China smartphones and branding

Last week I posted about Android in China. I explained that I’m interested in mobile technology, and when that coincides with topics about China business, I get really excited. So… along these lines, I read articles in Engadget and GSMArena about HTC’s decision to sell phones in China under its own brand name.

Then I read this post in WSJ China Realtime Reports about this news article..

The article has several areas of ambiguity which should have been made more clear, so that readers can understand the significance of this business development. Just a sample…

Luckily for the Taiwanese company, Apple has been slow to launch its hot new products here, and has a relatively small presence with a 7.1% share of smartphone sales in the second quarter, according to Analysys International. Only a non-Wi-Fi version of the iPhone 3GS is officially available in China so far, and Apple hasn’t yet indicated when it might release a version with Wi-Fi or the iPhone 4… If HTC follows through on its promise to make an aggressive branding push, it could pose a bigger threat for Apple, analysts say. CK Cheng, an analyst at CLSA, said HTC is a key beneficiary of China’s carriers looking to offer handsets that can compete with the iPhone.

This overlooks that fact that iPhone has been a popular seller in China’s grey markets since it came out. As for posing a bigger threat to Apple because it is a “beneficiary of China’s carriers looking to offer handsets that can compete with the iPhone”, I would say this is true. As it is true for Samsung, Motorola, Lenovo, Huawei, Nokia, LG, and Sony. And some others probably.

However, my main question is…why does HTC now need to promote the HTC brand instead of its subsidiary brand Dopod, which has been in China for many years? Today HTC phones in China are grey-market smartphones with wifi. I presume that in the future, HTC will still make their branded phones in China (maybe in the Wuxi Dopod factory). But will the phones be any different? If not, then why re-brand?

I think of negative comparisons between HTC and Acer in 2000. Like HTC, Acer, makes technology and provides manufacturing services for other brand names, as well as promote their own brand. In 2001, Acer created BenQ, which sold computers and systems in China. I believe it was supposed to be the “China channel” for Acer. However, when I went into computer markets in Shanghai in 2003, I would see systems and components from both Acer and BenQ. Acer also had AOpen, which was supposed to provide components, but actually also made “white boxes”. In America, Acer bought the brands (and American manufacturing facilities) Gateway, Packard Bell, and eMachines. BenQ, meanwhile, bought Siemens mobile and produces mobile phones…as does Acer. Then Acer got rid of its remaining shares of BenQ. I’m pretty sure that today, Qisida (BenQ), Winstrom (Acer) and AUO (Acer) all make LCD panels and displays. Talk about sibling rivalry!

I studied Marketing in MBA school, but I don’t believe I’m a branding genius. On the other hand, I know obvious strategic level brand idiocy when I see it. I hope HTC does not make similar mistakes as Acer with big, seemingly meaningless brand positioning movements. On the other hand, maybe HTC plans to eliminate Dopod brand, so that it has one unified brand world-wide. If this is the strategy, I think it does make some sense.

(full disclosure: I used to work for Acer in the United States. I believe it is there that I developed an unhealthy prejudice against Taiwanese companies).