China’s ZTE wants to rule telecom world

 

HONG KONG: Enterprise announces itself to the world in countless ways.

 

In the case of ZTE Corporation, it’s the ceaseless cell-phone chatter on board the train to Tibet that proclaims that the Chinese telecom equipment maker and network solutions provider has truly scaled Himalayan heights.

 

It’s ZTE’s CDMA and GSM wireless solutions, deployed in collaboration with China Mobile and China Unicom, which make it possible for passengers to yammer away mindlessly as the world’s highest altitude rail service chugs along one of the most desolate regions on Planet Earth. 

 

It’s a noisy tribute to the Shenzhen-headquartered ZTE, which was founded in 1985 by a consortium of state-owned companies led by Hou Weigui and is today a $3 billion dragon that operates in more than 130 countries. 

 

More such tributes have been pouring in recent times. Earlier this year, the Boston Consulting Group listed ZTE among “100 top companies from Rapidly Developing Economies (that) are changing the world”.

 

And BusinessWeek magazine rates ZTE among the top 100 infotech companies in the world and as one of China’s top brands. 

 

ZTE’s scorching pace of growth may not seem entirely out of character in a country where the number of mobile-phone subscribers has rocketed from about 50,000 in 1991 to 450 million today.

 

But in fact, homegrown Chinese companies - such as ZTE and Huawei, also from Shenzhen - were merely peripheral players in China’s telecom equipment market in the 1980s and 1990s. In an environment where bigger and richer foreign players like Motorola, Ericsson, Alcatel, Nokia and Siemens benefited from positive discrimination, and where state-owned telecom giants drive a harder bargain from their comrades-in-business than from foreign vendors, ZTE should have been happy just to survive. 

 

But ZTE set its sights a lot higher. Under the stewardship of Hou, a genial man who inspires informality in his interactions with his employees, ZTE seized on every new opportunity - and technological evolution - to race ahead, and in fact took the battle into enemy territory. From early on, Hou emphasised the importance of going global: today, that strategy - with the government’s critical support - is paying off. 

 

In the beginning, ZTE consciously targeted “underdeveloped” telecom markets with high populations, which offered the greatest potential for exponential growth.

 

Its winning advantage in such markets: its markedly lower prices, from leveraging the low cost of engineering and manufacturing in China. 

 

But last year, ZTE stepped up its profile in more mature markets with a roadshow across 10 European countries that announced its arrival on the big stage.

 

Today, it can justifiably claim that it’s competing not just on price but on technology as well. And although, at $3 billion revenue, it’s still much smaller than many global players, apprehensions about competition from ZTE and Huawei are known to have triggered a wave of strategic consolidation moves among rivals Nokia and Siemens, Ericsson and Marconi, and Alcatel and Lucent.   

 

Alongside its global expansion, ZTE has been getting its act together on other fronts too. The company listed on the Shenzhen stock exchange in 1997 and in 2004, it listed in Hong Kong as well. (That’s one area where ZTE scores over its bigger but unlisted rival Huawei.)

 

And although the government - or more precisely, the consortium of state-owned entities that goes by the name of Zhongxingxin - is still the single largest shareholder, Hou handed over the baton to the next generation of professional leaders in 2004: his successor, Yin Yamin, now 42.

 

Under Yin, the company is now preparing for the launch of 3G services in China, and building next-generation networks in Beijing and other cities. 

 

As ZTE spreads its wings at home and abroad, the chatter about this dragon looks like it will only get noisier.

 

 

BusinessWeek magazine rates ZTE among the top 100 infotech companies in the world

 

Last year, ZTE stepped up its profile with a roadshow across 10 European countries

 

The company is now preparing for the launch of 3G services in China