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Huawei plans US investments to compete with Apple and Samsung despite subpoena

Legal probes would not stop Huawei from investing heavily in the U.S. because Americans needed better tech products, according to one of the top executives at the Chinese smartphone giant.

In fact, Richard Yu, chief executive of Huawei's consumer business group, said the company aimed to hold 25 percent of the global smartphone market within the next five years. And he was confident Huawei would overcome the currently combative business and intellectual property relationship between the U.S. and China to do so.

"For the U.S. consumers, they need better products and innovations," Yu told CNBC on Friday at the sidelines of Converge, a technology conference in Hong Kong hosted by the Wall Street Journal and f.ounders. "We will continue to invest in the U.S. market."

On Thursday, the New York Times reported that the U.S. Department of Commerce had demanded Huawei turn over all information regarding the export or re-export of American technology to Cuba, Iran, North Korea, Sudan and Syria. The subpoena was part of a probe into whether Huawei had broken U.S. export controls, according to the report, which noted that many of Huawei's products used U.S. components or technology.

In March, the U.S. Commerce Department accused ZTE, Huawei's smaller Chinese rival, of selling products containing U.S. technology to Iran in violation of U.S. sanctions. It gave ZTE until June 30 to cooperate on resolving the matter or face an effective ban on purchasing U.S. technology.

Although the Commerce Department has not accused Huawei of wrongdoing, the New York Times report noted that a similar ban could hurt the company's ambitious expansion plans.

Local employees introduce the company's cellphones during a show by Chinese tech firm Huawei in Lusaka, Zambia, April 13, 2016. Chinese tech firm Huawei on Wednesday held a show in Zambia of its high-end products and services.
Peng Lijun | Huawei | Getty Images
Local employees introduce the company's cellphones during a show by Chinese tech firm Huawei in Lusaka, Zambia, April 13, 2016. Chinese tech firm Huawei on Wednesday held a show in Zambia of its high-end products and services.

Meanwhile, China has pushed back on attempts by U.S. tech behemoths to get access to its market, in moves ranging from targeting foreign companies under tough cyber-security rules to unexpectedly blocking access to Apple's iTunes Movies and iBooks stores from within China.

But Yu told CNBC he was confident Huawei would overcome the U.S.-China tech tensions to eventually win over U.S. regulators.

"I have confidence we can change this [the situation in the U.S.]," he said. "Do more business with carriers, and bring Huawei's innovation and products to the consumers. We need more time to do that. But I believe we will change this situation."

He said Huawei had devoted substantial resources to take its products to a global audience.

"We are investing money not only on technology and innovation, but also on marketing and branding to build the Huawei brand," Yu said, adding that the aim was to make the company a global brand on the scale of competitors such as Apple and Samsung.

In recent years, the company has put out increasingly sophisticated smartphones, such as its launch this year of the flagship P9, which has a dual-lens camera built in collaboration with Germany's storied Leica, as well as a bigger battery and a 5.2-inch, 1,080-pixel display screen.

Producing world-class phones has helped Huawei climb the ranks of the top smartphone vendors, with latest data showing that Huawei was the number-three global supplier of smartphones, behind Samsung and Apple.

The company shipped 108 million smartphones in 2015, exceeding its own expectations with a 44 percent increase in sales, compared with 2014. That figure was still dwarfed by Apple's 231.5 million iPhones shipped last year, and Samsung's 317.2 million, according to Strategy Analytics data.

Yu said partnering with established, quality brands was key to Huawei's strategy.

The company worked with Google to launch the Nexus 6P smartphone, and the newly launched MateBook two-in-one tablet contains Intel's sixth-generation Core M processors and runs on Microsoft's Windows 10. Huawei smartphones also run on the Google-owned Android platform.

To win over a global audience, the company turned to celebrity names for its marketing efforts, including "Batman v Superman: Dawn of Justice" star Henry Cavill, Scarlett Johansson, who plays the Black Widow in Marvel's Cinematic Universe, and Argentine football star Lionel Messi.

In China, meanwhile, Huawei has built its own operating mobile platform by integrating its cloud services, an app store and other online services into an ecosystem, due to Google's lack of presence in the market.

"We know China better than the other vendors, so we can do services better in China," Yu said.

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