Chinese company’s plan to win the smartphone wars

In a world where our possessions increasingly reflect our status, the smartphone has been on a steady rise.

Cars, handbags, watches and wine choices have their cachet but the smartphone has become an instant indicator. It is always with us and usually on show.

When it is placed on the table at meetings, restaurants or bars, snap judgments – even if they are unconscious ones – are made on the owner’s socio-economic status or style.

Since its debut 10 years ago Apple’s iPhone has had the form and function to dominate. Samsung is now a serious challenger, but the rest – Sony, Nokia, Motorola etc have fallen away in both coolness and capability.

Can any other brand gain ground against the two dominant giants in this ferocious, borderless battleground?

Google possibly, but the biggest threat to the duopoly may come from the country where most of the world’s smartphones are assembled – China.

Until recently, few would have given Huawei, a Chinese company that builds mobile networks, much of a hope.

But a year ago Huawei produced the P9 – a smartphone with a good camera and a very good battery. It added some brand “cool” by signing up Hollywood actress Scarlett Johansson, and filming a lavish-looking video in New Zealand.

Huawei claims its latest phones – the P10 and Mate 10, which it released this year – have pushed its share of the premium sector from 5.8 percent in 2016 to 14 percent in the second quarter of 2017.

The Chinese company makes a whole range of smart phones, from high end models to cheaper ones for Latin America, Africa and South East Asia.

Last year it sold 139 million phones and in volume terms, it surpassed Apple in the third quarter of this year.

But it's the profit potential and prestige of the premium sector that is now Huawei’s focus.

“We are number three, we are very hungry – we have very big ambitions we want to be number one – we want to beat Samsung and Apple,” Jan Harling told a group of New Zealand journalists invited to Huawei’s HQ last week.

Harling, a German, is the company's associate director of global media investment.

His job is to improve Huawei’s brand image.

“From a marketing perspective we are very young, and we are trying to get consistent brand image across global markets. We are still very much an engineering company, we only started the high-end game about five years ago and our marketing game is lagging behind – we haven’t put enough money behind that," said Harling.

The Chinese giant has plenty of money to rectify that. Revenue is US$78 billion and climbing.

Last year, Huawei pulled in US$42 billion from building and running mobile networks around the world.

“We are number three, we are very hungry – we have very big ambitions we want to be number one – we want to beat Samsung and Apple."

In New Zealand, it built 2degrees’ network and has been working on Spark’s 4.5G network.

The US and Australia have prevented Huawei from building networks in their own countries due to concerns over national security.

However, the negative publicity around potential spying by the Chinese government has not stopped Huawei making inroads into the consumer markets in those countries.

Harling told Newsroom that information derived from Facebook showed Huawei was taking customers off both Apple and Samsung and its year-on-year growth worldwide was 35 percent.

“The main reason Apple users are coming over is battery life, while Samsung users wantt a better camera.”

Huawei is pouring billions into research and development – $45 billion in the last 10 years according to Harling – in the quest to get the jump on Apple, Samsung and Google.

Nine of its 16 R & D centres are outside China. Its design work is done at its centre in Paris, camera technology in Germany with its partner Leica, and research into algorithms is carried out in Russia.

Being number one in the Chinese market gives Huawei a tremendous economic base from which to launch its assault but its executives know that it is still a fair way behind Apple and Samsung in brand awareness and desirability.

Ada Xu, Huawei’s head of global public relations, said the company planned to put a lot more investment into fashion, entertainment and style to appeal to female buyers.

“Women want something beautiful and are more emotional when they buy a phone.”

In New Zealand, Huawei has teamed up with local fashion designer Zambesi to help it in the image stakes and recently launched the Mate 10 phone in the showrooms of a local Porsche dealer.

While Huawei executives are reluctant to discuss it, they don’t disagree with the view that the company’s name is a handicap.

It’s hard to pronounce and few non-Chinese know what it means. The Cantonese pronunciation is “Wah-Way” and the Mandarin is “Hwa-Way”.

If the founders had their time over again they would probably choose another name.

Xu said the name came from two Chinese words put together and essentially means “excellence”. Other interpretations say it means “Chinese Achievement”.

As a recent Huawei marketing video rather pointedly suggests: “It is time the world learned to say Huawei.”

That might be so, but whether it does or not will be a true test of Huawei’s marketing and PR skills.

Mark Jennings travelled to China as a guest of Huawei.

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