June 21 (Bloomberg) -- Huawei Technologies Co., China’s largest maker of phone equipment, got word out about its new MediaPad tablet computer by creating a page on a site where Web users in the Asian nation are forbidden to go: www.facebook.com.
The Facebook Inc. page links to a video the Chinese company posted on another site that the country’s Internet censors block domestic users from accessing: Google Inc.’s YouTube site. Social networks are “very important” for Huawei as it seeks to overcome the “huge difficulties” of building a global brand, Victor Xu, Huawei’s chief marketing officer for devices, said in an interview yesterday in Singapore.
The prominence in Huawei’s global marketing campaign of social media like Facebook, YouTube and Twitter Inc. that are banned by China shows the growing importance of overseas markets in Europe and the U.S. as the company aims to more than triple annual sales to about $100 billion in the next five to 10 years. International business surpassed Huawei’s China sales for the first time in 2005, and rose to 65 percent of revenue last year, from 60 percent in 2009, according to its annual report.
“If China doesn’t let exporters access these networks, it’s basically like a tax on Chinese companies,” said Duncan Clark, chairman of Beijing-based BDA China, which advises technology companies. “Through social media, Huawei can reach tech-savvy bloggers, people who tweet a lot, and that makes an impact. It’s also cheaper than massive advertising everywhere.”
China, the world’s largest Internet market with 477 million Web users, bans pornography, gambling and content critical of the ruling Communist Party. Wang Lijian, a spokesman for China’s Ministry of Industry and Information Technology, declined to comment on the country’s Internet censorship policies.
“The issue of censorship in China is irritating, and there is definitely a cost” to local companies, Clark said. Still, Huawei is “ahead of the rest of China in its internationalization,” he said.
Huawei created the Facebook page for its MediaPad tablet on Facebook on June 11, nine days before the company unveiled the device at a press conference in Singapore. Tags at end of the YouTube video point users to the company’s accounts on Twitter and Facebook: www.twitter.com/huaweidevice, and www.facebook.com/huaweidevice.
“Around social networks, it’s very important,” Huawei’s Xu said in an interview in Singapore after the company unveiled the MediaPad tablet. “The Internet makes the world closer, between vendors and consumers. Our target audience is young and around social networks, from the ages of 18 to 34 years old. They are very active.”
Huawei’s press office has maintained a Twitter account since December 2009. A separate account for Huawei Device, which sells consumer products including smartphones and tablet computers, was set up last July. The main Huawei Press Twitter account had 4,401 followers as of June 20, while the Huawei Device account had 1,385 followers.
“They have to run effective consumer marketing campaigns in regions where they are still relatively unknown as a consumer electronics brand,” said Mark Natkin, managing director of Marbridge Consulting Ltd., a Beijing-based market research firm. “They have come a long way up the learning curve in terms of how to effectively use outside public relations firms and consulting firms to penetrate foreign markets. That’s something five or six years ago they were not so adept at doing.”
Huawei’s cross-town competitor, ZTE Corp., China’s second largest maker of phone equipment, has also begun using social media. ZTE’s press office set up a Twitter account in November and has 665 followers so far.
ZTE’s Twitter account is maintained by an outside public relations firm in Hong Kong, Fan Jiongyi, vice president of terminals, said in a May 25 interview, without elaborating.
Both Huawei and ZTE have made handsets for carriers globally and are now trying to establish their own brands to reach consumers directly, BDA’s Clark said. The rising popularity of Google’s Android operating system, combined with stumbles in the smartphone area by Nokia Oyj, have provided an opportunity to build a consumer device business for low-cost phones that can surf the Web, he said.
Huawei aims to boost handset sales to $20 billion within five years, from $5 billion last year and $6 billion this year, the company said in April.
Overseas sales jumped 34 percent at Huawei to 120.4 billion yuan ($18.6 billion) last year, according to the company’s annual report. That was more than triple the pace in its home market, as sales in China gained 9.7 percent to 64.8 billion yuan. China accounted for 35 percent of the company’s sales last year, down from 40 percent in 2009.
The company is owned by its employees, and the Chinese government holds no shares, its website says. Huawei employs 110,000 people worldwide, according to its annual report.
As it markets its brand abroad using social networks that are blocked at home, Huawei may become the best proof of the shortcomings of China’s current restrictive Internet policies, BDA’s Clark said.
“The government wants companies to be innovative and to have Chinese brands go forth,” Clark said. “These blocks on social media are an impediment to that.”
--Edmond Lococo, Ketaki Gokhale. Editor: Nicholas Wadhams, Anand Krishnamoorthy.
To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at email@example.com; Ketaki Gokhale in Mumbai at firstname.lastname@example.org.
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