Huawei- Marketing research in the USA market
Yao Liu
In brief
Huaweiplanned to hit the USA market in 2015. As a leader telecommunication company worldwide, Huawei offers a range of IT and communication products and service. Before getting into the USA market, Huawei has already been successful in the European market, Indians and the African markets. But it is not the first time that Huaweitries tomove into the USA market. With so many problems to solve, such as intensive competition, high marketing entry and even barriers and blocks set off by the United States government, etc. Huawei needs to take an overall consideration, and tailors a special and long-term strategy to apply to the USA market nowadays. Compared with the Historical Perspective and orbit that its main competitor, Samsun, moved into the USA market, Huawei still need to take a long way to go.
Contents
Background information 2 Problem statement 5 SWOT analysis5
Recommendations 11
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Company background
Huawei telecommunications equipment Co, established in1987,is one of the leading
manufacturers in telecommunications industry. In 2012,Huaweitook full ownership of a Chinese joint venture formed with Symantec. The company bought Symantec's 49% stake for $530 million in order to focus on developing security and data storage products for
telecommunications carriers and other businesses. But, the Shenzhen company has only manufactured Android smartphones since 2009, and it makes a varies range of products, mobile phones, smart watches, also, it offers different kinds of services and equipment for computing cloud, and telecom operations, radio access, core network, and other systems. Why dose Huawei want to enter the USA market?
As its main competitors in China, Xiaomi? and Lenovo?, have been ready for the global strategy in smart phone market all around the world, and started to snatch at Apple’s crown. Huawei relies to a great extent on internal development for growth. Huawei enjoys high reputation in European, Africa and Indian market, and it started to develop its global strategy to open new market in USA. Product and service lines
Huawei invested instead in its consumer and enterprise businesses, launching a series of smartphones for consumers and bolstering its cloud computing and data center offerings aimed at enterprise customers.Worldwide, the company maintains 23 research institutes and has set up 34 innovation centers that are operated in partnership with leading telecom operators. R&D accounts for around 10% of annual revenue, and more than 44% of its global workforce is involved in the development of products and services.In Europe, it launched the Honor 6 without
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the Huawei name attached, dropped the old Ascend brand name, and decided only high-end smartphones were the way forward. Competitors
Huawei takes almost more than half of marketing share in providing telecom equipment in China. Huawei has been grown into one of the major global players with offices in 140 countries. Its market share has since grown to 6.8 percent of the smartphone market. Huawei nearly doubled its device shipments to 20.1 million units.As the third-largest smart phone maker, right behind Samsung and Apple.Huaweihas been making strides to alter its image elsewhere in the world.
Exhibit 1. Top Five Smartphone Vendors, Shipments, Market Share and Year-Over-Year
Growth, Q4 2015 Preliminary Data (Units in Millions)
4Q15 Shipment
Vendor
Volumes
1. Samsung 2. Apple 3. Huawei 4. Lenovo 5. Xiaomi Others Total Lenovo + Motorola
85.6 74.8 32.4 20.2 18.2 168.3 399.5 20.2
Share 21.40% 18.70% 8.10% 5.10% 4.60% 42.10% 100.00% 8.10%
Volumes 75.1 74.5 23.6 14.1 16.5 174 377.8 24.7
Share 19.90% 19.70% 6.30% 3.70% 4.40% 46.10% 100.00% 6.50%
4Q15 Market
4Q14 Shipment
4Q14 Marke
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Exhibit 2. Top Five Smartphone Vendors, Shipments, Market Share and Year-Over-Year
Growth, Calendar Year 2015 Preliminary Data(Units in Millions)
2015 Shipment
Vendor
Volumes
1. Samsung 2. Apple 3. Huawei 4. Lenovo 5. Xiaomi Others Total Lenovo + Motorola
As Exhibit 1 and 2 shows below, Huawei sales increased from 6.30%in 2014by 8.10% in 2015. Samsung is in the first place with the largest market share of 22.70% and the largest sales volume of $324.8 millions in 2015. There is still a pretty sizeable gap between Huawei and Samsung, even between Huawei and Apple. Marketing strategy
Huawei caters to American customers with the low-end products. But, it presented P8 in USA market, and change the design of P8, which is totally different from order one that presented in European market. For building and improve its brand, Huawei actively provides sponsorships across Europe, Asia, Africa, the Americas, and Oceania and it plans to continue as worldwide sponsor in the spirit of collective success with its partners, and improved communication with
324.8 231.5 106.6 74 70.8 625.2 1432.9 73.9
22.70% 16.20% 7.40% 5.20% 4.90% 43.60% 1 5.16% 2015 Market Share
Volumes 318.2 192.7 73.8 59.4 57.7 599.9 1301.7 93.7
Share 24.40% 14.80% 5.70% 4.60% 4.40% 46.10% 1 7.20%
2014 Shipment
2014 Market
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local consumers. Huawei is getting on sports sponsorship highway and finish its image turnover gradually.Huawei is changing its approach to marketing as it tries to shed its image as a purveyor of cheap technology products - a common perception issue for many Chinese companies.
Problems statement
Being unknown in US market
Although Huawei is the fourth largest smartphone manufacturer worldwide and it is still unknown by most of customers in USA market.Huawei offers customers various hard
smartphone at low price, as most of Chinese smartphone manufactories in America. They didn’t make a clear target goal like Apple, who are very popular among young people in USA. Being restricted to open USA market
Huawei has already to get into American market in 2005, but failed. American government and Mainstream media, saw Huawei as spy who would leak out USA information. A lot of related reports came out and guided Americans that had a large negative effect to Huawei.
SWOT analysis
Before doing a SWOT analysis, I would like to do a PESTEL analysis. PESTEL and Port’s five force are basic analysis tool that contributes to a SWOT analysis. In PESTLE’s expended form, P for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environmental. Port’s five force is useful and powerful, and it’s aimed to help you understand both the strength of a company’s current competitive position, and the strength of a position a company’s considering moving into.
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Potential impact of political factors on Huawei
1.Huawei has been seen as a communication spy that would threat the USAnational security system with ZTE. In 2012, The house intelligence Committee released a report that indicated Huawei was trustless. Almost 4 years later, the Commerce Department announced that ZTE along with its related corporation should be e placed on the Entity List for actions contrary to U.S. national security and foreign policy. The Entity List will have a bad effect on Huawei as well by set entry barriers for Huawei to move into USA market.
2.As the largest telecommunication company in China, Huawei still relies on the low cost manufacturing in China. While U.S. will limit the import from China to protect its own manufacturing development, which may cause Huawei high cost. Potential Impact of Economical Factors on Huawei
1.Increased labor costs in China could take away the cost advantage of Huawei products, and most of the smartphones in Huawei are low-end, which would reduce the total profits of smartphones.
2.United States is a developed country with huge consuming power.Huawei could broaden its market by researching and developing its high-end or mid-tech products. Potential Impact of Social Factors on Huawei
1. American government put Huawei into an awkward situation and it claimed that Huawei would threaten America security system.
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2.Huawei is taking a hard time to do business in USA market. The \—AT&T, Sprint, T-Mobile and Verizon—don't give hands to Huawei and corporate with it by selling its device and smartphone.
3.Huawei is doing e-business to sell its products, and trying to build relationship with us carries, which would help it open the us market.
Potential Impact of Technological Factors on Huawei
1.Huawei has established a good relationship with Google. The information report showed that Huawei is in line to produce Nexus Android phones. The relationship between Google and Huawei could be mutually beneficial beyond the phone’s co-development.
2.Huawei input a lot into research and development new technology. According to its official introduction, Huawei’s R&D expenses totaled CNY30,090 million in 2012, accounting for 13.7% of the company’s annual revenue. Of the total R&D expenses, CNY1,300 million was invested in research. Huawei has cumulatively spent more than CNY130,000 million on R&D over the last decade. Huawei has already ranked into first ten claimed that they still would invest millions RMB into research and development.
3.Huawei is one of the top patent owners in the world. It has been a proactive advocate for strong IP protection spends approximately USD300 million per year to legitimately use patented technologies.
Port’s five force
Supplier Power
Huawei was an OEM (Original Equipment Manufacturer), worked for large IT or
Telecommunication companies, such as Google, and it changed into a ODM(Original design manufacturer). Huawei outsource a large percentage of its products to its suppliers, such as
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Foxconn, and Hisilicon. It also imports TFT(Thin Film Transistor) of its products from Japan Display Inc., which supplies top TFT or LTD technique products to many companies. The supplier of Huawei is so powerful to negotiate with it, which makes Huawei feel hard to control. While Apple is totally different, and it is more powerful than its suppliers. Buyer Power
Huawei is less known in American market. It’s hard for customers to judge whether Huawei smartphone are worth to buy or not and it’s still difficult for them to distinguish Huawei with other Chinese brands. Individual buyers decide how the market will be in the future. Competitive Rivalry
The smartphone market in USA is very competitive. Huawei needs to pay off a lot to catch up with Samsung and Apple, and it also facing the threaten from other competitors, like Xiaomi, and ZTE. Now, Huawei is aim at broadening its smartphone market by perfecting its market segment. Now Huawei is dedicated to establishing its high–end smartphone market, which makes it distinct from other Chinese companies, such as Xiaomi, ZTE and Lenovo. Threat of Substitution
With IT and the related technology developing so fast, Huawei and its main competitors invest a lot into development of new technology. Smartphone and other electronic products update very fast.
Threat of New Entry
It’s very difficult for new players to get into the smartphone market because the market barrier and intellectual property requirements, and Huawei is powerful enough to deal with new competitors.
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Strength
1.Chinese company.
As a Chinese company, It’s available for Huawei to cut cost for low wage level and cheap products to produce. There are a lot of OEM in China for Huawei to filter and corporate with. 2.Success in Europe.
Being Success in European countries enriched Huawei’s experience and enhance its ability to deal with gross-culture business. 3.good publicity
Huawei is the largest telecom equipment maker and largest telephone-network equipment maker in China.
4.Sponsor and invest a lot in soccer
It helps Huawei improve its image worldwide, which benefits its reputation and branding strategy in USA market. 5.Strong technology and skills
Huawei inputs a lot of money in R&D development to update its technology every year, and masters a lot of core technology in its related products.
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weakness
1. Lots of competitive companies
The USA market is competitive with Apple, Samsung, ZTE, Xiaomi, etc. Huawei needs to make itself special and outstanding among its competitors. 2. People have preconceptions
As a Chinese company, People in USA hold a prejudice that Chinese products are in poor quality. 3. Bad reputation
Made in China label and low wage Country label make Huawei a bad reputation and trustless for customers, who totally don’t understand how Huawei really is. 4.Pool design for its products
5.Pool marketing strategy to promote and advertise opportunities 1.Cheapest products
Low price but high quality helps Huawei attracts people’s attention to it, which offers Huawei a big chance to open the new market. 2.Smart technologies
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Huawei pays a lot in technique improvement and updating, leaving Huawei being more innovative than others/. threats
1.Competitions from others 2. ―Spy event‖
It has a bad effect on Huawei and restricts Huawei to move into USA market. American government still believe that Huawei would threaten American security system.
Recommendations
1.Building a new branding strategy.
Market strategy is so important to guide a company’s development for a long time. Huawei is facing a large problem that being lass known in USA market. People seldom tell difference between Huawei and other Chinese companies. So, Huawei needs to make a plan in details about changing its image and making itself more special for American customers. Developing a large range of products, in smartphone market to do a perfect market segment. 2. Paying a lot of attention to CRM.
CRM (Customer Relationship Development) is very important for a company to manage. According to Apple’s successful case, Huawei Needs to take it into consideration. By offering customized service and customer-experiencing service, Huawei can learn a lot from customers
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and build good relationship with customers. Also, excellent after-sales service is significant for a company to fill the gap between customers and itself. 3.Focusing on designing of the products.
Compared with Apple with a particular design, and Samsung that insist on simple and easy designs, Huawei’s design needs to be change and improve in the future. 4.Technology development
It is significant and necessary for acompany to take. According to the previous analysis, Huawei still need to strengthen its core technology development on smartphone and other products, for example, theLTD technology, and core software technology. 5.Perfecting security system
Perfecting the products’ security system is a hard project for Huawei to take. security system is very important that will affect customer’s privacy. Also, High protecting in security system would make Huawei outstanding among its competitors and help Huawei to improve its bad image resulting from the spy event in USA market. 6.Promotion and advertisement
Huawei did a bad job in Promotion and advertisement that contributes to its failure in being less known in USA market. Samsung’s successful strategy is useful for Huawei to take into reference. How to be special and attractive among customers is a large project for Huawei to complete.
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Reference
[1] https://ycharts.com/companies/AAPL/key_stats
[2] http://www.csmonitor.com/Technology/2015/0923/Why-Apple-Pay-and-other-mobile-wallet-services-could-be-regulated-like-banks
[3] http://money.cnn.com/2015/09/30/technology/apple-car-clues/ [4] https://www.idc.com/getdoc.jsp?containerId=prUSA40980416
[5] http://www.thetelecomblog.com/2015/12/18/huawei-plans-entry-into-u-s-smartphone-market/Smartphones And Foreign Policy ZTE Sanctions Explained.pdf
[6] http://www.reuters.com/article/USA-huawei-tech-USAa-idUSAKBN0LZ0BM20150303 [7] http://consumer.huawei.com/minisite/worldwide/sponsorships/index.html
[8] http://www.huawei.com/ilink/en/about-huawei/newsroom/press-release/HW_329164
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