Slowly but surely, Chinese smartphones are making their way into consumers’ hands. While Huawei is a leading infrastructure company, it started designing and manufacturing smartphones only recently. So far, the company preferred to sell white-label smartphones to carriers around the world. But in 2012, Huawei has shipped 85 percent of its devices under its own brand, compared to a scant 20 percent in 2011.
Chief Marketing Officer Shao Yang declared to Le Monde that the company plans to become one of the top 5 smartphone brands in 2014 and one of the top 3 in 2016.
That’s why Huawei invested more than 200 million dollars for its branding strategy. According to an IDC report, Samsung is currently the leading brand in China, followed by four Chinese companies — Lenovo, Coolpad, ZTE and Huawei. Apple, despite its apparent popularity, is sitting in sixth place.
At the same time, the Chinese market is very promising. Evidence of this lies in growth prospects. China Mobile (which, if you’ll recall, is the world’s largest wireless carrier), only has 79 million 3G customers out of its 700 million subscriber base. Huawei doesn’t want to miss out on that opportunity, as many subscribers will switch to a smartphone in the coming years. It is a good revenue opportunity as well, as margins are usually higher with smartphones compared to feature phones.
The branding effort is still a work in progress as Microsoft, Apple and Samsung spent more than a billion dollars each in advertising campaigns in 2012. But Huawei has a few assets compared to many of its competitors. Like Samsung, LG and RIM, Huawei manufactures its own phones. Apple, Nokia, HTC, Motorola and others rely on third-party manufacturers like Foxconn, which increases costs and reduces flexibility.
The other key advantage is that Huawei is a Chinese company. As current market shares show, there is a national bias in favor of Chinese brands when it comes to smartphones in China. Huawei can easily become an important entry-level smartphone brand in the world, after conquering the Chinese market. Even though it is one of the lesser-known brands in the U.S., the company should showcase new devices at CES next week and will lay out the company’s strategy for 2013.