SAN FRANCISCO/BEIJING (Reuters) - Two years after U.S. legislators branded it a national security threat, China’s Huawei Technologies Co Ltd is planning a campaign to win over U.S. consumers, rolling out new mobile phones and wearable devices backed by a marketing effort.
China’s second-largest smartphone maker, already with more than $40 billion in annual revenue from a wide range of telecom gear and products, is preparing to introduce Americans to several of its smartphones and wearable devices this year, including its youth-oriented “Honor” phone, Huawei officials told Reuters.
The company’s 2015 U.S. plans, which have not been previously reported, will encompass traditional advertising, online promotion and sports team sponsorships, said Huawei’s U.S. spokesman Bill Plummer.
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. It’s an important shift for a company that for years had been single-mindedly focused on engineering and relatively dismissive of consumer branding.
In December, it touted its new Honor 6 Plus phone on a billboard in New York’s Times Square. Plummer said that was “a sign of things to come.”
He declined to say how much Huawei will spend on its new marketing campaign or what sports team, or teams, it had in mind. It already sponsors London soccer club Arsenal, cricket teams in India and rugby clubs in Australia.
At the Mobile World Congress over the weekend in Barcelona, Huawei took the wraps off a smartwatch that will be sold in over 20 countries including the U.S.
Huawei now intends to appeal directly to consumers with several new phone models, both low end and high end. It hopes to secure deals with carriers, selling online through marketplaces, such as the one operated by Amazon.com, and on its own fledgling gethuawei.com U.S. direct-sales website.
It’s unclear how open the carriers, who dominate U.S. sales, would be to carrying phones from Huawei, a brand that remains unknown to the majority of American smartphone users. Reviews of its high-end phones, which can cost hundreds of dollars without a plan, have been generally positive.
Still, the U.S. market is dominated by Apple Inc (AAPL.O) and Samsung Electronics (005930.KS). None of the four biggest U.S. carriers - Verizon, AT&T, Sprint or T-Mobile - currently sell Huawei phones on their websites and all declined to say whether they have had talks with the Chinese company.
Huawei said in 2013 it would focus on other markets after its products were labeled a national security risk in a U.S. Congressional report, which said Beijing could use Huawei equipment for spying. Huawei denied the report, but Chief Executive Ren Zhengfei, who founded the company after leaving the Chinese military, told reporters at the time he felt stuck in a U.S.-China trade war.
A White House-ordered review found no evidence of spying.
Lawmakers’ concerns revolve primarily around Huawei’s networking equipment. And analysts say that a lack of brand recognition is a bigger hurdle for Huawei’s smartphone ambitions than pressures from Washington.
Huawei currently has less than 1 percent of the U.S. market, according to research firm IDC. But it can perhaps draw inspiration from China’s ZTE Corp (000063.SZ) (0763.HK), which has gained 6.4 percent of the U.S. market by selling cheaper smartphones and working with second-tier carriers like Boost Mobile, according to Ramon Llamas, a research manager at IDC.
Online sales, particularly as no-contract plans that require consumers to purchase a full-price phone gain in popularity, represent perhaps the best option for Huawei, said Gartner analyst C.K. Lu, adding that he sees it having a tough time signing carriers.
“The U.S. market is tough for anybody except Apple and Samsung,” said Lu.
Huawei’s plan to broaden its U.S. offering is part of a campaign for “normalizing” perceptions of Huawei in America and elsewhere, said Plummer.
Though he declined to spell out what normalization entailed, most public discussion of the company has centered around the debate of whether its equipment allows China to spy on the United States, and until now Huawei has kept a low profile.
Other Chinese companies still prefer that route: another major Chinese handset maker, Xiaomi, has said it will take its first steps onto U.S. soil without smartphones, choosing instead to sell earphones and other accessories to test the market.
Additional reporting by Malathi Nayak; Editing by Martin Howell