Huawei says new smartphone brand is selling well

Just 18 months after being launched, Honor, an Internet-based young generation targeted mobile brand owned and operated by Huawei, is rapidly gaining market share in Europe.

The brand debuted in 14 European countries in December and sales have since spread across almost the entire continent, Zhao Ming, President of Huawei Honor, says.

Zhao Ming, President of Huawei Honor. Huawei has sold 20 million Honor phones. Cecily Liu / China Daily

Key to this success, he says, has been the research and development work done both at Huawei's headquarters in China and locally in Europe to understand consumer needs.

On June 29, his team presented Honor products at the Italy China Innovation Forum, where the company also signed a cooperation agreement with the Polytechnic University of Milan and Shanghai's Tongji University to work together on high-technology innovation and knowledge exchanges.

Zhao says Honor is a brand that focuses on creativity, and it is hoped the new partnership will support young people in turning their ideas into products.

Honor products are mainly for the smartphone market, but it also includes products such as wireless Internet routers and wearable devices.

"We decided to launch Honor as a separate part of our business because we realized that young users are the future, and that their consumption and lifestyle habits are very different," Zhao says. "Whereas older-generation customers want a phone mostly for making calls or reading the news, many young customers are online for eight to 15 hours a day, so we want to design features that meet their needs."

To achieve this, Huawei has established a separate management team to work in an environment that encourages creativity.

Knowing the end users are young people, Honor products are priced more competitively to champion the idea of value for money, Zhao says. For example, the Huawei Honor 6 smartphone, which is sold mostly in Europe, costs about 250 pounds ($390; 350 euros) on Amazon. It has a full-HD, 5-inch display, an octa-core processor, a 13-megapixel camera, and a cat 6 LTE that promises speeds of up to 300 megabytes per second.

The low prices come largely from the retail model, he says, as most Honor products are sold online, cutting out the profit a retailer would typically gain by being a part of the supply chain.

"The advantage of our products comes from the software, leveraging Huawei's natural advantage as a telecommunications service provider. For example, our smartphones have fast speeds, long-lasting batteries and low levels of radiation and heat during use."

In addition, he says, there are unique features that make the products attractive for young customers, such as its camera, which can take photos almost as good as a single-lens reflex camera.

Good functions are essential, as consumers are most concerned about functions and the reputation of a product when they purchase online, he says. "When consumers compare products online with all the specifications next to each other, they will make very rational choices based on functions. We need to also build up good reputation so our consumers will recommend our phones to others through word of mouth."

Zhao says he wants the Honor brand to be associated with an optimistic and healthy lifestyle, representing a can-do attitude and courage to take on new challenges.

Some of the key markets for Honor in Europe include France, Germany, Italy, the Netherlands and the UK. Globally, it is available in 74 countries and regions.

Huawei has sold 20 million Honor phones and 55 million other Huawei-made phones worldwide. The company's target is to sell 100 million phones this year, including 40 million Honor phones.

Since 2000, Huawei has significantly expanded across Europe. Zhao, who started working with the company's European operation in 2002, recalls that landing the first customer was difficult, as Huawei was an unknown brand, while the made-in-China label also did not help. "At the time, companies in Europe thought that China was just a place that manufactured cheap clothes. They found it really hard to imagine a high-tech company such as Huawei coming out of China, selling advanced 3G technology."

It took Huawei a few years to establish a presence in Europe, gaining its first major customer in 2005. Dutch telecommunications company Telfort liked Huawei's products, but its existing supplier tried to make the switch difficult through price competition. Huawei managed to solve the problem with technology innovation and gained Telfort's business. From there, Huawei's business grew rapidly.

From 2011 until last year, Zhao was CEO of Huawei Italy, which supplies equipment and services to Italy's biggest telecommunications companies, including Vodafone and Telecom Italia.

After establishing a solid operator business, Huawei started to expand into the business and device segments in Italy. Today, its operator segment accounts for about 60 percent of overall revenue; devices, 30 percent; and business customers, 10 percent.

Its business customers are large companies such as Poste Italiane, Trenitalia and major banks that use Huawei's telecommunications signals for internal communications, which require fast speeds and high reliability. In the device sector, Huawei accounts for about 7 percent of the Italian smartphone market.

Zhao says Huawei has been able to achieve its success mainly due to its dedication to research and development, as the company annually invests about 10 percent of its revenue into research and development.

cecily.liu@chinadaily.com.cn

(China Daily European Weekly 07/03/2015 page23)