Huawei innovates to move up mobile value chain
Huawei Technologies of China is riding a wave of innovations in its campaign to achieve premium status in mature smartphone markets in Asia, competing head-to-head with Samsung and Apple.
“Huawei’s mission is to become an iconic global tech brand and our strategy is very clear: to become a premium brand,” Xu Qinsong, vice-president of global product marketing for Huawei Consumer Business Group, said during a recent visit to Bangkok.
“We have powerful technology and innovation. Once we understand the consumer requirement, we can leverage the power of our R&D,” he told Asia Focus.
The world’s third-largest smartphone seller last year spent US$12.4 billion on research and development, up from $10 billion in 2016, as part of its drive to upgrade its features and brand image.
Mr Xu said Huawei’s focus in Asia was now on middle-income countries such as Thailand and Malaysia, where it launched its top-of-the-line P20 series this year. Retailing for $800 to $1,100, it is the only smartphone with a triple camera.
Driven by the flagship Mate and P models, Huawei improved its share of the premium device market ($600 and above) to 8.4% in December 2017 from 3.4% a year earlier. The increase was driven by sales of the P10 and Mate 9 series, which have exceeded 20 million units since their launch, Mr Xu said.
“In the last four months, our shipments have grown very fast. In the second quarter, as we began to launch new models, overseas shipments have risen 40% and we expect to see at least 50% growth in a lot of countries this year,” he added.
Huawei is attracting more customers with high-tech specifications, full-view displays and creative application of advanced technologies such as artificial intelligence and virtual reality. The result is an 11% share of global smartphone sales, compared with 22% for Samsung and 15% for Apple, according to International Data Corporation (IDC).
Achieving premium status will help the China-based company avoid the cutthroat competition in the low-margin budget phone market.
Although the company increased its market share globally and shipped 153 million smartphones last year, growth in its consumer business segment, which includes smartphones, slipped to 31.9% on sales of 237.2 billion yuan ($37.85 billion), versus 43.6% in 2016.
The company is now preparing for the introduction of 5G technology, conducting pre-commercial tests with over 30 leading carriers. Business-to-business (B2B) revenue from carriers accounts for nearly half of the group’s total revenue.
“We have already proven that we are the leader in B2B business globally. In Thailand, for instance, Huawei is the strategic partner of AIS and DTAC on the operator side,” Mr Xu said. “On the consumer side, it will take time but that is our dream.”
One of the biggest challenges in the Asian consumer market, he acknowledged, is lingering resistance to “Made in China” products despite marked improvements in quality.
“We need to better communicate what our brand stands for and we need to tell consumers what kind of products we can deliver,” Mr Xu said.
“We want to be perceived as a high-quality and premium tech brand but this is not easy because most people today still see Chinese phones as a cheaper option. It takes a lot of time and marketing money to change consumer perceptions toward Chinese brands.”
Huawei continues to offer affordable products for consumers of all ages, even in its mature markets. It recently launched a sub-brand called Honor, aimed at young people eager to replace their smartphones at an attractive price.
In Thailand, the Honor 10 made its Southeast Asian debut at $440 (13,990 baht). It offers a dual-lens camera and an advanced artificial intelligence (AI) chipset that can pinpoint the outlines of surrounding objects and identify their locations instantly. In China, 1 million units were sold within 26 days of the launch.
Aside from its premium push, Huawei is making its mark in the budget segment in less-mature markets such as India, where 50% of smartphone users have budgets below 10,000 rupees (4,800 baht). Its Honor 7 series sells there for between 8,999 and 11,999 rupees.
The company aims to become one of the top three smartphone brands in India by 2022, according to P Sanjeev, vice-president of sales for the consumer business group of Huawei India.
“India is the only market which is growing at a very fast speed,” he said. “This year we expect smartphone users in India to be at least about 340 million. … India strategy is a key for us. If we want to reach the top three soon, we have to go for the sub-10,000 rupee segment.”
Huawei has also partnered with OneAssist, a local protection and assistance services platform, to offer protection plans for customers buying its handsets in India. The plan covers both Huawei and Honor units and starts at 1,249 rupees to cover accidents and damage.