Industry Voice: Win Together: Huawei's Ecosystem Partners Grow from 500 to 28,000

[February 28, 2020] Despite mounting challenges in 2019, Huawei managed to navigate the year's difficulties by remaining committed to creating value for customers and working closely with partners. Indeed, its annual sales revenue is estimated to top CNY850 billion (US$124 billion) for the year, representing roughly 18 percent growth year-on-year.

For the Enterprise Business Group (EBG), 86 percent of revenue was generated from cooperation with partners. By the end of 2019, Huawei had established over 28,000 partnerships worldwide, with an annual growth rate above 10 percent for the eighth consecutive year. In 2020, together with partners, we will continue to build a prosperous ecosystem for the intelligent era.

One Goal: Win Together

“To survive, a company must be able to compete in the market. To thrive, however, cooperation is also needed, which is perfectly encapsulated by the old adage: if you want to go fast, go alone; but if you want to go far, go together.

Technologies and business models will never stop evolving, and enterprises need to adapt to the ever-changing environment through digital transformation. The requirements for digital transformation, however, are unique for every enterprise, which makes it impossible for any single Information and Communications Technology (ICT) company to handle the challenge wholly independently. Instead, ICT companies need to cooperate with each other for long-term development.

Huawei's core values are customer-centricity and dedication, as we aspire to create the most value for our customers. Huawei wouldn't be able to survive if we only pursued success for ourselves, when cooperating with partners to provide joint products, solutions, and services.

Huawei's goal isn't to maximize profits, rather it is to maintain profits at a reasonable level, since Huawei's long-term success is dependent on the success of its partners and customers. For this reason, our goal goes beyond winning alone: We aim to win together, with our partners and customers.

Two Driving Forces: ‘Platform + Ecosystem' Strategy with Seven Types of Partner

Huawei is committed to achieving mutually beneficial outcomes with partners in an integrated ecosystem. Our ICT, global marketing, as well as our training and service platforms, are all open to our partners. Our competitive advantage comes from our ability to jointly develop innovative solutions and Go-To-Market (GTM) strategies with our partners to launch products and solutions ahead of the competition. Meanwhile, we are also focused on promoting the development of industry standards, reducing the costs of digital transformation, and expanding the industry market with partners to achieve sustainable growth.

Platform Strategy

Digital transformation affects industries large and small. Industry pioneers will combine their wealth of experience and data with ICT to reshape their production and service processes, and become platform-based enterprises that serve the entire industry.

Huawei is in a unique position to help enterprises with digital transformation. Using our technical expertise in fields such as cloud computing, big data, Internet of Things (IoT), and Artificial Intelligence (AI), Huawei offers innovative, differentiated, and leading ICT hardware and software infrastructure. The resulting platform is open, scalable, flexible, and secure, and further boosted by seamless cloud-pipe-device synergy.

As enterprises undergo transformation and become platform-based, they need to focus on their strengths and innovating their business, without being burdened by the complexities of ICT software and hardware systems. To help enterprises realize this transformation, Huawei has developed the Horizon Digital Platform, applying the extensive experience Huawei has accumulated in digital transformation and through cooperation with industry-leading enterprises.

Ecosystem Strategy

As described in the 2020 partner ecosystem overview, Huawei's partner ecosystem consists of seven types of partner: Sales Partners, Solution Partners, Service Partners, Investment & Operation and Financing Partners, Talent Alliance Partners, Social Partners, and Industry Partners (the latter being a relatively new addition).

“By the end of 2019, Huawei had more than 22,000 Sales Partners, 1,200 Solution Partners, 4,200 Service Partners, 1,000 Talent Alliance Partners, and 80 Investment & Operation and Financing partners. The achievements of EBG are made possible only by the hard work and dedication from ecosystem partners across industries and domains.

• Sales Partners, also known as channel partners, include Distributors, Global Partners (GPs), Value-added Partners (VAPs), Gold Partners, Silver Partners, and Authorized Partners. They work with Huawei on routes-to-market and sell Huawei products, solutions, and services to end-customers. Huawei is actively expanding its scale of cooperation with these partners, while improving their sales capabilities and developing core channels for Named Accounts (NAs).

• Solution Partners include Independent Software Vendors (ISVs), Independent Hardware Vendor (IHVs), Consulting Vendors, and System Integrators (SIs). They develop or deploy joint solutions with Huawei or Huawei's ecosystem partners. Solution Partners play a critical role in the internationalization of the Horizon Digital Platform, especially in the intelligent campus, Intelligent City, and smart transportation domains.

• Upon receiving certification, Service Partners become Certified Service Partners (CSPs). Granted by EBG, certification verifies a channel partner's capabilities. It measures a partner's service qualifications and serves as a basis for incentive policies and management. To help service partners, we will focus on improving their capabilities, encouraging independent delivery, and increasing their service sales proportion.

• Investment & Operation and Financing Partners are further classified as either Investment & Operation Partners, or as Financing Partners. They provide investment, operation, financing, and leasing services to Huawei's customers or partners, helping them meet financing requirements. Huawei will focus on ensuring that the funding requirements of distributors, VAPs, Gold and Silver Partners, and customers are met, aligning with Huawei's strategy of building an open, cooperative, and mutually beneficial ecosystem. Strengthening the overall operations capabilities of Investment & Operations and Financing Partners will enrich Huawei's ecosystem as well as stimulate the digital economy as a whole.

• Talent Alliance Partners provide exchanges of talent, training, capability improvement, and other services for Huawei's industry chain. At this stage, Talent Alliance partners mainly include Huawei Authorized Learning Partners (HALPs) and Huawei ICT Academies. Working with Talent Alliance partners, we aim to train 1,000,000 ICT professionals in order to meet the talent supply requirements of digital transformation.

• Social Partners include standards organizations, industry associations, and industry research institutes. They help improve Huawei's brand awareness and influence across industries, directly or indirectly. For the development of Social Partners, we will continue to establish partnerships with standards organizations and industry associations, expanding Huawei's global network.

• Industry Partners include hardware and software component partners, and they use modules such as Kunpeng and digital platforms to help build the commercial service capabilities of Huawei components. To enhance the development of Industry Partners, Huawei plans to coordinate resources to develop computing ecosystems for Kunpeng and Ascend in priority regions.

While remaining customer-centric, Huawei is dedicated to building sustainable ecosystems that bring mutual benefits to partners. By fully making the most of our partners' strengths, we will continue to expand the industry market and form a community with common interests that works, grows, and transforms together.

Three Rules for the Enterprise Business

Huawei released three mandatory rules for all employees: support the attainment of the mid- and long-term business goals of the enterprise business, enhance the development of ecosystem partners, and build a sustainable ecosystem.

Adhere to the ‘Being Integrated' Strategy

The ‘being integrated' strategy is Huawei's corporate-level strategy for enterprise customers. It is a business model that has proven suitable for Huawei, and serves as a form of self-restraint for the company. The strategy must be observed by all employees serving enterprise customers, not just by EBG staff.

“This ‘being integrated' strategy enables Huawei to avoid competition with partners and maintains focus, instead, on empowering them. By adopting this strategy, we hope that partners can assume more responsibilities for customer-facing services such as sales and delivery.

In such an arrangement, partners are expected to play an important role in the business, helping with customer relationship management, business consulting and network design, industry application and joint solution development, solution integration, engineering implementation, post-sales services, investment and financing, operations, talent development, and standards development.

By empowering partners, Huawei helps them to fully exploit their competitive advantages in industry knowledge, customer coverage, system integration, the customization of industry applications, and the localization of services.

Share Success

In the past, Huawei has achieved success in direct sales, but we require our employees to change their mindset to focus on creating shared success with partners. In any cooperation, employees should take the partner's perspective into consideration, extending the relationship beyond simple sharing of profit and loss. The only way for Huawei to succeed is for partners to succeed as well, necessitating a mutually beneficial relationship.

To turn this into reality, Huawei's partner policies are taken very seriously indeed, to protect Huawei's brand image and reputation, and ensure the sustainable growth of the company. In particular, we prohibit arbitrary deduction of incentives for partners, and we require employees to not make promises lightly. Indeed, every promise must be fulfilled and partners should receive all the incentives they deserve. There are strict disciplinary actions for individuals failing to keep promises or for poor behavior.

Maintaining a Fair, Just, Transparent, and Simple Approach

Huawei adheres to principles of fairness, justice, transparency, and simplicity in every collaborative partnership. We have teamed up with partners in order to establish a just market order that plays by fair market rules, to create a healthy, harmonious, open, and mutually beneficial partner ecosystem.

Huawei continuously seeks to optimize its IT systems, including management systems, the ‘e + partner system' — which is used for procedures such as partner registration — and online transaction platforms. By simplifying management and increasing a partner's authorization to access Huawei's materials, Huawei improves the operational efficiency and service security of the ecosystem, making transactions with partners more convenient.

Four Measures: PSEE (Profitability, Simplicity, Enablement, Ecosystem)

Huawei released its future-oriented channel architecture and channel policies in 2012, and they have been frequently updated based on the business development of our partners and their feedback. To ensure the stability of the overall framework, in 2020 Huawei will further optimize its ecosystem partner policies related to business outside of China, based on four measures:

Profitability

In 2019, we canceled the sales rebate threshold, which means partners are now rewarded for every dollar they earn. As a result, there was an 80 percent year-on-year growth in the number of partners who received incentives, with the total incentive amount distributed nearly doubling over the same period. In 2020, Huawei will maintain the stability of the channel partner incentive framework and expand the scope of qualifying products, to include standalone software as well. Partners will also receive service content support in accordance with their star level. With a higher star level, partners are entitled to more authorization and more benefits. Diversified special incentives such as capability rebates and Business Incentive Programs (BIPs) will be introduced to motivate partners to pursue more ambitious goals.

Simplicity

Huawei has been continuously simplifying policy and process execution. Over the years, partner certification requirements, rebate capability appraisal, and the Market Development Fund (MDF) and Joint Market Fund (JMF) have all been simplified. Our partner policies are now easier to remember, understand, and implement — facilitating Huawei's cooperation with partners.

In addition, Huawei will build a partner policy center based on the ‘e + Partner' platform, to provide partners with more transparent and timely policy information, clearly communicating certification policy requirements, the various incentives available, and program solutions. In 2020, we will release a list of products that partners may get rebates on to improve policy transparency and make incentives easier to predict. We will allow partners to independently apply for and accept MDFs to accelerate the execution of marketing activities and make Huawei's entire business process visible to partners.

Enablement

Huawei will raise the capability requirements for both pre-sales and post-sales for core partners. But Huawei will also increase capability rebates and provide free training and exam vouchers that match the partner type — motivating partners to invest in improving their capabilities. In 2020, Huawei will launch Huawei Certified Pre-sales Professional (HCPP) certification for IP and storage products, to help partners gain in-depth knowledge about relevant products and acquire the practical skills needed to provide independent customer guidance, deliver scenario-based solution design, and conduct Proof of Concept (PoC) tests. We have also extended the availability of MDF and JMF to support global partners, solution partners, and carrier partners in their business development. We want our partners to reap the benefits of upgrading their capabilities to deal with the challenges of digital transformation.

Ecosystem

Huawei has established the Huawei ICT Academy Development Incentive Fund (ADIF) for 2020, to drive the development of the Huawei ICT Academy, support its training and operations, and motivate trainees to obtain Huawei certifications. Meanwhile, ADIF will increase awareness for the Huawei ICT Academy brand, strengthen cooperation with educational communities, and develop technical talent for Huawei, with talent and the Academy brand becoming a point of strength for the company. In the future, Huawei will also attract more ecosystem partners through a series of favorable policies, ranging from the Joint Solution Development and Marketing Fund and the Global Partner Incentive Fund (GPIF), to improving satisfaction levels for service delivery and making the MDF available to more partners.

In the era of ecosystem collaboration, it is more important to manage cooperation than to manage competition. With this in mind, Huawei will continue to increase investment in building a diversified ecosystem.

Five Advantages: Brand, Rapid Growth, Continuous Innovation, an Extensive Product Range, and Security Compliance

Although Huawei has been in the enterprise business for less than 10 years, and still has much to learn from industry leaders and competitors, Huawei has several distinct advantages.

Fortune Global 500 and Interbrand's Top 100 Best Global Brands: Huawei's Brand Value Benefits Partners

As a leading global ICT solutions provider, Huawei has been growing rapidly and steadily by offering cutting-edge technologies and exceptional services. Huawei was listed in the Fortune Global 500 index for the first time in 2010, and it has risen in the ranking year after year, becoming the world's 61st largest company in 2019. In 2015, Huawei also became one of Interbrand's Top 100 Best Brands , ranking 74th in 2019. Throughout this period, there have been no major ups and down and no impetuous attempts to ‘leap forward;' instead, Huawei has maintained smooth and steady growth.

Continuous and Rapid Growth, Driving Strong Growth for Partners

“Over the past five years, year-on-year, Huawei's revenue has maintained a Compound Annual Growth Rate (CAGR) above 20 percent. Despite facing some adversity in 2019, Huawei's annual revenue is still expected to exceed CNY850 billion (US$123 billion).

Huawei's robust growth means that the business growth of its partners is also assured. By the end of 2019, enterprises in more than 700 cities around the world, including 228 Fortune Global 500 companies, had selected Huawei as their partner in digital transformation.

Long Term Investment in Technical Innovation and Product Innovation Helps Partners Build Leading ICT Solutions

Huawei continues to focus on its strategy of investing in the R&D of telecom networks, cloud data centers, and smart devices. To remain at the forefront of the industry, we will focus on innovations for cutting-edge technologies that are driven by actual customer needs. Huawei has more than 96,000 R&D engineers worldwide, accounting for approximately 50 percent of the total workforce. In 2019, investment in R&D is expected to reach CNY120 billion (US$17 billion), of which roughly 15 percent was invested in cutting-edge technology research. In addition, Huawei has joined more than 400 standards organizations, industry alliances, and open source communities, holding more than 400 key positions. A total of nearly 60,000 proposals have been submitted by Huawei, with over 5,000 standard proposals submitted in 2019 alone. Over 87,000 patents have been granted to Huawei and over 90 percent of those are invention patents.

An Extensive Product Range Enables Partners to Create End-to-End One-Stop Solutions and Services for Customers

Huawei's products and solutions cover fields such as mobile network, broadband, IP, optical network, network energy, telecom value-added services, and terminals. Huawei EBG integrates multiple new ICT technologies, including cloud computing, AI, IoT, big data, converged communications, video, and Geographic Information System (GIS), and uses the ‘platform + ecosystem' strategy to provide high-quality solutions for both government and enterprise customers, supporting digital transformation. In 2020, we will carry out co-marketing activities with partners for our star products including next generation AirEngine Wi-Fi 6, OceanStor Dorado flash storage, and the Uninterruptible Power Supply (UPS) + SmartLi power solution (a lithium battery-based energy storage system solution) and increase resource input for partners to achieve results that benefit both parties.

Security and Compliance Have Been Top Priorities for Over 10 Years, Ensuring the Healthy Development of the Partner Ecosystem

Huawei prioritizes network security over its commercial interests. Additionally, Huawei adheres to strict business ethics, all international conventions, and the laws and regulations of each country it operates in. Huawei's management team has always adhered to the core philosophy of "compliance with international laws and regulations" and regards it as the cornerstone for Huawei's global operational compliance. The article titled "Huawei Compliance System Safeguards Partner Ecosystem Development" (pp. 72-75) describes in detail Huawei's initiatives and achievements in terms of network security and a compliance framework over the past 10 years. It covers the building of the compliance management system as well as trade compliance, security and trustworthiness, anti-corruption and anti-commercial bribery policies, intellectual property rights, and trade secrets protection. These initiatives and achievements are all vital for the healthy development of the partner ecosystem.

“In the intelligent era, EBG's targets are to integrate ubiquitous connectivity, a digital platform, and pervasive intelligence, to build the foundation of digital China and be positioned at the core of a digital world. In the era of intelligence, the key to a mutually beneficial ecosystem is to enable everyone to use their own strengths to create a whole that is greater than the sum of its parts. Huawei will continue to evolve its ecosystem policies to expand the partner ecosystem, help partners achieve their goals, and provide better support for partners. We will dedicate our efforts to the development, cultivation, support, incentives, and compliance of our partners. Ultimately, we will streamline partner management to build an open, cooperative, and mutually beneficial ecosystem, and strive to become the preferred supplier for digital transformation.

[Biography]

Frank Shen, Vice President of Partners & Alliances, Enterprise Business Group, Huawei Technologies, Co., Ltd.

Mr. Frank Shen now serves as Vice President of Partners & Alliances, Enterprise Business Group, Huawei Technologies, Co., Ltd., overseeing the management of global partner strategy and operations. Mr. Shen joined Huawei in 1997 and has worked in several representative offices both in and out of China. He holds a master's degree in electronic materials and components from Southeast University, and with more than 20 years of experience in market expansion and sales, he has served as country general manager, director of the commercial affairs department, and field office director of the channel business dept. He has also received Presidential Commendation on several occasions.