beyondbrics

For HTC, Taiwan’s biggest maker of mobile phones, China seems an obvious market.

The company manufactures its phones in China, its Taiwanese headquarters are within 500 miles of Shanghai, and it shares language and culture with the mainland.

However, after a four-year transformation, HTC is only now introducing itself to Chinese consumers – reflecting how Taiwanese companies have thought global first and local second.

The challenge for Taiwanese tech players has been to turn themselves from contract manufacturers, operating on slim margins, into global brands. It’s no easy task – BenQ, an electronics company, expanded too fast and had to backtrack.

So HTC decided not to launch its brand in China, the world’s largest handset market, but in Europe. There it at least had some experience of consumer behaviour, having made customised handsets for British Telecom.

“To build a global brand is difficult, and we had no experience. We needed to build localised marketing operations,” Peter Chou, HTC chief executive, told the FT. After successfully establishing itself in the Europe, HTC looked to the US.

In China, meanwhile, the company sold through Dopod, a separate entity, albeit owned by Cher Wang, HTC’s founder and chairwoman.

Only on Tuesday did the company launch its first four HTC-branded smartphones in China. “Now, as our global brand recognition has risen steeply, the time is right,” Chou argues.

According to the chief executive, HTC will test working with partners and retail channels over the coming six months. If all goes well, the company is likely to merge with Dopod in China.

Here, too, HTC can learn from its compatriots’ struggles in China. Some Taiwanese companies tried to operate all retail outlets themselves, or relied on national-level operators. In a country the size of China, provincial networks and outsourcing are more effective.

Meanwhile, Acer, the world’s second-largest PC vendor, pitched itself as a home-grown brand to Chinese consumers – who can be nationalistic in their preferences. That was unsuccessful, and HTC should recognise that its status is as a foreign brand.

Acer still fails to make the top five in Chinese PC sales. Yet it is undeterred, saying that global success is not possible without success in China.

HTC’s Peter Chou would surely agree.

Related reading:
Taiwanese manufacturers in danger of overexpansion, Tech Blog
HTC calls for iPhone ban in row over patents, beyondbrics