Huawei plans Canada expansion

Warc, 11 August 2014

TORONTO: After encountering resistance to its presence in the US market, Chinese smartphone vendor Huawei is taking steps to expand north of the border to Canada.

Huawei currently has less than 1% of the Canadian market after maintaining a "relatively low profile" in the words of Scott Bradley, Huawei Canada's vp for corporate and government affairs, but the company now sees new opportunities in the country.

Speaking to Bloomberg, Bradley explained that Huawei could benefit from regulatory changes that now prohibit carriers from tying customers into three-year contracts.

The new policy, brought into force last December, gives consumers more flexibility to switch from one provider to another and, as the shorter contract terms mean carriers cannot subsidise their phones to the same extent as before, Huawei believes its cheaper phones could be attractive.

It plans to build its presence by ramping up its marketing and by getting involved in some community projects.

For example, Huawei will be sponsoring the Canadian leg of pop singer Katy Perry's tour this summer and it is supporting 35 sports teams by helping to pay for their uniforms and equipment.

It is also donating network hardware to some communities in the remote north to help them get better connected with mobile networks. "We want to be embedded with people's lives," said Sean Yang, president of Huawei Canada.

However, while Huawei has become the third largest smartphone vendor in the world according to a recent report from Canalys, it has faced strong resistance in the US amid accusations that it is too closely linked to the Chinese government.

The House Permanent Select Committee on Intelligence said in 2012 that its ties with the Chinese government constituted a threat to US national security and recommended that US consumers avoid buying its products.

Some Canadians have also expressed concern about whether the company should have been allowed to build its presence on Canada's mobile network, although Bradley says Huawei is working "openly and transparently" with the government and consumers.

Separately, the latest industry data covering the US market in Q2 2014 has shown smartphone penetration has grown to 71.6%, or 173m people.

According to research firm comScore, Apple is the top smartphone vendor with 42.1% market share, followed by Samsung (28.6%), LG (6.4%), Motorola (5.9%), and HTC (4.8%).

Data sourced from Bloomberg, comScore; additional content by Warc