88 Huawei Investment & Holding Co., Ltd.
- Sensitivity analysis
Assuming that the interest rate increased by 50 basis points on December 31, 2019 and other variables remained
unchanged, the company’s net profit and equity would decrease by CNY264 million (in 2018, the amount decreased
by CNY132 million).Credit RiskThe company has established and implemented globally consistent credit management policies, processes, IT
systems, and quantitative credit risk assessment tools. It has established dedicated credit management teams across
all regions and business units, and set up centers of expertise specializing in credit management in Europe and
Asia Pacific. The company uses quantitative risk assessment models to determine customer credit ratings and credit
limits and quantify transaction risks. It has also set risk control points for key activities across the end-to-end sales
process to manage credit risks in a closed loop. Huawei’s Credit Management Department regularly assesses global
credit risk exposures and develops IT tools to help field offices monitor risk status, estimate potential losses, and
determine bad debt provisions as appropriate. To minimize risk, a special process is followed if a customer defaults
on a payment or poses an unacceptably high credit risk.Sales FinancingWith its global coverage, Huawei’s sales financing team maintains close contact with customers to understand
their financing needs and taps into a wide range of financing resources around the world. As a bridge for
communication and cooperation between financial institutions and customers, the sales financing team provides
customers with specialized financing solutions that contribute to ongoing customer success. To transfer risks,
Huawei arranges for third-party financial institutions to provide sales financing, such as export credit facilities,
leasing, and factoring. These institutions bear the associated risks and profit from these operations. Huawei has
established systematic financing policies and project approval processes to strictly control financing risk exposures.
Huawei only shares risks with financial institutions on certain projects, and measures and recognizes the risk
exposures to ensure that business risks are under control.