ZTE Becomes More Competitive in Global Handset Market

A few days ago, one of the leading domestic mobile phone manufacturers ZTE Corporation announced its 100,000,000th set of mobile phone to have gotten off the production line in Shenzhen. It's the first time for domestic mobile phone's accumulative sales volume to exceed 100 million sets, demonstrating ZTE has entered into the "first camp" of global mobile phone manufacturers successfully.

As to the annual sales volume of mobile phone, from 12 million sets in 2005 to 16 million sets in 2006, and to 31.06 million sets in 2007, ZTE's mobile phone business realized "hop, skip and jump" in three years, and its income and profit both grew substantially. Comparatively, the market shares of domestic mobile phones, however, were shrinking gradually meanwhile from 60 percent in the peak period to lower than 30 percent in 2007. Looking back at the development course of ZTE mobile phone, we found that ZTE can always stand erect tide head and deal with difficulties flexibly before every market change.

From 2005 to 2006, global mobile phones developed towards the direction of high end and intelligentization, and some of China's domestic brands encountered with development bottleneck for lack of R&D capacity. ZTE Corporation alternated its strategy quickly to follow a way of "technological innovation + operator customization + internationalized market expansion". On the one hand, ZTE invests a large number of personnel, capital and material to establish an independent technological system; On the other hand, ZTE avoids low-end market competition and develops international market with its globalized operation capacity.

With the aid of the customization line, ZTE successfully avoided market risk and realized dual enhancements in mobile phone sales volume and operation benefit. On the international market, the operator customized mobile phones takes up 70 percent in the total sales volume of mobile phones. ZTE Corporation accumulated enough brand and reputation with its role as a system equipment supplier and saved itself plenty of marketing capital. Currently, 70 percent of ZTE mobile phones are exported to the international market, and customized sales takes up more than 50 percent in its total sales volume of mobile phones.

From 2007 onwards, ZTE mobile phone insists the development strategy of "High-end and low-end mobile phones depend on customization, and middle-end mobile phones depend on market". The independent design and technological innovation of ZTE mobile phone have both reached or surpassed the first well-known international brands, and its high cost performance and low repair rate win ZTE mobile phone enough market trust. Through cooperation with globally top operators as Vodafone, Hutchison Whampoa, and Telefonica De Espana, ZTE mobile phones entered three high-end market of Europe, North America and Japan successfully, and realized its sales in over 100 countries and regions. 

In six years, ZTE mobile phone completed the accumulation from technology and capital to brand. Its gross profit rate kept over 20 percent, much higher than other domestic brands in China and close to the gross profit rate level of first well-known mobile phone brands. In the first half of 2008, even in the condition of disadvantageous macroeconomic environment, ZTE still realized a high increase of 66 percent year on year in mobile phone sales sector, much higher than traditional mainstream mobile phone manufacturers. It is estimated that its sales volume in 2008 will step into a higher level, and reach 50 million sets.

Luck favors the prepared minds, so does business operation. From 1998 onwards, ZTE Corporation has started the accumulation of independent mobile phone technologies. ZTE Corporation set up R&D centers in cities like Shenzhen, Nanjing, Shanghai, Xi'an, etc, and equipped them with independent software and hardware supporting platform, industrial design platform, and R&D and test platform. ZTE Corporation invests 10 percent of its annual income to R&D, and by the end of May 2008, ZTE Corporation had applied for 1587 domestic patents and 106 international patents in mobile phone field, ranking the first among all mobile phone brands in China.

As one of the few manufacturers which are capable of developing all series mobile terminal products of 3G, 3.5G, GSM, CDMA, PHS fixed station, and wireless LAN card, ZTE Corporation has mastered all core technologies of mobile phones except part of the core chip development. With the support of the special fund of the National 863 Program, ZTE Corporation developed successfully and independently a set of intelligent mobile information terminal platform with the globally advanced level. On the 3.5G and 3G terminal market, ZTE Corporation began to participate in the global competition from 2005, ranked the first in several sectors of this field, and obtained rich experience in terms of video technology, mobile phone television, multimedia data transmission, and user interface design.

In 2006, China's independent 3G technology TD-SCDMA market was initiated. ZTE Corporation attended the TD-SCDMA test during the whole course and got the first TD-SCDMA network access permit. Presently, three out of ten TD-SCDMA subscribers hold a ZTE mobile phone.

Currently, led by manufacturers as ZTE and Huawei that integrate mobile communications equipment and terminal equipment manufacture, China's domestic-branded mobile phones are growing. In the first half of 2008, the market shares of international brand mobile phones decreased by 8 percentage points year on year, and China's domestic brands are showing a tendency of rapid development.