Huawei targets South Africa as key market

The launch of a range of new Huawei flagship smartphone in Dubai this week marked a significant shift in strategy for the company, with South Africa in the crosshairs.

As it continues making a comeback from the 3-year-old ban by the US government on its use of Google’s Android services, Huawei is focusing on markets where both consumers and governments remain well-disposed to the brand. This combination has propelled South Africa to the forefront of Huawei’s marketing efforts, exemplified by the acceleration of roll-out of new flagship products here.

In the past, there has been a long lag between new Huawei handsets being released in China and their arrival in South Africa. The current top end of the Huawei range, the P50 Series, was launched in China in August 2021, and only arrived in South Africa seven months later, in March 2022.

The new P60 Pro, unveiled in China in March, was launched to the Middle East and Africa on Wednesday night, with a South African launch planned for next Thursday, two months after its initial appearance. The Dubai event took place, appropriately, at Atlantis the Palm, a luxury hotel built by South African hotel magnate Sol Kerzner 15 years ago. It is still managed by Kerzner International Resorts.

Pablo Ning, president of the Huawei consumer business group for the Middle East and Africa, told Business Times before the event that South Africa was a core market for Hauwei.

“South Africa today is very important in our strategy. We keep investing in that country. That was especially so even during the pandemic season. We opened six Huawei Experience Stores in South Africa last year, covering three major cities. We couldn’t have achieved these milestones without the trust and support of customers.”

The roll-out of Huawei branded stores is a significant strategic move for the South African market. It is one of the few smartphone markets in the world where the main channel to reach contract customers is the network operator rather than retail outlets. This means that high-end and flagship phones depend heavily on operators for their success. Like Samsung, which also has its own branded stores across South Africa, Huawei has adopted a dual strategy in order to reach all market segments. However, it also serves to make a statement about Huawei’s survival as a post-Android company.

“South Africa is an operator-dominated market,” said Ning. “But we still try to meet customers directly, to hear their voice and understand their thinking. This definitely will help us to improve the user experience. This will also give the market confidence that people were wrong when they said, ‘they will not survive’ and ‘they will quit the market’. We use our actions and we use the results to assure the customer we’re still there.”

It also means that the company can gain first-hand insight into customer needs and problems, said Ning.

“If they have any problem they can now come to us and we are willing to solve it. If we cannot create value for consumers, there’s probably no need to exist. For global investment and for local investment, we need to do it.”

The result is that the brand has thrived in markets like the Middle East and Africa, across multiple product categories.

Sales of mobile phones and high-end wearables in the region increased by 50% in the first quarter of 2023 over 2022. Last year, high-end PC sales increased by 73% over 2021, in the wake of rolling out more than 100 Huawei stores in the region.

There is a further key to the company thriving despite the US ban. According to Ning, Huawei spent US$23-billion on research and development in 2022 – about 25% of its revenue. This is unprecedented in the world of big tech, where large companies typically spend between 5% and 10% of revenue on R&D.

“We have replaced more than 13,000 parts in our products that have been affected by US sanctions,” said Ning. “We will continue to strengthen R&D investment to ensure qualified business continuity and product competitiveness. As long as we have competitive products, we can survive and thrive.”

The result, he said, was that while the industry was still focused on incremental improvements in handset components, Huawei was making breakthroughs in material science.

“The P60 Pro has the industry’s largest light intake telephoto camera. In the P60 Pro Rococo Pearl edition, we used environmentally friendly materials to reproduce a never-repeatable texture for the first time. Each phone is one of a kind. 

“The Quad-curved Kunlun Glass increases the drop resistance of the glass by 10 times. 

“The (new) Mate X3 is the world’s thinnest large-screen foldable phone. For the first time, the large-screen foldable phone is made lighter and thinner than a standard phone.”

* This feature first appeared in Business Times in the Sunday Times.