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ZTE aiming to boost smartphone sales

ZTE aiming to boost smartphone sales

Updated: 2012-04-23 22:39

By Shen Jingting (

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ZTE Corp, the fourth largest handset producer in the world, said it plans to ship more than 30 million smartphones this year, up from 15 million in 2011.

He Shiyou, executive vice-president of ZTE, said ZTE would like to see smartphones make up more than 30 percent of all mobile phones it ships this year. Last year, they made up 20 percent.

He made those statements at the company's annual analyst conference in Shenzhen, where the company is based.

ZTE's 2011 sales of mobile devices increased 60.4 percent year-on-year. Of the company's total revenue, 31.3 percent came from that business, or 26.93 billion yuan ($4.3 billion), compared with 25.3 percent a year earlier.

Of the top 50 telecom carriers around world, about 43 use ZTE's mobile devices, according to the company. More than 8 million 8 million of ZTE's Blade smartphone were sold in 2011.

However, most of the handsets ZTE sold before were in the range of mid-to low-end mobile phones, which usually carried a price of less than 1,500 yuan for each unit.

In 2011, ZTE poured its low price mobile phones into the world market and became the world's No 4 mobile phone seller in 2011, according to a report from the research firm IDC.

But the company has contended with a declining gross profit margin from its sales of relatively inexpensive mobile devices and increasing competition in the entry-level mobile phone market, as its international rivals, such as Motorola and HTC, have started to introduce low-priced models into the Chinese market.

In the hope of overcoming the difficulties, He said, ZTE has placed a priority on promoting its mid- to high-end mobile devices.

"The mid- to high-end mobile phone market has a relatively higher gross profit margin," said He. "In addition, those mobile phones will help improve ZTE's branding."

Mid- to high-end mobile phones, as defined by ZTE, are those that cost between 1,500 yuan and 3,000 yuan for each unit. The devices are usually equipped with dual-core, even quad-core processors, and have large screens.

Europe and the United States could be the chief targets targeted market for ZTE's high-end devices.

"As long as mobile phone models achieve success in the United States market, you can say they are truly international stars," He said.

ZTE aims to become a mainstream mobile phone seller in the United States. The Chinese company hopes to command at least 10 percent of the US smartphone market in the next 2 to 3 years, said Lv Qianhao, director of ZTE's mobile phone marketing department.

Intellectual property disputes threaten smartphone industry

ZTE will invest heavily in developing mobile phone patents that can be put directly into use and help make ZTE's mobile phones stronger competitors in the global market, said He Shiyou, executive vice-president of ZTE.

He made the remarks at the company's annual analyst conference in Shenzhen, where the company is based.

ZTE has invested 10 percent of the money it makes from annual sales into research and development. The company has 18 centers where such work is carried out in the world. About 26,000 employees work at them.

A white paper issued by the China Academy of Telecommunication Research pointed out that Chinese smartphone companies are at risk of becoming embroiled in intellectual property disputes since many of the most important patents in their industry are held by international companies such as Google Inc and Microsoft Corp.

Most of the smartphone patents held by domestic makers have to do with designs or physical forms and not with central technologies, the white paper said.

He said intellectual property disputes are common in the global mobile phone industry and ZTE is not worried about them. "The more famous a brand is, the more likely it will be involved in a patent dispute," said He.

Targeting big growth

The nation's second-largest telecom equipment maker, ZET is targeting sales from government and enterprise businesses to hit more than $6 billion by 2015.

As the global telecom equipment market experiences stagnant growth rate and provides limited space for companies to grow, telecom gear producers, such as ZTE and its cross-town rival- Huawei Technologies Co, have entered new markets to explore business opportunities.

The government and enterprise business, together with smartphone business and telecom equipment business, have become the three major drivers for ZTE's performance, according to Xu Ming, vice-president of ZTE Corp.

The government and enterprise business refers to telecommunication and IT solutions provided by ZTE to clients from government and industries such as energy, transportation and education.

In 2011, ZTE sold products and services worth 10 billion yuan to customers in the government and enterprise sector.

"ZTE hopes to achieve a compound annual growth rate of about 50 percent for its government and enterprise business in the next a few years," said Xu on the sidelines of the company's annual analyst conference in Shenzhen on April 23.

The overseas market is likely to contribute more than 60 percent of its total sales of government and enterprise business by 2015, he added.