Realising the massive potential in India, Chinese smartphone brands have been aggressively increasing their presence in the market. Among these is Huawei Consumer Business Group with its brands Huawei and Honor. Although focussing on different consumer segments and product experiences, the brands are gradually consolidating their presence and trying to replicate their global success in the Indian market. Huawei India’s Peter Zhai tells BrandWagon’s Chandni Mathur how the group here benefits from its international reach, technology, R&D and resources. Edited excerpts:
Tell us about the progress of Huawei and Honor. How are the brands scaling up their operations in India?
From the outset, Honor was envisioned as a young, energetic e-brand for digital natives, aiming to create a better and accessible mobile internet experience for the young generation. Huawei has a different branding strategy targeting business elites and focusses more on premium segments, which differs from Honor’s primary focus. The dual brand strategy ensures our competitive advantage in different markets, allowing us to cater to varying consumer requirements. Having diversified in the offline space as well, we are focussing on bolstering our presence across cities by introducing innovative value-for-money devices and better after-sales centres.
Reports suggest that Huawei’s share was 1% in the last quarter of 2016 in India. Your presence and market share globally seems to be much higher. What are the challenges in India?
Huawei has been present in India for the last 17 years. We were the first ones to realise the massive potential of the Indian market. Honor was rolled out in India less than three years ago and we have been gradually consolidating our position in the market. Our growth has been calibrated; our priority initially was to understand the varying needs of the Indian consumer and ensuring a solid foundation. Picking up momentum, we have been consistently strengthening our base by investing in a R&D centre and also setting up a manufacturing base for our Indian operations. Our aim is to provide solutions which hinge on our philosophy of innovation, being consumer-centric and quality.
How are you developing the India business in terms of local manufacturing and increasing your retail presence?
We started manufacturing in partnership with Flex India in September, 2016 and started with Holly 3 which was our first phone under the ‘Make in India’ initiative. We further increased the scope by manufacturing Honor 6X. Both, Honor Holly 3 and Honor 6X have registered strong growth since their launch. We are implementing several changes to maximise the efficiency of our retail strategy. We are already present in over 30,000 retail shops through over 400 distributors and will expand as per business requirements since India holds immense strategic importance for Huawei.
In terms of marketing strategy, consumer and growth, how is the West different from a market like India?
The Indian smartphone market is the second largest in the world but effectively tapping the potential of this vast country is a challenging task. Therefore, our marketing strategy here needs to factor in the multiplicity of languages, customs and ethnicities even while speaking the language of millennials. Western markets are comparatively more uniform and compact, and therefore easier to market to.
For the Indian market, our aim is to diversify our distribution network, constantly innovate with strong support from our R&D and make our products and services easily accessible. We continue to focus on providing consumers with premium quality technological devices at compelling price points. We are already amongst the top three smartphone players globally and plan to replicate the success in India as well.
How do you see the market changing with several smartphone players entering India?
Every smartphone brand has created a niche market for itself. This has not only increased the competitiveness but also brought about a vast array of new opportunities to increase the overall market size. With a higher number of players, the growth will be multi-directional. At Huawei, we welcome competition as it allows us to innovate further and provide even better products and services to our consumers. Our prime focus will be on strengthening and increasing the distribution network, both offline and online. Secondly, the strategy would be to provide a differential experience and innovative features in our offerings.
Many smartphone manufacturers have adopted an aggressive marketing strategy by associating with properties like IPL to gain visibility. What is your strategy in terms of visibility?
Our approach to marketing is different from other consumer brands and you might have noticed this over the last year. We intend to innovate in a much more sustainable manner through an always-on integrated marketing campaign approach. In line with our global strategy, we intend to align with sports, lifestyle and fashion platforms to increase our relevance and connect with millennials. We believe word-of-mouth is a strong driver as this particular target group is known to rely heavily on peer recommendations; currently, over 60% of our smartphone buyers reportedly purchase on this basis. To boost consumer confidence, we are also consistently investing in revamping our after-sales service to push for growth in India.
After China, is India the next most viable smartphone market for Chinese brands?
With sales in major markets, including the US, China and Western Europe having peaked already, India represents the biggest opportunity because of the twin phenomena of dipping data costs and smartphone prices; resulting in burgeoning demand and overall healthy growth of the handset market. Smartphones in India are expected to account for 62% of all mobile phones sales in India in 2018. Interestingly, this growth can be witnessed in the lower as well as the mid-market segment. Considering the overall situation, India presents great opportunities for smartphone players who have a long-term commitment to the country.
With competition getting fierce and margins turning razor-thin in the evolving Indian market, how are Chinese smartphone brands gearing up to fight leaders like Apple, Samsung, etc?
We are the only Chinese company to spend 10% of our total revenue on R&D. In India, our R&D facility in Bengaluru has already churned out more than 45 releases and EMUI software updates with support in 16 local languages. The most recent example of our technology edge was displayed at the recently concluded IFA 2017 where Huawei Consumer Business Group unveiled Kirin 970. By combining the power of the cloud with the speed and responsiveness of native AI processing, Huawei is bringing AI experiences to life and changing the way we interact with our devices. The ultimate goal is to provide a significantly better user experience. Kirin 970 is the first in a series of new advances that will bring powerful AI features to our devices and take them beyond the competition.