CITY INTERVIEW: Ambitious Chinese telecoms giant Huawei is playing it smart
By
PETER CAMPBELL FOR THE DAILY MAIL IN SHENZHEN, CHINA
PUBLISHED: 16:03 EST, 1 October 2014 | UPDATED: 16:03 EST, 1 October 2014
Shao Yang is the public face of a company that almost no-one in Britain has ever heard of.(
shows how ignorant these westerners can be and they are quite proud of the fact!)
Despite its growing presence not many people in the UK know the brand of ‘Huawei’ - and fewer still know how to pronounce it. (The answer is Hoo-wah-way) But the Chinese telecoms giant is taking the mobile world by storm.
Five years ago it had never made a single handset. This year, however, it expects to ship 90 million phones - a staggering trajectory over the space of half a decade.
Well connected: Five years ago Huawei had never made a single handset. This year, however, it expects to ship 90 million phones - a staggering trajectory over the space of half a decade
It has come from nowhere to become the third-largest maker of smartphones in the world behind Apple and Samsung.
But for Yang, the deputy chief of its devices arm and the face of the company’s mobile business,
bronze is not good enough. He wants gold.
‘This is a competition,’ he says. ‘It’s about how you meet consumer dreams.’
It has a track record of throwing its weight behind a project and growing market share.
He even admits it picked EE in Britain because the network provider was the ‘most aggressive’.
‘In
1998 when I joined the company we said we were going to be number one in wireless technology,’
Yang says, when we meet at the company’s vast headquarters in Shenzhen, China.
‘
At the time there were seven rivals that were bigger than us. Now we are number one.’
He adds: ‘
In mobile we said in the next five years we will be the top three. That was in 2010.
’
But it will take a huge leap for the company to knock Apple’s 15 per cent or Samsung’s 30 per cent share(
no more,25% at best)of the market.
Possibly not surprisingly for a company founded by a former Red Army officer, Huawei has a battle plan - and it is to do with making phone calls and connecting to the internet.
‘Samsung is the best at hardware, Apple is the best at software, Huawei is the best at connecting to the network.’
The comparison is not entirely surprising for a company that grew on the back of building and flogging telecoms infrastructure equipment around the world.
But
with Samsung’s share in decline, the group has set its sights not on the South Korean firm, but on its fierce rival from the US.
‘Apple is still the best smartphone in the world.
‘But Apple doesn’t listen to the consumer. It makes it uncomfortable to be the consumer.’
He wants to pull out all the stops to create phones that allow people to use them freely.
Its latest, the Ascend Mate 7, comes with a fingerprint scanner on the back that can unlock the phone in several different modes depending on which digit is used.
Huawei now has five different ranges of phone, including one for just £60. But even with its strategy in place, the group has the branding stacked heavily against it.
Why not ditch the complicated name and launch a brand consumers can get their tongues around?
‘We meet this kind of question always,’ says Yang, with a tone of voice that suggests he is sympathetic to the objection.
When it first looked at selling to ordinary customers, ‘we thought we needed to totally change the name’.
But after studying the world’s top 100 brands, presumably to see which ones could be picked off and replaced by his own, Yang realised that none of them also served businesses.
To keep its infrastructure business while becoming a consumer giant, Huawei would have to break new ground.
‘I remember [O2 owner] Telefonica saying to me we can have the best product, but we need to build our brand.’ He says this led to a deep debate internally at the company.
‘It will only work if it is a very strong root, if you start both from the same principle. If the root is strong enough then both trees can grow from it.’
The result was a halfway house - and one of the very rare occasions on which the group compromised.
Its flagship phone range is the Ascend ‘which English people can pronounce’, he says, holding up his own shiny new device. ‘Maybe it’s hard for people to pronounce or remember Huawei.’
Britain, where it also occupies third place in the market, is key to its success internationally, he says.
‘The UK is a heavily competed market. It is the second most difficult market in Europe after France.
But it is very important and most of the brands use the UK as a key market.
‘There is a lot of money invested. If you look at the marketing costs in the UK they are very high, higher than in other countries.’
He says Huawei is ‘not so rich’.
‘It is hard to invest a lot.’
So picking its ‘partner’ to promote it in the UK was key.
‘Currently we use 4G partner Everything Everywhere.’ Clearly the rebranding of the Orange and T-Mobile owner to ‘EE’ has not proved memorable.
But with the growth of Huawei’s brand comes an increasing awareness of past troubles dug up in its less visible, more secretive corporate business.
In 2012 the US Senate all but barred it from public work after accusing the group of allowing the Chinese state to infiltrate its systems and snoop around the world.
Given that Huawei’s kit is in almost every country - including Britain’s superfast broadband network, countless offices and a host of Government departments - the implications of the accusations are difficult to exaggerate.
It denied the allegations and demanded evidence. None has yet appeared in the public domain. But the storm led to the group quietly redoubling its efforts to increase security.
Despite being founded by a former Red Army officer, and spending the first decade of its life in the 1980s and 1990s doing business exclusively with the Chinese state, Huawei maintains that it has no formal link to the government of the People’s Republic.
It is owned by its employees, making it one of the largest private companies in the country.
Raising the issue of the spying claims leads to Yang losing his bounce for the first time in our meeting.
He looks to his PR attendant, who leans over and whispers frantically in his ear. It is clear he had only expected us to talk about phones and the company’s growth rate.
‘The US market is,’ he begins, before pausing and starting again. ‘The US market has always been a very important part of our business.’
It accounts for around 5 per cent of smartphone sales.
‘The market is not related to that kind of report,’ he insists. But since the ‘report’ - a senior Senate committee paper on the back of an FBI investigation - Huawei has conversely become less reticent about splashing its name across North America.
‘This is a time of change in the US market. We use operator brands in the US, such as T-Mobile. But now is the time we can really use the Huawei brand,’ he says.
Three years ago only one-fifth of its phones sold in the States bore the Chinese giant’s branding. Now the figure is 95 per cent.
The room where we meet is large, with place names waiting for us facing across the boardroom table.
Yang, sitting directly opposite me, can survey the company’s vast campus where one-third of its 150,000 staff are employed through the large windows behind me.
My view is of water bottles arranged in a neat pyramid formation on a low shelf just behind Yang’s head.
As he pushes towards his goal of global smartphone domination, Yang will hope that his ducks line up just as neatly.