Huge investment in R & D responsible for success - Huawei

Smart grab

Leading ICT brand Huawei Technologies says its attention to and heavy investment in research and development is largely responsible for its success on the global market.

By Edmund Smith-Asante, SHENZHEN

One of the ICT equipment on display in the company's showroom.

Leading ICT Company Huawei Technologies has attributed its success in the telecommunication industry to its uncompromising stance on research and development which currently involves 45 per cent (80,000) of its about 180,000 employees.

“We have had a policy of re-investing 10 per cent of profits into research and development from the beginning and that is why Huawei is so successful. We also invest 10 per cent of our R & D money in technology,” the Head of Communications of Huawei, Mr. Joe Kelly told a group of African journalists who visited the company’s headquarters in Shenzhen, China.

During a presentation on the operations of the company, Mr. Kelly said in its almost three decades of existence 14.6 per cent of its annual revenue had been invested in R & D, “making Huawei more competitive, pushing the industry forward and driving technological advances.”

He said the total R & D investment over the past decade was over CNY 3,100 billion (US$ 44.6 billion), while in the future annual investment in R & D was expected to hit between US$ 10 billion and US$ 20 billion more.

Mr. Joe Kelly, Huawei's Head of Communications in a briefing session with the journalists during the meeting.

Mr. Kelly however, said the key factors behind the company’s sustainable growth were a value-driven system, strategic direction and heavy persistent investment, adding that the company had plans of investing in basic research and exploring the technological architecture of the future intelligent world.

R & D investment in a decade

Huawei has steadily increased its investment in R & D since 2005 when it entered the global market from US$ 0.7 billion to US$ 11.0 billion in 2016.

An amount of US$ 1.16 billion was invested in 2006, US$ 1.4 billion in 2007, US$ 1.64 billion in 2008, US$ 2.1 billion in 2009, US$ 2.67 billion in 2010, US$ 3.74 billion in 2011 and US$ 4.77 in 2012.

In 2013 the amount was increased to US$ 5.20 billion, in 2014 it was US$ 6.61 billion and in 2015 it jumped to US$ 9.25 billion.

The company spent US$25 million/day in R & D in 2015 alone and invested over US$ 38.3 billion from 2005 to 2015.

Saying that Huawei mobile phone handsets were the third most sought globally after the iPhone and Samsung brands, Mr. Kelly said “Huawei will never go for low price, low cost or low quality, as this would undermine the strategic advantage we have built over the past two decades.”

Three business groups

Video surveilance monitors on display. PICTURE BY EDMUND SMITH-ASANTE

Although the Huawei brand’s popularity in Ghana and in other parts of the world could be attributed to their mobile phone handsets which sold over 139 million in 2016 alone, Mr. Kelly said the company’s businesses were spread in three main categories.

These are the Carrier, Enterprise and Consumer business groups which were established in 2010.

The carrier handles the wireless and fixed networks, network energy and global services among others while the enterprise wing deals with network infrastructure, cloud-based green data centers and information security.

The consumer group handles the smart phones, mobile broadband and home devices. But it was the carrier group that posted the highest revenue in 2015 of US$35.78 billion and was followed by the consumer group with US$19.888 billion and the enterprise with US$ 4.252 billion.

Apart from its partnership with several companies in joint innovations, ensuring standards, financing, supplies and providing channels, Huawei’s flagship CSR “Seeds for the Future” programme has also helped in developing local talent by training nearly 10,000 ICT students.

It has also worked with 35 countries to implement digital projects and with over 100 universities and training institutes worldwide to established 45 ICT training centres.      

Huawei in Ghana

An equipment on display. PICTURE BY EDMUND SMITH-ASANTE

Huawei entered the Ghanaian market in 2001, registered its subsidiary in 2005 and currently employs over 500 people with local employees accounting for 76 per cent. It has also employed over 110 technical engineers for on-site support service and project implementation.

In 2015, Huawei’s local procurement amount was US$ 49 million and its accumulated procurement amount was approximately US$ 354 million by the end of December 2015 resulting in an employment of 4,000 people in related industries.

Writer’s email: edmund.asante@graphic.com.gh

Facts

·        Huawei Technologies Company Limited was founded 28 years ago in 1987 by Ren Zhengfei and several other investors as a rural-based company with a capital of US$ 5,642.

·        The company currently has operations in 170 countries globally and employs about 180,000 people, 80,000 of whom are working in research and development in 15 centres globally.       

     Huawei does not manufacture its own smart phones but produces the designs for their manufacture by partnering companies in China and abroad such as Flex, which it signed an agreement with last year to manufacture phones in India.

This story was written on April 30, 2017