Huawei’s Organizational Structure - Final Report PDF

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Huawei’s Organizational Structure Huawei is notable for its hierarchal corporate governance, with executive and legislative tasks and priorities being separated based on group rankings, that lies upon a democratic system where the company’s active shareholding employees can vote for candidates for senior-level positions. The group with the highest authority in Huawei’s corporate governance is the Shareholders’ meeting, which comprises of 9 chosen candidates picked by 33 members of Huawei’s union, and Ren Zhengfei, Huawei’s cofounder and president. Its purpose is to assess and address major issues as chosen by the Representatives' Commission, which consists of all representatives of shareholding employees and exercises rights on behalf of all shareholding employees. The representatives, in turn, are elected for a term of 5 years by active shareholding employees: as of now, 52 members are part of the Representatives’ Commission (see Appendix _ for all the names of the members). Some of the most common issues tackled by the Shareholders’ meeting include “the company's capital increase, profit distribution, and selection of the members of the Board of Directors and Supervisory Board” (Huawei’s Website). The latter two groups form the second highest authoritative rank in Huawei’s corporate governance. The Board of Directors oversees pertinent issues relating to Huawei’s strategies and operations, as well as deciding “the selection, appraisal, and compensation of the Chief Executive Officer and approve the appointment and compensation of other members of senior management” (Huawei’s Website). In 2016, the issues tackled involved the company's medium-to-long-term development plan, annual business plan and budget, BOD committee operations, long-term incentives, annual profit distribution, capital increases, and financing. The Board of Directors is comprised of 17 members chosen by the Shareholders’ meeting. Currently, its chairwoman is Sun Yafang (who was ranked the 81most powerful woman in the world by Forbes), the deputy chairmen are Mr. Guo Ping, Mr. Xu Zhijun, Mr. Hu Houkun, and Mr. Ren Zhengfei, the executive directors are Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, and Ms. Meng Wanzhou, and the directors are Ms. Chen Lifang, Mr. Wan Biao, Mr. Zhang Ping'an, Mr. Yu Chengdong, Mr. Li Yingtao, Mr. Li Jin'ge, Ms. He Tingbo, and Mr. Wang Shengli(APPENDIX X). Concerning the Supervisory Board, it oversees internal and external compliance of Huawei’s goals and monitoring senior members’ management. Its members attend the Board of Directors meetings as non-voting participants but they supervise the matters for the Board of Directors’ decision making processes and the legitimacy of the Board of Directors’ operations. Like the latter, the Supervisory Board’s members are also chosen by the Representative Commission. Its current members include its chairman, Liang Hua, the executive members, Mr. Zhou Daiqi, Mr. Ren Shulu, and Mr. Yin Xuquan, and its core members, Mr. Song Liuping, Mr. Tian Feng, Mr. Yi Xiang, Mr. Yao Fuhai, Mr. Peng Zhongyang, and Mr. Li Jian (APPENDIX X). On the same hierarchal level as the previous two groups, Huawei has hired a Dutch professional service company, KPMG, to act as its primary external auditor in order to go through its financial statements and ensure that they are in compliance with standard guidelines, which is then subject to review by the Audit Committee. It has been hired by Huawei since 2000 and mainly provides services pertaining to audit, advisory and taxes. One of Huawei’s most significant characteristics involves its CEO rotation system, which is

under the responsibility of the Board of Directors. Per Huawei, the CEO is “responsible for the company's survival and development”, as the person in charge of the company’s operations and crisis management during tenure. In 2016, the three rotating CEOs in question were Mr. Guo Ping, Mr. Hu Houkun, and Mr. Xu Zhijun. Their salaries are not revealed by Huawei but based on data obtained by China Stone Management Consulting Group on a study that focused on China’s 200 largest public companies by market capitalization, it was estimated that 64.8% of executives received compensation ranging from 100,000 to 500,000 yuan (about US$16,000-US$80,000), and 19.5% between 500,000 and one million yuan (Wharton, University of Pennsylvania), figures well below that usually earned by their American counterparts. As such, it would be safe to assume that Huawei’s CEOs’ salaries would fall somewhere between those ranges. Finally, concerning Huawei’s business structure, it has based itself one 3 main components: customers, products, and regions. 4 organisations, nicknamed “Business Groups” (BG), are put into place to carry out the actions necessary to “jointly create value for customers, and are responsible for the company's financial results, market competitiveness, and customer satisfaction” (Huawei’s Website). The BGs in question include Products and Solutions, Carrier BG, Enterprise BG, and Consumer BG. Carrier and Enterprise BG’s tasks involve “managing and supporting solution marketing, sales, and services that target carrier customers and enterprise/industry customers respectively” (Huawei’s Website) which are in turn complemented by Products and Solutions’ integration of Information and Communications Technology solutions to carriers and enterprise/industry customers, while at the same time enhancing product competitiveness and quality. Consumer BG’s role involves “serving device consumers and deals with all aspects of the consumer domain”, with a significant focus on improving customer satisfaction....