Huawei Set For Europe Smartphone Blitz 华为智能手机全球营销首选欧洲

By newsdoug on June 21, 2012

Huawei to launch marketing blitz Telecoms equipment giant Huawei may be a familiar name to industry insiders, but as a consumer brand it has a long way to go as it tries to develop its consumer-oriented smartphone business. In pursuit of that aim, the company is gearing up for a massive marketing blitz that looks set to target the lucrative European market first, to be followed perhaps by an eventual try at the more difficult US market. The choice of Europe for its first global smartphone offensive looks smart, mirroring a similar path for the rise to prominence of Huawei’s core networking equipment business staring in the mid 2000s.

Unlike the US, where established names like Apple (Nasdaq: AAPL) dominate, Europe is more open in terms of brand loyalty and thus makes a better starting point for Asian brands looking to build up their presence in the west.

I got to hear about Huawei’s aggressive smartphone marketing plan at a breakfast meeting this morning where Shao Yang, the man leading Huawei’s smartphone drive, detailed an expansion strategy that includes a hefty $200 million smartphone marketing budget this year. Much of that money will go to Ogilvy Worldwide, which Huawei hired late last year to create global advertising campaigns for its smartphones.

Somewhat surprising was Huawei’s selection of a branding partner early this year in BBH, a British company whose global presence includes a Shanghai office but isn’t quite in the same league as the top global players. I can’t really comment too much as I don’t know this company, but perhaps Huawei was looking for someone with a big European presence, as that appears to be where it will focus its first big global market push.

As its core networking equipment business slows, Huawei and crosstown rival ZTE (HKEx: 763; Shenzhen: 000063) have both been looking to smartphones as a new growth engine. Shao acknowledged that the smartphone market is much more competitive than networking equipment, and is also a market where companies that were industry leaders one day can easily see their position change overnight, as evidenced by the recent declines of former leaders Motorola Mobility (NYSE: MMI) and Nokia (Helskinki: NOK1V).

Huawei’s smartphone strategy seems to be 2-pronged, involving the major marketing push to boost its brand coupled with a move away from its traditional nice in cheap smartphones to more high-end products.

I’ve already said I think its approach of targeting Europe first looks like a smart one, and the company certainly has the resources to compete in this space over the long term. If I were a betting man, I would say this new drive probably stands a 50 percent chance of success, especially as the only true market leaders right now are Apple and Samsung (Seoul: 005930).

Skepticism about Chinese brands in general could be Huawei’s biggest risk factor, as could its traditional position as a follower rather than innovator of new technologies. But that said, companies like Samsung and Taiwan’s HTC (Taipei: 2498) have certainly overcome such risk factors, which should give the people at Huawei some encouragement that perhaps their company could indeed someday become a major global smartphone player.

Bottom line: Huawei’s plans to become a global smartphone brand stand a better than 50 percent chance of success, though it could suffer from consumer skepticism.

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