Huawei rolling out new products to enhance user stickiness

July 17, 2019 12:54
Huawei Pay, which was launched in Hong Kong on Monday, allows users to settle bills in more than 40,000 retail spots accepting the UnionPay contactless card payment. Photo: AFP

Despite the potentially debilitating impact of the US embargo on its operations, Huawei Technologies has continued to develop new products as part of efforts to maintain its growth momentum globally.

The Chinese telecoms equipment maker has launched its own mobile payment service in Hong Kong, and is set to release its first smart display, a product that will allow the company to step into users' homes.

Both initiatives show that Huawei is seeking to diversify its business model from just selling hardware to customers and telecom operators to providing services that will generate recurrent revenue for the company. This is quite similar to what rivals such as Apple and Samsung Electronics have been doing.

In launching Huawei Pay in Hong Kong on Monday, the company hopes to encourage users to settle bills digitally in more than 40,000 retail spots accepting the UnionPay contactless card payment.

Users can link their UnionPay card with the Huawei Pay app, and this will enable them to settle payments by simply putting their phone in front of the cashier sensor.

Unlike Samsung Pay and Apple Pay which accept mainstream credit cards such as Visa and Mastercard, Huawei Pay only accepts UnionPay cards. The reason is that UnionPay played a key role in the development of Huawei Pay when the project started three years ago.

UnionPay helped Huawei set up its own mobile payment service back in 2016 to enable customers to pay for goods and services using their smartphones and other devices.

Earlier this year, Huawei Pay was launched outside China for the first time. In Russia, 66 banks are now supporting the technology. Both Huawei and Honor smartphones will carry the new service, which is compatible with 20 mobile devices, including several smartwatches.

Huawei has its fair share of criticisms regarding privacy protection. But the company insists that its payment service is quite safe as it uses a device-specific number known as a token instead of the user's bank card number to handle transactions.

The bank card number is not stored on the user's device or the Huawei Pay server, and as such is not shared with merchants. Its service security level is at par with rival bank services.

So far, Huawei Pay is only available in Hong Kong, mainland China and Russia, which means its business scale is still insignificant compared with that of Apple Pay and Samsung Pay.

In August last year, Huawei Pay said it had completed 20 million transactions worth 8.5 billion yuan (US$1.24 billion) since making its debut in August 2016. Within that period, more than 15 million points of sale, including public transport, were accepting the service.

Huawei Pay was launched not only to offer its customers a mobile payment service. Its mobile wallet will also be able to store a variety of digital applications such as bank cards, ID cards, membership cards, tickets, coupons and electronic car keys.

For these application services, Huawei Pay will open up its comprehensive capabilities to all developers. According to a recent news report, Huawei is also planning to launch an e-ID card that users can store in the Huawei Pay wallet.

In short, Huawei is seeking to enhance user stickiness to fend off intensifying competition from rival brands.

But while such a strategy may work in the local market, it may present some challenges in luring overseas users amid concerns that Huawei may be used by the Chinese government for espionage.

Apart from Huawei Pay, the company is also launching its first smart display under the Honor brand next month.

While some market observers insist that a smart display is not much different from a television set at home, the new product is unique as it will be running on Huawei’s self-developed operating system called “Hongmeng”.

Huawei has high hopes for the new smart display, which will be marketed as an innovative big-screen product. It is envisioned to become an “emotional center of the family”, bringing family members together in the living room, as it plays the role of a family entertainment center, an information-sharing hub and a control center for multiple devices at home.

This allows Huawei to enter the users' daily lives, and become a part of their family.

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EJ Insight writer