Can Chinese phone brands catch Apple and Samsung?

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By Gérard Al-Fil

What do Argentine soccer legend Lionel Messi and Lebanese pop star Nancy Ajram have in common? The answer is: Both superstars as brand ambassadors have made Huawei more known to Arab consumers. The red flower logo is an indispensable symbol of high-tech “Made in China” whether you enter the world’s biggest shopping center (by footfall) Dubai Mall, or the Al Faisaliyah Mall in central Riyadh or the Majid Al-Futtaim’s Beirut City Center”.


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“Quality, design and innovation have made Huawei big,” Joe Kelly, the Vice-President for International Media Affairs at Huawei Technologies in Shenzhen, Guangdong Province, told Gulf Marketing Review at Huawei Connect Forum 2017 in Shanghai in September this year.

Huawei, the Shenzhen-headquartered firm, has indeed reached a number of milestones recently by selling its latest model Honor 9 Android smartphone literally meaning “Chinese achievement”.

Chinese checkers

In July this year, Huawei surpassed Apple Inc. and climbed to the second rank in the world as the second largest seller of smart phones, behind global market leader Samsung, according to research firm Counterpoint.

While Apple Inc.-founder Steve Jobs was once called “the man who invented the future”, Huawei, on the other hand, “up to now, has not produced a single invention,” said Tian Tao, co-author of the book “Huawei, Leadership, Culture and Connectivity”.


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This accolade follows Apple’s lukewarm launch of iPhone 8 in Dubai’s Apple stores, at the Mall in the Emirates and in the Yas Mall in Abu Dhabi. “Most people wait for the iPhone X which will be launched to mark a quantum leap in relation to new apps and features,” one salesperson at the MoE store told GMR. According to a new study published by GfK, Huawei also ranked second in smartphone market share in Saudi Arabia. Huawei exceeded iPhone’s market share as of end of July 2017. With this, Huawei’s market share is 17.3 per cent, while Apple ranks third with 16.4 per cent.

Nevertheless, South-Korean ICT giant Samsung remains globally in the pole position, and both Samsung and Apple continue to control the Arab smartphone market. Samsung continued to lead the GCC smartphone market in Q1 2017 with 28 per cent share. The vendor’s shipments were up 5 per cent QoQ, but it’s important to note that this does not include S8 and S8+ plus shipments; the flagship devices were launched globally towards the end of Q1, and their shipments will be accounted for in the figures for Q2. Apple remained in second place with 19.8 per cent share, but saw impressive QoQ growth of 10 per cent.

“Apple recorded the largest QoQ shipment growth of the region’s top five vendors,” says Nabila Popal, a senior research manager at IDC. “This can be directly attributed to the success of the iPhone 7 and 7 Plus models, which accounted for over 60 per cent of the brand’s volume in Q1 2017. The gap in the market created by the Samsung Note 7 was still prevalent in Q1, and Apple’s flagship model comfortably capitalized on that gap. It will be interesting to see how this dynamic plays out over the coming quarters with the success of Samsung’s S8 and S8+ devices.”

Sweden’s Ericsson, Nokia and BlackBerry (Canada), once the masters of the Arabian mobile phone universe have been over the years replaced by market leaders Apple and Samsung. Nokia, however, started to counter-attack by switching its smartphone operation system from Microsoft to Android. Even America’s Motorola celebrates a comeback in the UAE, KSA and elsewhere with its handy and price-wise competitive Moto series.

Commitment, but where?

So how did Huawei manage to climb from zero to hero in the GCC, which according to IDC is a one of the most competitive and most fragmented markets for consumer electronics on the globe?

One of the reasons is that unlike its Chinese rivals like Xiaomi, Huawei follows a multi-channel approach to reach all potential buyers. Huawei Smartphones are available online as well as in Carrefour Supermarkets in the GCC as in consumer electronics stores like Sharaf DG, Emax or Jumbo Electronics.

Secondly, the firm reaches local customers’ hearts and minds through bringing public institutions forward by adding new technology.


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Next-door rivals

Partnerships also opened doors to the GCC for Huawei’s compatriot competitors. Known for its orange-white logo, Xiaomi operates in the UAE in a partnership with Dubai-based Task FZCO.

Xiaomi products are for example not available at Emax.

The 2010-founded company quickly climbed up the ranks in its home market. Within seven years, Xiaomi (Mandarin for small-seeded grasses) rose to become the world’s fifth biggest manufacturer of smartphones. Unlike Huawei, Xiaomi follows a niche strategy. Its products are more handy, simpler in usage and cheaper hence targeting buyers with a lower income.

In the UAE, Xiaomi launched its market entry with a gigantic party hosted in the ballroom of the Conrad Hotel in Dubai. The gathering was joined by the local and international media and garnished with the obligatory raffle draw. In August this year, the first Xiaomi store in the region was opened at the Burjuman Shopping Centre in Dubai. Orange Xiaomi billboards were suddenly visible along Dubai’s main artery Sheikh Zayed Road.

On this occasion, the firm launched sales of its Mi 6 which consumes 25 percent less battery power. The location of the store indicates that Xiaomi is targeting more the consumer with a smaller budget, in contrast to the loyal affluent Apple iPhone users.

Online push

On October 1st, Xiaomi announced via its twitter channel @xiaomiarabia that its phones are available on Catalogue brands by downloading the Noon Mobile App via Google Play Store by visiting Xiaomi’s move on twitter came just one day after the digital marketplace started operations in the UAE. This home-grown e-commerce-platform has been launched by real estate tycoon Mohammed Alabbar and backed by a group of Gulf investors including Saudi Arabia’s Public Investment Fund and Kuwait’s M.H. Alshaya & Co.

Xiaomi’s move on twitter came just one day after the digital marketplace started operations in the UAE.

@xiaomiarabia, however, has just 2,136 followers on twitter and this insignificant number exposes that for Chinese smartphone makers there is still a long way to go for it to get even with its Western and Korean peers in relation to branding.

@HuaweiArabia has attracted just 155,000 followers. @HuaweiMobileKSA, the firm’s Saudi account has 169,000. That compares to Korean rival Samsung which has reached 1,5 million fans on Facebook.

Then, there are Lenovo and Oppo. Lenovo has reached out to cost-aware buyers, while Oppo’s pitch is its powerful camera which can produce razor-sharp selfies. Oppo has just launched its new A71 and the price of 599 dirham appeals to students and low-income shoppers alike.

Lenovo, once called Legend, was the talk of the town in the GCC when it hit the market with competitive prices for full-fledged smartphones. As of the second quarter 2017, Lenovo was still ahead of Huawei in the UAE, according to the Telecommunications Regulatory Agency (TRA). Lenovo had in this period a 5.4 percent market share, while Huawei reached 3.2 percent. While Apple led the ranking, Samsung followed with a 34.5 percent market share.

Mind the WeChat-Gap!

Nevertheless, hurdles remain for Chinese “home-grown” products towards beating Apple, Blackberry and Co. While in China, smartphone owners use the messenger service WeChat, owned by China’s Tencent, Arab users still stick to WhatsApp. WeChat is used to chat, pay and send money to the beloved ones on the occasion of Chinese New Year. Some Chinese smartphones base the entire setup around WeChat while in the GCC people stick to WhatsApp and Facebook.

In China, 400 million citizens use their smartphone for daily payments. In the Middle East, paying by phone remains mostly an affair for bank transfers, telecom and electricity payments. China boasts the highest share globally in this regard, with a market penetration of 46 per cent.

In the Chinese 12-year Zodiac cycle, the year 2017 marks the year of the rooster. The rooster symbolizes punctuality and hard work. Hence, Chinese smartphone providers will work hard to shape their brand and rival their peers in Arabia and elsewhere.


The article appeared in the November 2017 issue of Gulf Marketing Review.