING BOARD MANAGING BOARD
NETWORK CLOUD AND
CARRIER ENTERPRISE PRODUCT AI BG CONSUMER
BG BG AND BG INTELLIGENT
SOLUTIONS AUTOMOTIVE
REGIONAL SOLUTION BU
REGIONAL ORGANIZATION
ORGANIZATION

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