Do call it a comeback: Huawei returns to Brazil phones market

Chinese telecoms giant Huawei will give the Brazilian cell phones market a new shot.

Some four years after giving up on selling phones in Brazil because of tax and competitive issues, Huawei is preparing a comeback in partnership with Brazil's major electronics manufacturer, Positivo Tecnologia.

The deal was announced at a ceremony Wednesday in Brasília marking the 20th anniversary of Huawei's operations in the country. But phones will reach the market only in the third quarter of the year.

Under the licensing agreement, Positivo will be responsible for the marketing and the retail sales of Huawei's top smartphones, which will be imported.

Talks are being advanced with major retail chains such as Via Varejo and Fast Shop. The plan is to sell online and, mostly, via kiosks in malls or at company stores.

The agreement could also evolve to have Positivo assemble Huawei's handsets locally. But at least for now, Huawei rules out direct manufacturing in Brazil.

"We have to come step by step. Let's be practical. We need to convince Brazilian consumers that our products are premium," said Huawei's head of device business development in Brazil, Adam Xiao Ersong.

Huawei has invested 14mn reais (US$3.6mn) in R&D in Brazil year-to-date, Huawei Brazil CEO Yao Wei said. (According to China's ambassador to Brazil, Li Jinzhang, total Chinese investments in the country since 2009 amount to US$54bn.)

THE COMEBACK

Huawei started negotiating its return to the Brazilian handset battlefield in January, having come up with a shortlist of potential partners: Positivo and Multilaser. It decided in Positivo's favor given its commercial capillarity, technical support network, expertise and local structure, Xiao Ersong added.

Positivo is a phone manufacturer, selling the Quantum phones. Despite that, Norberto Maraschin, VP of mobility and international business, sees no risks of "cannibalization" of products: Huawei's smartphones for Brazil will target the premium segment while Positivo focuses on the intermediate, mid-to-upper layers, argued Maraschin.

The first two models to be made available locally are the Pro 20 and the yet-to-be-launched new Nova family line. Huawei did not disclose prices, but devices should be in the 3,500-4,000 reais range.

Ersong met with high-ranking Brazilian officials, including science, technology, innovations and communications minister Gilberto Kassab in April (pictured at bottom), to announce it would resume sales of phones in the country.

On the occasion, the company did not specifically talk about tax incentives, but expressed concerns over a World Trade Organization case condemning Brazil for illegal subsidies and protectionist measures on a range of industrial policies, including for electronics manufacturing, known as Lei da Informática.

The government promised to take care and said the most likely response to the WTO concerns would be regulations that preserved incentives while also writing off protectionist measures.