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 Exhibit 3H-R

Huawei operates in Iran in strict compliance

with applicable laws, regulations and
sanctions of UN, US and EU.

Huawei's engagement with Skycom is normal

business cooperation. Through its trade
compliance organization and process,
Huawei requires Skycom to make
commitments on observing applicable laws,
regulations and export control requirements.

H U A W E I T E C H N O L O G I E S C O . , LT D . H u a w e i C o n f i d e n t i a l 2 J S ' f f l ' H U A W € I
 Exhibit 3H-R

Background of Sanctions: Multiple Sanctions

against Iran by UN, EU and US amid
Increasingly Intractable International Situations
> On June 9, 2010, the UN Security Council passed Resolution 1929 (2010)
UN Sanctions imposing the fourth sanction against Iran. The scope ofthe sanction mainly
covers nuclear-related products, weapons, energy and financial products.
> Of particular note, this resolution has an "Annex IV Possible Areas of Cooperation
with Iran". The "Environment, Infrastructure" section of this annex articulates
"Support for modernization of Iran's telecommunication infrastructure, including
by possible removal of relevant export restrictions". Therefore, Huawei's
telecommunications business is not covered in this sanction resolution of
the Security Council.
> On July 26, 2010, the restrictive measures against Iran ("Council Decision of 26
EU Sanctions July, 2010) were passed at the meeting ofthe EU's 27 foreign affairs ministers.
This sanction imposed by the EU covers "dual-use goods and technology",
including communications products.
> Huawei pays close attention to the blacklist of Iranian individuals and
entities released by the EU to ensure that neither Huawei nor its partners
carry out business cooperation with the enterprises or individuals on the
blacklist.

HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential

H U AW 6 I
 Exhibit 3H-R

Background of Sanctions: Multiple Sanctions

against Iran by UN, EU and US amid
Increasingly Intractable International Situations
> On July 1, 2010, President Obama signed the Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010 (CISADA). According to this act, sanctions will be imposed on any
business or individual that has conducted any commercial or financial transaction with Iran's
Islamic Revolutionary Guard Corps or Iranian banks that are included on the sanction list.
> The US laws and regulations regarding sanctions against Iran are very complicated, but they
mainly target Iran's oil and energy industry, entities controlled by Iran's Revolutionary Guard Corps,
and Iranian banks and insurance companies, and prohibit US financial institutions from engaging
in any related transactions.
> Huawei attaches great importance to this act. Our Trade Compliance Office released a
formal document in April 2011 requiring observance ofthe act across the company.
> The US Government Accountability Office (GAO) submitted a report on June 30, 2011, concerning
the establishment of procedures by the US government for a ban against firms that sell Iran
technology to disrupt communications. No firm has been identified in the report. The GAO thinks
there are several possible reasons for the difficulty in identifying any such firms, including (1) the
lack of a clear distinction between technology exported to Iran to disrupt the free flow of
information versus technology exported to Iran to support necessary and acceptable filtering and
monitoring of communication and (2) Iran's growing capacity to develop its own monitoring,
filtering, and disrupting technology suggests it is relying less on non-Iranian technology to monitor
and filter internal communications. Therefore, GAO is making no recommendations in this report.

HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential $£ huawgi

 Exhibit 3H-R

Background of Sanctions: Analysis of US

Export Control Against Iran

o US entities and individuals are prohibited from dealing

Direct
with entities or individuals of comprehensive embargoed
Control countries (Iran) or those on the blacklist.

• All entities and individuals are prohibited from trading US

controlled products or uncontrolled products that do not
Re-export comply with the de minimis exemption rule (US-origin
Control
technology valued at 10% or less) with entities or individuals
of comprehensive embargoed countries (Iran) or those on
the blacklist.

• All entities and individuals are prohibited from providing

Iran with technologies or services used for monitoring,
filtering and interception.

HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential

# * HUAW€I
 Exhibit 3H-R

Relationship with Skycom: About

Cooperation

▶ As a business partner of Huawei, Skycom works with Huawei

in sales and services in Iran.
> Huawei conducts normal business activities in Iran and
provides civilian telecommunications solutions in line with
global standards (e.g., ITU/3GPP) and export control
requirements ofthe US and the EU. Huawei works with local
suppliers, distributors and carriers in strict compliance with its
well-established business conduct guidelines.

HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential &£ HUAW€I

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 Exhibit 3H-R

About Iran: Huawei Announced Restriction of Its

Business in Iran
> There are primarily four telecommunications equipment
vendors in Iran: Ericsson, Nokia Siemens Networks, Huawei
and ZTE.
> Huawei has four customers in Iran: TIC, TCI, MCI (including its
subsidiary MobinNet) and IRANCELL Products we sell in Iran
include fixed and mobile (except CDMA) products, devices,
optical networks and software.
> In 2011, Huawei publicly announced restriction of its business
in Iran.

H U A W E I T E C H N O L O G I E S C O . , LT D . H u a w e i C o n f i d e n t i a l 8 9 S * & H U A W € I
 Exhibit 3H-R

About Iran: Huawei Only Provides Standard,

Civilian and Commercial Telecommunications
Equipment and Services
> Like all the other global communications equipment vendors, Huawei
sells civilian communications equipment and necessary after-sales
services to local telecommunications carriers. All these equipment
and services are used to improve local telecommunications
infrastructure, and enable local people to enjoy convenient
communications services.
> Huawei has never researched, developed, manufactured, or sold any
technology or product for military use. Equipment and services we
provide to the Iranian telecommunications carriers are the same as
those we provide to other business customers around the world.
> Huawei has never provided and will never provide any technology,
product, or service for monitoring communications flow, tracking user
locations, or filtering media contents in the Iranian market.

H U A W E I T E C H N O L O G I E S C O . , L T D . H u a w e i C o n fi d e n t i a l 9 & r &
HUAW€I
 Exhibit 3H-R

About Iran: Risks of Doing Business in Iran

While we have done everything we can to comply with applicable laws
and regulations, there are still some risks in doing business in Iran.

US sanctions are
changing and they are
essentially a set of
principles; the blacklist is
frequently updated; and
sanction-related laws are
complicated.
Understanding and
commanding these laws
and regulations presents
a challenge to all
companies.
All the Iranian carriers While the fast evolving
have state ownership. At communications technologies
the end of 2009, Iran make it easier for people to
privatized several state- communicate, potentially illegal
owned carriers, but they leakage of user information
still have some threatens user privacy. This
investments from state- challenge in the
owned enterprises. This telecommunications industry
is a fact that has also becomes more prominent in a
been questioned. sanctioned country as Iran.

HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential 10 » HUAW€I

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 Exhibit 3H-R

Enforcing Partners' Compliance

We require compliance by our partners through qualification,
regular communication and cooperation on compliance review.

Cooperation on
Qualification Regular Communication Compliance Review

Huawei has strict We maintain We work with our

rules on supplier and communication with partners on export

partner selection. suppliers and control. For example,

partners on export we work with US

Export control review
is part of qualification
process.
control. suppliers on export
control audit to build
trust in trade

compliance practices.

HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential 14 4'& HUAW€I

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 Exhibit 3H-R

Looking Into the Future: Continued Effort to

Improve Compliance Practices
Huawei's commitments in the 2012 CSR Report:
> We effectively fulfill our export control responsibilities and obligations, and prioritize these obligations over Huawei's
commercial interests.
We will continue to learn from industry best practices and observe applicable rules, laws, and regulations.
> HSBC has been working with Huawei for a long time and has a deep understanding of Huawei's history of growth
around the world. We have been and will continue to be transparent in our financial operation and across the
company. Open processes and voluntary disclosure of our annual reports are examples of transparency. The Huawei
that you see and interact with is who we really are. Huawei'e engagement with Skycom is normal and controllable
business cooperation, and this will not change in the future.
> HSBC has rich experience in trade compliance. We look forward to discussions on compliance and good experience
from HSBC to help us further improve our compliance practices.
> Huawei subsidiaries in sensitive countries will not open accounts at HSBC, nor have business transactions with HSBC.
> In the spirit of openness and transparency, Huawei is willing to share any information with HSBC.
> Huawei will set up a sales entity at GCC countries to directly handle sales into sensitive countries. The GCC entity will
help ensure effective monitoring and transparency of all businesses in the area. We are ready to discuss and work with
HSBC on sales compliance and channel of fund at sensitive countries.

H U A W E I T E C H N O L O G I E S C O . , LT D . H u a w e i C o n fi d e n t i a l 1 6 4*4 HUAW€I
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