How has Huawei evolved since entering Spain in 2001 and what is the importance of this market for its global operations?
Because of its geographic position and historical socio-economic links, Spain is a perfect gateway for any international company looking to enter Europe or Latin America. Spain is one of the first countries where we started developing our foreign operations, back in 2001. At that time, we had only one country manager, one local sales person, and a secretary. It was challenging work in that the telecommunications industry is highly complex and the density of technical requirements is such that at the beginning we had to solve the issue of how we could gain the trust of operators in the industry. At first it seemed that in order to get a meeting, we needed to spend three weeks explaining ourselves, knocking on the doors of mid- and low-tier managers and engineering chiefs. However, we quickly gained the trust of consumers thanks to our superior technology. Our success in Spain was partially possible due to how open the Spanish market is—Spain depends on free trade, and it is this openness that has allowed it to have such success in Latin America and hold such an important position in global economic development. Medium-sized telecoms operators like Jazztel started in 2004/2005, followed by the big operators like Vodafone and Telefonica. Throughout our time here, our innovative spirit and the quality of our products has consistently won the trust of the industry. This would not have been possible without the openness of the Spanish market and consumers. During this journey, we have treated Spain as a top priority and even built a joint innovation center with the top operators here, always introducing our latest technologies in this market first.
What is the strategic plan in terms of expansion in Spain as Huawei looks to maintain this growth?
Spain is the perfect place to introduce innovative digital technologies, such as AI, 5G, big data, and cloud services because of the strong long-term relationship we have with the telecoms operators such as Telefonica, Vodafone, and Orange. Thanks to the government, the regulations, and ambition of the leading operators, Spanish digital infrastructure is amongst the best in the world, especially in terms of the fiber backbone. This is highly important because it can provide the opportunity to everyone, not only the rich and middle class, but also those in rural areas, to leverage broadband and gain more opportunities, such as those wrought from e-commerce, online education, and external communications. 5G is a key technology and Spain was quick off the mark, with the government making the decision in 2018 to finalize the first step of the C-band spectrum auction. There are large accounts in Spain, but also a lot of medium-sized, global corporations that are agile, intelligent, and fast-moving and these companies are open to new digital technologies. During this digital transformation, we were able to not only collaborate and introduce our solutions to those companies, but also worked to jointly promote our technology as part of a greater solution.
Huawei has faced issues this year in the US market after it was banned by a government national security order, as well as having its products excluded from future Google updates, which will significantly affect its competitiveness. How is Huawei dealing with this crisis?
The world is seeing great benefits from the role companies have played in globalization over the past 30 or 40 years. The leading German photography technology player Leica has collaborated with us for the past four years on our flagship P9 phones and this is an example of co-engineering. China has a population of 1.4 billion and most consumers know of Leica, which in the past would have been an impossibility. We also reinvent and co-engineer things to the benefit of more than just ourselves. This recent issue in the US happened because certain parties do not want to collaborate and prefer to go it alone. This is an outdated mentality that does not reflect the current trend of industries and societies. It is a case of moving one step forward and taking two steps back. We believe that the business world should not be disrupted in the name of political point scoring and the recent decision will harm US companies. That said, the move presents no big challenge to us since were ready for such an eventuality.
Can you elaborate on the division of your consumer and corporate operations? Which takes priority in Spain?
Globally, we have four business groups. One is the carrier network division, which serves the telecoms operators to provide digital infrastructure. The second is the consumer division of smart devices, watches, and wearables. The third is the enterprise division, which provides digital solutions and digital infrastructure to different verticals, such as public administration, transportation, energy, utilities, banking and financing, and manufacturing. The last division is the cloud, through which we provide public and private cloud solutions. We operate that cloud business independently in China and via collaboration with Deutsche Telecom and Orange in Europe. In Spain, we operate all of these business units and they are all priorities in their own right. Our consumer business accounts for almost 50% of our total revenues, but our enterprise and cloud businesses are growing quickly. After so many years of silence and since access to financing has increased, Spain's green energy sector is now exploding. A lot of Spanish EPC companies are working with Huawei to expand their business into Latin America, especially Brazil, Mexico, Central America, and Colombia.
What are your key objectives for the company in 2020 and what products are you looking to launch?
We have launched Mate20 and P30 and will also launch Mate30 for consumers by the end of this year. Beyond that, we have a lot of other solutions and products that we will enter the market with, for instance ARM-based CPUs, because in our computing service 80% is AX86 based, which is an area dominated by a few companies. We want to help clients reduce cost and power consumption by providing more alternatives, so we aim to enhance ARM-based CPUs after the commercial launch in 2018. More and more innovations will come about and it is important to bear in mind that Huawei has more than 80,000 dedicated engineers for R&D. In 2018, we invested 14% of our total revenue with a value of almost USD15 billion into R&D, which puts us in the top-five companies globally in terms of capital expenditure in this area. This is our commitment to society. Huawei is probably the only company in the world with such a wide portfolio in telecommunications, consumer devices, the cloud, enterprise IT, and AI, which will become a common technology in the future. Simply put; we are ambitious.