Brand Audit Huawei Technologies Co. Ltd. Mayur Kumar
Brand Audit: Huawei Technologies Co. Ltd. China's Huawei, one of the world's largest smartphone providers, and a major global force in telecommunications and networking, may be more of a household name in Asia than in Western markets, but it is making serious inroads globally and has earned its place in this year's (2014) Best Global Brands ranking. After spending years defending itself against claims of breaching cyber security, the brand has gone on the offensive with its "Make it Possible" campaign in recent years—a campaign that is aimed at making the connected world a reality for more people. Focused on innovation and aggressive globalization, Huawei strategically utilizes its resources according to market demand. A testament to the success of its strategy, the multinational networking and Telecommunications Company is quickly becoming the market leader in Latin America and Central Asia, and a major player in both Europe and Canada. It is a interesting brand to do brand audit.
Background Information Huawei was founded in Shenzhen in 1987, employing nearly 140,000 employees worldwide. For its first twelve years, Huawei expanded domestically and then expanded internationally, establishing R&D facilities, into India in 1999 and then Sweden the following year. In 2001, Huawei established Huawei North America in Dallas, Texas, with international market sales reaching $552m in 2002. By 2005, international contract orders exceeded domestic sales and, by 2007, Huawei had established joint ventures with Symantec and Global Marine. As of 2008, Huawei ranks third in worldwide market share in mobile network equipment and first in mobile broadband devices and in 2010, The Economist awarded the “2010 Corporate Use of Innovation Award” Huawei. Although Huawei’s geographic reach is a fair bit smaller, its products and solutions serve one third of the world’s population, reaching just over 100 countries. However, Huawei’s experience in the US has not been without many rough patches,
including altercations with the US legal system and Congress. With at least four bids to acquire US technology companies and mobile supply contracts, including firms like 3Leaf, it was rebuffed on national security grounds. Huawei is also under investigation by the State Department for selling equipment that could be used for monitoring mobile phone users in Iran, which could be a breach of US sanctions, leading to Huawei’s exclusion from all US government procurement.
Article I.
Strategic Brand Analysis
Section 1.01 Brand Architecture
Radio Access
Huawei
Single BTS Multimode BSC
Fixed Access
FTTx DSLAM MultiService Access uniSite
Core Network
Single CORE Single EPC Single SDB SmartCare
Transport Network
Data Communication
WDM/OTN Hybrid MSTP MSTP Microwave Marine Network
NE Routers AR Routers Metro Services Platform Ethernet Switches Network Security Multi-Service Control Gateway PTN ATN
Energy & Infrastructure
Carrier Class Power Hybrid Power Mini-shelter EasySite Antenna and RF ODN
Application & Software
Storage & Network Security
OSS
Devices
BSS Consumer Enterprise
CloudStor Storage Area Network Network Attached Storage Application Storage SNS Switch
FBB O&M (product series) MBB O&M (product series)
Mobile Phone Mobile Broadband Home Devices
Above can be seen the brand architecture of Huawei, showing the product lines across the top and the categories within. Huawei establishes product lines according to product characteristic and function. Huawei offers a diverse and extensive product line offering.
Section 1.02 Brand Hierarchy The chart below shows the brand hierarchies of Huawei, including HuaweiIntel and Huawei Marine Systems joint venture and modifiers (product lines and categories). They sell very few products under brands other than the family brand.
Corporate Brand Family Brand Individual Brands Modifier
Networks
Enery & Infrastructure
Data Center & Storage
Section 1.03 Extending Strategies Huawei has engaged more substantial extending strategies, introducing not only category and product line extensions into cloud and mobile device technology, but also brand extensions through its joint ventures with Symantec and Global Marine Systems, creating Huawei Symantec and Huawei-Marine Networks brands. Huawei current plans product line extensions into e-education and e-healthcare.
Section 1.04 Sustaining Strategies (a) Reinforcement Huawei’s reinforcement strategies focus around providing consistent and reliable products that are perpetually fine-tuned to provide the best possible equipment to consumers. (b) Revitalization By updating its logos and packaging, Huawei revitalize its brands simply and effectively, primarily relying on new technologies and renovated products to continuously revitalize the brand. (c) Adjustment Huawei is constantly assessing customer needs and adjusting products offerings to reflect changing market demands. It has chosen to migrate into the
handheld mobile devices market. As years pass, firm retire products or services, as they are no longer relevant to current technological needs.
Section 1.05 Brand Value Chain Value Stages Marketing Investment Customer Mindset Market Performance Shareholder Value
Huawei Low, but growing (R&D investment) Struggling (security suspicion) Weak, but determined Private firm
(a) Marketing Investment Huawei has growing marketing investment, both in its home country and abroad. Because of the nature of its products and marketing strategies, product marketing is minimal, but focuses instead on providing quality products through R&D investment and consistent, helpful services and communications. (b) Customer Mindset
Huawei has starkly different performance in China compared to the US. While US customers have thorough awareness of Huawei, attitudes and attachment are both quite negative due to security and intellectual property concerns, dramatically damaging customer mindset. However, in China, Huawei is thought of quite highly and widely respected. (c) Market Performance Huawei has very strong market performance worldwide, with market shares exceeding 60 or 70% in some markets, both domestically and abroad. However, Huawei’s market performance has struggled in the United States and some global markets due to failed acquisitions and security concerns. During the global economic slowdown, Huawei witnessed decreased revenues, but these struggles seem to have somewhat recovered along with the global economy. However, despite these challenges, Huawei is persistent in finding success in the US. (d) Shareholder Value Huawei’s shareholder equity is very difficult to measure, as it is a private, employee-owned company.
Article II. Brand Image and Brand equity Section 2.01 Brand Image and Tactical Contributions
Huawei’s
tactical
contributions with the exception of its overarching lack of meaning in its brand identity. Huawei’s name lacks significant meaning in Chinese or English. Without an English name, ‘Huawei’ acts as nothing Tactics Name
URLs
Logo Character Slogan Jingle Packaging
Huawei Effectively meaningless in English, “华为” not that meaningful in Chinese, either Informative corporate website with unique websites for different regions in local language, not as easy to navigate or informative Simple and adaptable, though not particularly meaningful None None None Clean, modern, streamlined
more than an indicator that the brand is a Chinese brand, where “ 华 为 ” can be translated as ‘magnificent doing’ or ‘China does,’
neither
particularly
of
which
meaningful
is or
descriptive. The online presence of Huawei is
substantial,
maintaining
informative corporate websites, providing information on brand history,
financial
information,
product information and company news. It is wise, hosting unique websites for different regions in the local language with information and news relevant to the brand’s presence in that region, not simply a translated version of the corporate website. Huawei has simple and adaptable logos. However, Huawei does not has a character or jingle, perhaps reflecting its minimal public marketing and desire to maintain a very professional appearance.
Section 2.02 Marketing strategies Huawei use a pull strategy, with minimal active advertising and allowing the products to sell themselves. Products are sold online or at certified resellers. For the firm, formal advertising is focused toward corporate customers, not private individuals. As for pricing strategies, Huawei has maintained a competitive pricing strategy, facilitated, in part, by low Chinese labor and R&D costs and government subsidies.
Section 2.03 Brand Equity Management Systems Huawei have a solid view of brand equity, thoroughly detailed in its corporate websites and annual reports, as well as the scope of key brands and products. Huawei have brand measurement systems and management program. It also touts proactive consumer sensitivity and adaptation, but does not state its methods of doing so. Regarding treatment of the brand, Huawei, particularly, has run into some difficulties, which have come to define its experience in the US. As previously discussed, Huawei has struggled to separate itself from its founder’s ties to the Chinese military and People’s Liberation Army, which has elicited national security concerns. Sale of equipment which could be used for monitoring mobile phone users in Iran is currently under investigation by the State Department as a breach of US sanctions, potentially leading to Huawei’s exclusion from all US government procurement. They have also experienced issues in India with Taliban allegations and security concerns in Australia. Despite no evidence being uncovered, Huawei has suffered significant, potentially irreparable damage to its image.
Brand Equity Charter
Huawei
Firm view of brand equity Scope of key brands Actual & desired equity for the brand Brand measurement system Brand management programs Poor treatment of the brand
✔ ✔ ✔ ✔ ✔ ✔
Huawei prepares a formal brand equity report and maintains an advisory position for brand equity responsibility.
Article III. Key Challenges and Issues for the Brand Section 3.01 SWOT Analysis Huawei’s strengths lie in its investments in R&D and patent ownership, growing its innovative and advanced technological products which have earned its global recognition. Huawei’s weaknesses, however, are in its lack of transparency and image of secrecy, worrying companies and governments who might otherwise trust the brand to protect valuable security information. Huawei has failed to understand the US legal system and market demands, as well as its image as a risk to national security, which have resulted in its failed acquisitions. Opportunities for its brand involved continued innovation and technology advances. The continued growth and expansion of technology usage and literacy offer the brand unlimited growth opportunities, so long as it stay ahead of the competition through continued improvement. Huawei face threats from competition as research and development take time and, if the competition provides solutions first, the brand will struggle to compete. Development in this industry is simply risky as the business relies upon continued growth of the internet and internet-based systems. Merger and acquisitions have no assurance and are inherently risky, particularly in this industry due to the advanced, high technology companies with particularly high overhead and sunk costs. Global politics and exchange rates also pose a threat to international trade as a whole. Huawei, however, faces threats from the US government, with the House Intelligence Committee launching informal inquiries in late 2010 as the campaign against Huawei’s involvement in a $5 billion bid to supply network equipment to Sprint Nextel was coming to a head, particularly related to Huawei’s ‘reported relationship’ with People’s Liberation Army. While investigations turned up no evidence for concern, this is not an isolated incident and Huawei needs to address the threat of political distrust which extends into the nation at large.
Article IV. Brand Creation and Positioning Huawei is monolithic brands, although it maintain a few independent or partner brands in addition to the corporate, family brand.
Section 4.01 Customer-Based Brand Equity Huawei Identity
Leading global ICT solutions provider based in China1
Meaning
China’s first real global brand, innovative technologies and devices
Response
Innovative and advanced, ease-of-use
Relationship
Engaged customer base
Huawei holds identities as global leaders in information technology, although it has a clearer geographic identity, for better or worse, giving it meaning as China’s first real global brand, producing advanced and innovative technology and mobile devices, such as smart-phones and tablets. Huawei has struggled to establish a clear customer base, especially overseas. Despite these struggles, it has attracted much attention through its competitive pricing, quality equipment and diversity of offerings, giving Huawei a good foundation to build a loyal customer base, something it has consistently striven to achieve.
Section 4.02 Competitive Frame of Reference Target Segment
Direct Competitors
POPs
PODs
Brand Mantra
Huawei
Businesses (primarily large), young adults/mobile device users, professionals, governments and service providers
Ericsson, Lucent, Cisco
Supply hardware and software, security systems
Broader product scope, including telecommunications and mobile devices
None
Huawei targets very similar market segments, marketing to businesses, professionals, governments (primarily security systems) and communications service providers. The only significant difference is when it comes to private individuals: Huawei targets mobile device users, which are disproportionally young adults, particularly those with disposable income.
Article V. Future Brand Strategy and Strategy Recommendation Section 5.01 Expanding Strategies Huawei practices standardization strategies, adjusting the software and packaging language accordingly. Due to the nature of the product, not much customization is necessary as the demands for equipment, software and services are effectively identical across geographical markets. Huawei, however, has had no such success in its expanding strategies, facing resistance in many of its geographic expansions in last decade. However, it has successful geo-expansion into over 100 countries and Greenfield R&D centers around the world, including four in the United States. Despite its multiple failed and blocked attempts to acquire US brands, it has successful formed alliances and joint ventures, resulting in the multiple brand extensions discussed above.
Section 5.02 Issues to be Resolved & Strategy Recommendations Huawei’s primary concern is its failure to understand and comply with local legal systems as it enters new geographic areas. Because of the sensitive nature of security and information systems, it is imperative that Huawei recognizes how its actions in one market affect demand in other markets.
Huawei’s experience with its sales in Iran impacting its product and acquisition reception in the US require them to realize the importance of convincing both the US consumers and government that Huawei’s interests are not inconsistent with US security, which may include establishing new leadership without connections to the People’s Liberation Army. Huawei must actively and intensively work to dispel and correct ‘misinformation and misperceptions’ of intellectual property, security and espionage concerns. Huawei also needs to consider developing a more formal and consistent measurement and report of brand equity to help the brand adapt to meet the needs of its customers. Beyond this, it also needs to become more transparent in its R&D and dealings, as its reputation abroad for being secretive will cost it dearly as this is an industry which handles very sensitive and valuable information that consumers are not willing to entrust to companies they do not trust. Huawei needs to take into consideration its behavior and struggles in foreign markets and its impact on other markets. Issues in the US have drawn suspicion of Huawei in other markets, such as Australia. In order to control and minimize losses, Huawei should do one of two things: focus on repairing damage done in overseas markets, making reparations as the community, culture, government and consumers see fit in order to prove itself as a reliable and secure brand before expanding into other countries and other markets, or cut its losses in these countries and exit the market, investing in other developing markets in attempts to contain and move past the struggles in the West. Huawei also needs to bolster its domestic market by building up the industry as a whole. Domestic demand needs to grow through technological development in order for Huawei to continue building as a global brand.
