UPDATE 1-Huawei aims higher with branding campaign, Windows phones

* May produce Windows 8 tablets -exec

* Plans $200 mln branding campaign

* Avg selling price for handsets to double this year

By Kazunori Takada

SHANGHAI, June 21 (Reuters) - China's Huawei Technologies Co Ltd, the world's No.6 mobile handset maker, aims to move up three spots in market share by 2016 by raising its brand profile and expanding its handset and tablet offerings.

Competition in the handset market has been heating up, eroding margins of some companies. Last year, Huawei's gross profit margin dropped 6.5 percentage points to 37.5 percent. To counter that, Huawei is pushing into the higher-end segments, which has helped to double the selling price of its handsets this year.

The Shenzhen-based firm plans to spend $200 million on advertising this year, said Shao Yang, chief marketing officer of Huawei Device, the division that sells dongles, handsets and tablets. The company declined to disclosed its previous ad budget, but Nokia was reported to have spent a similar amount to promote its Lumia 900 phone model.

Shao said on Thursday the company may also produce computer tablets running Microsoft's Windows 8 operating system after choosing the same system for its handsets. Shao added that a tie-up with a well-known consumer brand, such as the one between Sony Corp and Ericsson, is unlikely for the handset business.

"We need to learn how to get close to people and understand people. That's something we lack," Shao said.

Huawei, mostly unknown by consumers outside China, is aiming for the No.3 spot in the market by 2016 and has selected advertising agencies Ogilvy & Mather and Bartle Bogle Hegarty to lead the brand awareness campaign, Shao said.

"We see ourself as a global, local company," he said, when asked how the company plans to portray itself in overseas markets where Chinese products are often viewed as cheap, but unreliable.

The mission is to be a global company, Shao said, but adapt the company's products to local cultures with local hires in each market.

The company has also been trying to globalise itself by hiring non-Chinese executives, including hiring Americans and Britons, some of whom reside on its Shenzhen campus complete with manicured gardens, swimming pools, grocery stores and apartments.

At Huawei Australia, its directors include former foreign minister Alexander Downer and the company also hired John Suffolk, former chief information officer for the UK government, as its cyber-security chief.

Shao said Huawei plans to ship 50-60 million smartphones globally this year, up from 20 million last year and 3 million in 2010.

Shao said the tablet market was tough to compete in because of the dominance of Apple Inc, but the introduction of Windows 8 could be a catalyst for change.

"Until now, the only winner (in the tablet market) is Apple ," he said. "Next year, Windows 8 will the first wave to threaten Apple...Now I have an iPad but I still need to keep my laptop. If I have Windows 8, I won't need to keep two."

At an event in San Francisco on Wednesday, Microsoft officially announced phones running its Windows Phone 8 software would hit the market this autumn.

Huawei, founded by chief executive Ren Zhengfei in 1987, has diversified into consumer devices with its Vision smartphones and MediaPad tablets as growth in its core telecoms gear market has stalled. Last year, Huawei recorded sales of 44.62 billion yuan ($7.02 billion) for consumer devices, a rise of 44.3 percent.