Huawei eyeing top spot in consumer and enterprise

Huawei is hoping to improve brand awareness across enterprise and consumer in Australia, and wants to grow its global market share, with two new localised-led operations potentially coming up.
Written by Corinne Reichert, Contributor

Huawei Australia chairman John Lord has outlined the Chinese tech giant's plans to push ahead in the consumer and enterprise business segments, saying it should leverage its influence in Europe to gain more local awareness.

While Lord said Huawei is already widely known across telecommunications companies through its carrier business, it still needs to push into the enterprise sector and become a more pervasive provider.

"We do need to get to be known in industry verticals better, because enterprise is the new game ... we still need to be known," Lord told media in Shenzhen on Tuesday.

"Even though they're better known globally and in Europe now, they're still not known enough, and people probably think of them as a mobile phone over here, and a network over there, and not as this middle enterprise player, which of course they are. So that's still the job for us."

Huawei is also aiming for deeper penetration within the consumer space, with rotating CEO Eric Xu saying on Monday that the company's goal is to become the number one consumer brand in the world.

"We will leverage the technical expertise we've been building over the last decades, and try to build a premium brand, or high-end brand. We want to make it the top brand throughout the world. At the same time, we want to capture consumers' recognition through service and quality," Xu said at the Huawei Analyst Summit in Shenzhen.

"We're committed to building an ecosystem with consumers in the centre, so as to improve stickiness or loyalty of consumer customers. We want to leverage our own strengths, and we want to engage with consumers in the right way ... build our consumer brand into a trusted and loved brand."

Huawei is therefore considering it a top priority to make inroads into both enterprise and consumer, Lord said.

"We have two roles today: One is still to get consumer land to be able to say our name and buy our mobile devices, which we're putting a fair bit of effort into, and the second one is still to say to business, 'hey, we are one of the smartest companies in the world and we can take your business end to end, wire to wire'."

The chairman suggested that Huawei's continuing lack of brand awareness in Australia could be improved by leveraging its success across Europe as a sort of seal of approval.

"Our problem in Australia is still we've got to get people to know Huawei, because they don't still -- we do surveys and we're still chipping away -- but in Europe it's a lot bigger," Lord said.

"I think we need to let Australia know we're playing one of the lead roles in Europe, too, as part of our branding and image."

One of Huawei's biggest successes in Australia has been the deployment of its first localised board, which the company is now looking to as an example for launches elsewhere.

"The structure of the board was very smart. We had three Australian directors ... and then we had two global directors. And that was just a smart move," Lord said, explaining that it gave Huawei Australia "instant access" to the global board in China, which consequently "gave us that clout, and also we were able to inherit what the company was all about".

What he called the "Chinese-Western board model" was then used to launch a localised-led operation in the United Kingdom with the same structure consisting of three local and two global board members.

Lord hinted that more localised boards could also be on the horizon.

"They're looking at other countries -- perhaps there will be another announcement this year of one country, and another one next year."

In regards to its consumer business, Huawei already holds the most smartphone market share in China, and ranks in the top three worldwide. Last week, the Apple iPhone's market share reportedly shrank by 3.2 percentage points in China due to the success of Huawei.

"iOS declined 3.2 percentage points between February 2015 and February 2016. Huawei was able to recapture the top spot on the smartphone brand leader board, capturing 24.4 percent of smartphones sold in urban China, just ahead of Apple's 22.2 percent," said Tamsin Timpson, a strategic insight director from Kantar Worldpanel ComTech.

Huawei's FY15 net profit of 36.9 billion yuan ($5.7 billion) -- a 33 percent year-on-year rise -- on revenue of 395 billion yuan was largely attributed to its consumer business. Described by as "a major highlight" of the tech giant's results, consumer grew by 73 percent over the year to reach 129.1 billion yuan due to the increasing popularity of its handsets; Huawei shipped 108 million smartphones worldwide over the year.

Huawei also filed the highest number of patent applications worldwide during the course of 2015, making 3,898 applications, according to the World Intellectual Property Organization. Trailing were Qualcomm, which filed 2,442 patent applications; ZTE, which filed 2,155; and Samsung, which filed 1,683.

According to Huawei, it has had a total of 50,377 patents authorised, with 52,550 patent applications made in China and 30,613 patent applications made outside of China.

To ensure its continued success, Huawei has more than 79,000 research and development (R&D) engineers, amounting to 45 percent of its total workforce, 16 R&D centres and 36 joint innovation centres worldwide -- including a AU$30 million National Training and Innovation Centre in Sydney, as well as centres in China, Germany, Sweden, Russia, and India -- and R&D investment amounting to approximately $37 billion over the last 10 years.

The company invests at least 10 percent of its sales revenue back into R&D each year, with 15.1 percent of its 2015 sales revenue being invested last year.

Disclosure: Corinne Reichert travelled to China as a guest of Huawei.

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