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Unlocking Shared Opportunities in the Digital Economy
Digital and intelligent transformation is creating waves that will sweep across the globe. With over 170 governments adopting digital strategies and the digital economy propelling societal advancement, green, low-carbon development is gaining momentum, with 130 countries pledging to achieve net-zero emissions. In the next decade, green and digital trends will dominate.
AI is surging towards a technological singularity, impacting every sector. According to Huawei GIV, AI will dive deep into every sector around us, including clothing, food, housing, cities, and energy. It will become central to most production processes leading to substantial growth in digital infrastructure, including computing power, networks, and bandwidth. By 2030, we expect over 200 billion global connections, widespread 10-gigabit experiences, and over 90% of infrastructure running on the cloud, causing a surge in digital infrastructure demand.
Frontrunner sectors like finance, government, and OTT have already digitalized their production systems, while some industries are trying to automate their work facilities. SMEs contribute more than 60% of GDP to ASEAN countries. 70% of SMEs are strengthening their use of digital technologies, but over half of SMEs are still in the initial phases of digitalization. This is such a huge market, and we can't afford to ignore their digitalization needs.
Digital transformation is set to create a market exceeding one trillion US dollars. IDC predicts global digital transformation spend to reach 3.4 trillion dollars by 2026. Amidst this unprecedented growth, the Asia-Pacific region stands tall, offering a promising landscape for innovative pursuits and prosperous collaborations. Huawei seeks to collaborate with partners and tap into these vast opportunities in this region and beyond.
Jointly Building a Digital Asia-Pacific
The Asia-Pacific region, home to 4.2 billion people or 61% of the world's population, is experiencing rapid growth and urbanization, fueling a rising demand for advanced ICT solutions.
Over the past two years, I've visited nearly 20 Asia-Pacific countries, noticing three distinct aspects about regional digital development. Firstly, digital progression varies between locations; secondly, digital transformation is integral to national strategies, prompting tangible action; finally, the region's large and youthful population is propelling digital infrastructure deployment and fortifying a resilient digital economy.
As a global ICT company deeply rooted here, Huawei has always considered Asia-Pacific as a strategic market. We aim to help in the Asia-Pacific in three key ways: As a builder, as a cultivator, and as a contributor.
As a builder, our primary goal is to aid in creating a digitalized Asia-Pacific. We've garnered a wealth of experience of digital transformation across various industries along the way. In Asia-Pacific, we have helped PLN, Indonesia's state electric power company, to provide new power bandwidth operations. We've also helped build the largest battery energy storage system in Southeast Asia for another customer. We were there to help Singapore's first batch of corporate digital banking services to go live, enriching the portfolio of financial services for SMEs. All these are lighthouses we have erected with partners and customers. They light our way forward in driving deeper digital transformation across countless industries.
As a cultivator, we focus on fostering talent and partners through our extensive Asia-Pacific ecosystem. Currently, we have a network of over 7900 enterprise partners and 2000 cloud partners in the region. As you might know, our APAC OpenLab 3.0 was officially launched this March, which could be the facility and strength of all the partners to create innovative scenario-based solutions. What’s more, over the past three years, Huawei's Spark Program has recruited 150 startups, helping them go digital faster and easier.
As a contributor, we aim to foster a greener and more inclusive Asia-Pacific. For example, in Singapore, we've supported a customer in building one of the world's largest floating PV systems. Meanwhile, in many rural areas across the region, we're striving to connect the unconnected, bringing the benefits of digitalization to all.
3 Types of Market: Distinctions and Opportunities
As the digital landscape varies across countries and industries, Huawei has developed distinct strategies for three key markets: the Named Account (NA) market, the commercial market, and the distribution business. Each strategy is designed to specifically address the unique needs and complexities of these markets.
i. NA market
The NA market is made up of tens of thousands of large-scale companies worldwide, each facing their digitalization challenges. To effectively meet these needs, Huawei partners with various firms, using past successes as a blueprint. Our focus in 2023 is on more than 700 named accounts in the Asia-Pacific region, with the goal of establishing sustainable relationships with companies that have capabilities in areas like influence and system integration. This year, Huawei will also provide more than 100 funded heads for partners and work with partners to cultivate at least 500 golden seeds to help them grow faster.
In terms of mechanisms, we hope to work with partners in account mapping so that our capabilities are complementary, our resources are interlocked, and our partner selection process is strictly managed. We will not allow our employees to randomly change the partners. This will protect our partners' investment into customers.
ii. Commercial Market
The commercial market is made up of millions of SMEs. In Asia-Pacific, over 96% of businesses are SMEs, and they are actively looking for digital solutions. This positions the region to potentially become the world's largest edtech market by 2030. The edtech and smart classroom market, is projected to reach 64 billion dollars by 2027.
Huawei supports these businesses through a partner-led development strategy, offering 200+ products and 70+ solutions across diverse industry scenarios, including healthcare, education, and government. This year, we'll introduce 60+ new products and 30+ lightweight solutions for key sectors like education, healthcare, manufacturing, real estate, and retail.
We remain partner-centric, offering support across five critical areas: R&D, marketing, sales, supply, and service. In R&D, we focus on creating marketable products and solutions; in marketing, we aim to boost our brand awareness and partners' marketing precision; in sales, we provide incentives, rules, and digital platforms to enhance partners' project development capabilities; in supply, we're advancing our supply chain's digital transformation for agile customer supply; in services, we're deploying more resources and sharing tool capabilities to streamline delivery and maintenance for partners.
In 2023, Huawei Asia-Pacific will invest $25 million in partner incentives and host about 1,500 enablement and marketing events for partners. We recognize the importance of deal registration; hence we're bolstering our deal registration policies to strictly protect registered deals and penalize policy violators. We encourage partners to register deals, aiming to grow our active partner base by 60%, double project opportunities and revenue, and attain shared success in the commercial market.
iii. Distribution Business
The distribution business caters to micro businesses across Southeast Asia, notably the 71 million MSMEs, 72% of which are rural-based, demanding network connectivity, data storage, and security products. Huawei is building a robust partner system to navigate this large, fragmented market.
We're focusing on improving product development, partner relationships, and digital platform construction. We manage market, inventory, and price, offering extensive support to our partners. We're soon launching the Asia-Pacific Distribution Policy 1.0 to expedite SMEs' digital transformation and invite partners to seek Huawei certification.
Recently, we introduced eKit, a dedicated brand for the distribution business, aimed at fostering SMEs' digital transformation and supporting partners' growth. eKit offers varied solutions, leveraging our technological know-how and digital transformation experience.
New eKit products will debut this year to assist partners in expanding their businesses. Additionally, we've created the Huawei eKit website and app to provide distinct functions for partners, installers, and end users, from online transactions to independent operations, delivery, operations and maintenance, and product and price inquiries. The website goes live in July, and the app will follow in August.
Collaboratively Win Business Success with Partners
Asia-Pacific holds huge opportunities for digitalization, cloudification, and decarbonization. We currently forecast rapid growth for our business in Asia-Pacific over the next five years in these three areas. Our goal is to achieve 30% annual growth in revenue. We believe that 95% of this increase will be attributed to the contributions made by our partners. We are committed to supporting these partners to provide more valuable services to customers and achieve greater business returns.
To ensure the huge market opportunities of digital transformation are shared with our partners, we will also continue to increase incentives. In 2023, Huawei have dedicated 200 million US dollars to partner incentives. In addition to providing more sales rebates, we have increased our investment into partner incentives to improve their capabilities. We will also provide more marketing funds and more diversified programs for partners. The stronger the capabilities of partners, the more opportunities they will find. The greater their contribution, the more their incentives!
Huawei adheres to the principle of being bonded by interest, backed by integrity, and guaranteed by rules. We work hard to cultivate a healthy, open, and transparent business environment for partners to grow together. Internal and external compliance has always been on the top of our agenda and we have always put anti-bribery and anti-corruption compliance above the company's business interests. To this end, we will continue to conduct third-party surveys on partner satisfaction every year and resolutely act to correct top issues. To amplify the Voices of Partners, Huawei has also created a dedicated email address for you to contact us at: VOP@huawei.com. All partners are welcome to send us questions and suggestions any time.
To Travel Far, Go Together
"To travel fast, go alone. To travel far, go together." The Asia-Pacific region is booming with all the new opportunities brought by the digital economy. With an open mindset and determined collaboration, it will continue to blossom. As we set forth on this journey, it is our partners that stand side by side with us. We firmly believe that we can go further in the future, if we go together. Huawei looks forward to continue joining hands with our customers and partners to write a new chapter for this thriving, digital Asia-Pacific.
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