ZTE sets sights on leading global role

Matt Walker, principal analyst at Ovum, said ZTE has proven itself to be committed to working with carriers in emerging markets. "Strong support by vendors such as ZTE is one reason for the mobile boom in emerging markets that has been apparent over the last five years or so," he said.

However, ZTE's overseas expansion faces severe challenges in the United States and India due to political and security concerns. ZTE was prevented from selling network infrastructure to major US operators and limited to signing contracts with a few small US carriers. The Indian authorities also imposed harsh restrictions on ZTE's business with local partners.

Hou did not conceal his disappointment at ZTE's setbacks in the United States. "It's useless making further efforts (to persuade the US government to trust ZTE). The problem cannot be solved," Hou said.

Redefining ZTE

This year could herald a harsh winter for telecom companies, analysts say. Telecom carriers slowed investment and became picky. Competition intensified and most telecom equipment makers said that they could not afford to further cut product prices.

In a recent filing to the Shenzhen Stock Exchange, ZTE said its first-half net profit fell 68 percent to 245 million yuan because of lower investment gains, foreign exchange losses and domestic operator networks postponing their tenders.

"ZTE has had to evolve with the times," said Walker at Ovum. "ZTE seems to be at a crossroads now, where it can and should stake out its own, independent vision and clarify its unique role in the industry."

He Shiyou, senior vice-president of ZTE, said the company would transform itself from a telecom equipment maker into a "communications integrated-solution provider". The company already owns a complete product line and has a well-functioning global marketing network, he said.

New business areas, including mobile devices, cloud computing and telecom services, are likely to become major drivers for ZTE in the near future, Hou said.

The company plans to double its smartphone shipments to more than 30 million this year and become one of the world's top three cellphone vendors by 2015. ZTE also aims for sales to government and businesses to hit more than $6 billion by 2015.

Neil Mawston, an analyst with Strategy Analytics, said ZTE is growing rapidly in entry-level and mid-range smartphones but Apple and Samsung dominate the premium segment. "ZTE's biggest long-term challenge will be to develop a connected portfolio of smartphones, tablets, smart TVs and cloud services so it can compete better with rivals such as Apple's iPhone, iPad and iTunes," he said.

shenjingting@chinadaily.com.cn

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