In the IFA electronic trade fair held in Berlin last week, more than half of the major handset exhibitors were Chinese brands. But they still have a long way to go in order to gain a foothold in Europe.
September is a golden month for global handset makers to introduce their new flagship models. Mobile phone giants Samsung and Apple have both revealed their latest products this month.
Because of their higher price-to-value ratio, Chinese brands occupy four out of the top five spots in the domestic market. But outside China, the situation is completely different.
Making themselves better known to overseas customers is one major objective of many mainland players, as they aim for a bigger role in the global handset market.
Yu Chengdong, chief executive of Huawei’s consumer business group, shared with Yicai.com their marketing strategy in Europe.
The group found out the best way to communicate with European consumers is through football. That’s why Huawei has put a lot of effort into sponsoring soccer teams and related sports events.
Huawei has a deal with La Liga, Spain’s first division league, to sponsor its football matches. The company is also sponsoring English Premier League side Arsenal, Italian team AC Milan, France’s Paris Saint-Germain club and Borussia Dortmund of Germany.
Thanks to all these efforts, Huawei now holds 5 percent of the smartphone market in Europe. It said that its aim is to expand its share to 10 to 12 percent.
But that won’t be easy.
“If the scale of your group is small, no one will ever care about you, but if you start to establish some fame, then patent lawsuits will definitely come along,” Yu said.
Taiwanese brand HTC clearly illustrates this point. HTC has a history of patent wars with rival Apple, and thus its products are not allowed to be sold in the western market.
The costs of applying for patents can be forbidding. In Europe, companies have to spend about 200,000 euros (US$258,760) in order to apply for one patent.
For an idea of how many patents industry players own, just look at Apple. It has over 155,000 patents around the world.
In the first few profitable years, normally, a company has to spend 40 percent of its earnings just for patents. This means that if it earns US$1 million, it has to invest US$400,000 in patent applications, which is a huge financial burden to the firm.
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