The chairman of China’s Huawei tells Matt Warman how the company plans to rule the smartphone market and that it can overcome political ‘spying’ fears in the US.
London’s Camden Roundhouse used to house a giant turntable for trains steaming in to and out of the capital – since it was reinvented as an arts venue, it therefore made an appropriate site for one of China’s largest companies to mount its own bid to turn toward a new direction.
Not content with being the maker of much of the infrastructure behind the internet, Huawei wants to be one of the world’s three biggest mobile phone brands by the end of 2015. For its first major consumer launch last week journalists were flown in from South Africa, Europe and beyond to witness the kind of event usually hosted by Apple or Samsung.
Chief executive Richard Yu stood on stage to announce the Huawei Ascend P6 – the world’s thinnest smartphone – and to issue a clear statement of intent. The company has the ambition, simply put, to make the best smartphone in the world and to sell it for less than Apple or Samsung.
If that sounds like hubris, no lesser figure than Sir Charles Dunstone, chief executive of Carphone Warehouse, says Huawei’s a force to be reckoned with: “I think it’d be hard to displace Samsung and Apple. But with products like these priced like they are, I think Huawei has very credible aims.
“There’s a lot of people vying to be in the top three and they’ve got to take these products incredibly seriously. It’s an amazing line-up backed by the most enormous research and development.”
With no vested interest in seeing Huawei displace a Sony, an LG or a BlackBerry, Sir Charles adds: “If you were anyone else, you should be scared.”
Yu himself doesn’t appear scared of anybody – he talks freely not only about Huawei’s line-up, but also about the complex politics that have at times threatened to engulf the company. There could be no more palpable demonstration that secretive Huawei is trying, admittedly slowly, to open up.
When he sees my Samsung Galaxy S4 on the desk, Yu is blunt: “We want to provide the best, most beautiful, slimmest smartphone – this one’s much thicker.” Picking up on criticisms about the Samsung build quality he says simply: “We’re not made of plastic.”
Huawei claims Samsung – the biggest smartphone maker in the world – has built its success on hyperbole and enormous advertising spend. “In the high tier, if you have huge money to spend on marketing and branding, like Samsung, then everyone will buy that,” he says.
“We don’t have so much money to do marketing and branding so we have to make our products better. The best smartphone in the past was from Nokia, then from Apple, then from Samsung. And who is number one? The industry is so dynamic – no matter how successful you are, if you’re currently number one, doesn’t mean tomorrow you’ll be number one
“Samsung, they have such huge money – if you invest in marketing and branding then people will always buy no matter how good the products are. The Samsung Galaxy S4 is just a so-so smartphone.”
He claims he’d like to buy more advertising space “but I don’t have so much money”.
While it’s Samsung that has all the momentum, it’s Apple that has set the pace for “cool” – the factor Huawei badly needs if it is to truly compete. Never lacking in ambition, Yu thinks he’s got Apple in his sights as well.
“In its latest update, Apple makes the phone extremely simple to use,” he says. “But if we are just learning from them we can’t catch up, because they are now slipping. We want to go higher than them.”
Being “higher than Apple” is part of the thinking behind the software Huawei’s using for the new phone.
A simplified version of Android, it also offers highly customisable interfaces, including a way to make the switch from one homescreen to another look like a windmill.
“We have a good relationship with Google,” says Yu. “We want Android to be more user friendly, so we have made a lot of enhancements. Google is good for an engineer but it’s not good for the consumer. It’s a little bit too complicated.”
Huawei will also go after new markets: “We want to bring a lot of personalised things – ladies like a lot of these things, so we’re making it more suitable for them.”
Indeed, Huawei’s approach in China has been to build phones tailored for every market. Huge investment in research and development means that there’s a phone, tablet or in-between phablet at a range of prices and at a host of sizes.
The new P6 does represent a step change in the quality of its design and Huawei’s clear commitment to a new approach. Hardly two years ago it had never made a phone in its own name, while the P6, up against Apple, Samsung and others already has 2m Chinese pre-orders.
Yu says that in China, Apple is hamstrung by its lack of a large-screen phone. “Large-screen phones do very well in China,” he says. “Asian people prefer large phones. Gentlemen can’t put an iPad Mini in a pocket.”
Moving on from the battle over products, Huawei is also involved in a battle over politics. Around the world, Huawei has had to deal with rumbling accusations that its network business could be a conduit for Chinese espionage.
In its defence, the company points out that it merely sells networking equipment to businesses which operate them.
Why would Vodafone put up with a back door that could be infiltrated by a foreign power? And, anyway, Huawei is a privately held company not state-owned entity. These arguments appear to carry little weight with some politicians, as both the US and Australia restrict Huawei’s operations in their countries.
In the UK, both David Willetts, the science minister, and George Osborne, the Chancellor, have gone out of their way to welcome the firm and its significant investment.
“Consumers welcome the Huawei brand,” says Yu. “It’s a [US} government guy, a political guy [who doesn’t]. Consumers like Huawei, and feel that we’re a trustworthy brand, a reliable company.
“Politicians feel that Huawei headquarters are in China and China is the Communist Party and some governments don’t like the Communist Party or socialist countries.
“Actually, China is not a socialist country any more, we’re a capitalist country. The only difference is, we have only one party. Some leaders don’t like this system. We are a Chinese company – if we were a British company, a German company, we’d have no problem.”
Yu describes Huawei as “a globalised company, headquartered in China”.
While many British companies outsource work to China or to India, Yu says it is in order to recruit quality staff that can only be found in Britain that Huawei is so active here, opening a new UK headquarters in Reading two weeks ago.
“The UK’s a good [test bed] for America and the world,” he says. “We hire a lot of UK people and we contribute a lot to society.
In the UK we can get good people. We behave like a local company.”
As Chinese companies, across Africa in particular, are accused of parachuting in their own employees without benefiting the wider society, in the UK at least Huawei is keen to stress that it is learning how to be a good corporate citizen.
None of this will placate the company’s critics – but Huawei is a brand with unparalleled bulk and ambition. “All retailers say they will buy more from Huawei,” says Yu.
And retailers such as Sir Charles certainly seem to agree. At the Roundhouse, he took to the stage to emphasise how good his own relationship was with Huawei, and how much faith he has in the business. But more than that, he implied it was time for a change when it comes to the established smartphone hierarchy.
“Typically over time the prices of the established products comes down,” he told me afterward. “But, in fact, over the last five years the price of products has gone up as more features were added. Huawei understands as they build their market share they’ve got to develop a point of difference. And every one of my customers would like to spend less.
“Huawei is approaching it in a smart way – they’re saying, ‘How do I give people a better product at a better price?’. That’s a lot more credible than the people I meet who say they’ve got a phone just like the iPhone but it’s more expensive.”
For now, Sir Charles’s Carphone Warehouse markets a Huawei device as “the best smartphone you’ve never heard of”.
“There’s a story round that,” he says. “And you can demonstrate to people you’re getting more for your money.” But Sir Charles clearly thinks that story is beginning to change. The comparison he makes is stark: “10 years ago, number one was
Nokia. Just think how quickly you can be displaced.”
Yu certainly agrees.
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