Huawei's Xu: going digital, byte by byte

Huawei's strategy chief says governments should free up additional wireless spectrum, cultivate local programming talent and encourage online entrepreneurship.

William Xu, Huawei's global head of strategy and marketing, shares his thoughts on Asia's digital transformation for FinanceAsia's 20th anniversary.

FinanceAsia’s 20-year anniversary is a good time to step back and reflect on the impressive progress Asia has made in a relatively short span of time. During the past two decades, the world’s economic centre of gravity has shifted decisively eastward.

In the early 1990s, Asia’s economies made up roughly one-quarter of the world’s GDP; today, they account for about 40%, while poverty in the region fell from 55% of the population in 1990 to 21% in 2010.

From the start of its economic opening in the early 1980s up until the last five years or so, China’s GDP has grown at about 10% a year.

 Two main factors have driven this impressive growth: a plentiful supply of cheap labour and a high rate of investment in fixed assets such as roads and bridges. But, these advantages are diminishing rapidly as an aging population reduces the number of people in the work force, and the era of catch-up growth that fuelled heavy fixed-asset investment draws to a close. 

China is now making an important transition from being the world’s workshop to becoming a global centre of innovation and design excellence. Last year China rose by six places in the Global Innovation Index, a ranking by the World Intellectual Property Organization, Cornell, and INSEAD, and its total investment in research and development (R&D) has risen more than six-fold in recent years, making it the number two country  in R&D spending after the US.

Huawei exemplifies a new type of company that has emerged in China. From a small, local re-seller of telephone switching equipment in the late 1980s, it has grown into the world’s largest maker of network switchers and routers, as well as the third-largest smartphone seller.

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The company designs consumer wearables such as high-end watches and fitness trackers. At the same time, it supplies key parts of the digital infrastructure that helps countries raise living standards by providing citizens and business access to mobile broadband, e-commerce platforms, cloud computing services, and advanced data analytics.

IMPROVING LIVES

To complete the transition to a high valued-added economy, China and Asia as a whole must build the infrastructure necessary for future growth. Among the most crucial components of that foundation are information and communications technology (ICT) networks that fuel productivity, efficiency, and innovation across industry sectors. Huawei’s Global Connectivity Index, a map of digital economies around the world, shows that a one-percentage point increase in a country’s connectivity can drive up national competitiveness by 2.1%, innovation by 2.2%, and productivity by 2.3%.

For companies, ICT has moved from playing a supporting role to serving as a key production platform. According to a report by McKinsey, cross-border flows of data and information now have a greater impact on the global economy than the trade in physical goods. Some forecasters predict that by 2025, half of the value in the global economy will be generated by digital means.

Non-digitized economies will not benefit from these flows unless they strategically promote the development of broadband infrastructure, cloud computing, the internet of things, big data, and data centres -- the main technologies that create opportunities for innovation and growth.

Currently, more than 100 countries have national broadband networks in place or are planning to build them. But this is only a start. Other crucial inputs include policies aimed at freeing up additional wireless spectrum, cultivating local programming talent, and encouraging online entrepreneurship.

ICT’s power to change lives is now so great that governments, regulators, and ICT leaders must work collaboratively to ensure that people can enjoy the next phase of society’s digital transformation.

Every step of the journey will be important: from crafting policy, to building infrastructure, to cultivating talent and creating innovative new business models. None of this will be easy, but no worthwhile journey ever is. For many in Asia over the next 20 years, the results will be life changing. FA

William Xu has served as the company’s global head of strategy and marketing since 2013. He joined Huawei in 1991 and subsequently worked in various roles in China and Europe including CEO of the Enterprise Business Group and president of Europe

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