Huawei unveiled major initiatives at its annual channel partner event, ΣCO-Partner 2017, and also announced its new partnership strategy, both aimed at strengthening its overall enterprise business in China. At the event, Huawei revealed plans to expand its range of partnerships, which will include industry alliances and business alliances, and working with the open-source and developer communities.

In addition, Huawei announced that it is investing CNY2.6 billion (US$377 million) in its channel partners (distributors, resellers, systems integrators and service providers) in China, with a focus on partner enablement, profitability and marketing. The channel has played a vital role in Huawei’s enterprise growth in China, as over 80% of its revenue now comes via its channel partners. Moreover, the company is seeking to transform its Enterprise Business Group (EBG) from being a pure hardware provider to a platform builder, and push its public cloud business by expanding its channel community through the recruitment of more cloud-focused partners.

Huawei seeks better alliances and greater awareness among developers

One of Huawei’s key priorities in 2017, like most IT vendors, is to be a leader in digital transformation. To this end, its industry alliance partnerships are geared toward developing vertical-specific solutions across healthcare, government and education, among others. Moreover, Huawei is pushing open-source architecture more heavily than its local competitors. It has adopted more than seven leading open-source frameworks to support its enterprise solutions, such as OpenStack, Hadoop, Apache Spark and ETSI. It is sharing these open-source architectures with its partners to enable them to build solutions on them. In addition, Huawei is heavily pushing its Ecosystem Software Development Kit (eSDK), first launched in 2012, which is an open-source platform where developers can build software applications on Huawei’s products. Huawei has unlocked its open-source capabilities in 14 technology categories to date, which include UCC, software-defined networking, the FusionStage cloud platform, big data and IoT.

The channel remains key to Huawei EBG’s growth in China

Huawei uses a two-tier distribution model in China and has about 6,000 channel partners, with 34 of these each making annual revenue of over CNY100 million (US$14.5 million) from Huawei EBG. Its largest distributors are:

  • CNBM Technology is a subsidiary of China National Building Material Group, which is the largest building materials service provider in China. It distributes Huawei’s products across UCC, uninterrupted power supply, server and storage solutions. Its substantial partnership with Huawei helped boost CNBM Technology’s total revenue by over 30% in 2016.
  • Digital China is China’s largest IT distributor. Huawei EBG accounted for 25% of Digital China’s overall enterprise distribution business in 2016, reaching CNY5 billion (US$723 million). It distributes Huawei’s networking, data center infrastructure and security products. The two companies are also extending their cooperation to cover cloud services, by jointly researching cloud use in healthcare, government, finance and agriculture.
  • Synnex is one of Huawei’s earliest distribution partners. Its Huawei enterprise business continues to grow, with a 40% annual increase in 2016, primarily due to some key data center and e-government cloud projects in China.
  • VST ECS expanded its Huawei enterprise business team by 150% to over 500 employees in 2016, mainly to cope with growing shipments of Huawei’s server and storage products in China. It is also a key partner for Huawei Enterprise Cloud services, distributing its FusionStorage solutions in the country.
  • Kinghighway distributes Huawei’s UCC, enterprise networking and security services and has been its largest distribution partner for videoconferencing and immersive telepresence systems for more than six years. Its Huawei EBG revenue grew 60% in 2016.
  • Futong sells Huawei cloud infrastructure, storage and server products to downstream partners and end users in more than 34 cities in China. Futong also sells data migration, virtualization and disaster recovery technologies.

Huawei also works with leading local systems integrators and value-added resellers, such as Taiji Group, DHC Software, Neusoft, Yusys Technologies and Joyo Technology, to deliver vertical-targeted solutions. It works with seven authorized learning partners, including Yutian, Bossay and Yeslab, to provide certification training and technical support on cloud, networking, data center and security solutions, for both end users and other channel partners.

Huawei seeks new partners to grow its cloud business

The cloud computing market continues to grow rapidly – Canalys estimates that the worldwide cloud computing market grew 52% annually in 2016. One of Huawei’s strategies in 2017 is to capture a significant portion of this growth, but it will face stiff competition from hyperscale providers, such as Alibaba in China. It is seeking to recruit 10 to 20 channel partners this year to specifically help bolster its public cloud business. The newly registered cloud partners will mainly focus on three areas: developing applications based on Huawei’s public cloud platform; facilitating the migration of customer workloads to Huawei’s public cloud system; and reselling Huawei’s public cloud services. At the event, Huawei announced that its public cloud business is a strategic priority for its leadership team for the first time, which means it is likely to receive support and investment at a corporate level. At present, Huawei’s global public cloud business consists of Huawei Enterprise Cloud, which is similar to Alibaba Cloud, delivering scalable and elastic data center infrastructure services via the Internet, as well as three joint public cloud projects with telecoms companies: Deutsche Telekom’s Open Telekom Cloud, Telefónica’s Open Cloud and China Telecom’s eCloud. These are all built on Huawei’s hardware and software solutions. Huawei announced the establishment of a cloud business unit, specifically responsible for public cloud business. The new department will recruit 2,000 employees to help grow the business via the channel in 2017. Its infrastructure footprint has expanded onshore, with five service regions now in operation across South China, East China, North China, Inner Mongolia and Guizhou.

Consistency in its channel strategy will be vital

As Huawei continues to make a greater investment in the channel, it needs to ensure that it is an easy vendor to do business with. It needs to maintain simplicity and predictability in its partner programs and do this consistently. As a China-based vendor, it stands to benefit both from China’s digital investments to accelerate economic growth, and its security policy of prioritizing domestic IT infrastructure providers over US-based vendors, such as Cisco and Hewlett Packard Enterprise. It needs to make sure that its local channel partners in China also benefit from its alignment with these government initiatives. In addition, it needs to address key issues with its channel partners in China. Partners have complained of insufficient support and delayed responses when issues are elevated to the channel management team. There are also complaints of Huawei not following up on its promised investments, which can be a cause for concern, as partners often rely on vendor commitments. Huawei is seen as a leading enterprise IT vendor in China and it has made the correct channel investments to accelerate its business. But it needs to fix these issues for it to be truly successful with its partners.

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