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ZTE looking to narrow sales gap with Huawei

2011-05-26 09:11

ZTE looking to narrow sales gap with Huawei

A worker sweeps up in front of a ZTE Corp advertisement for smartphones and tablets outside one of the company's media events in Beijing in April. ZTE's flagship mobile phone, the ZTE Blade, achieved unexpected success in Europe last year, with more than 1 million sold on the continent since it was launched. [Photo / Agencies] 

SHENZHEN - ZTE Corp, China's No 2 telecommunications equipment maker, will narrow the sales gap with domestic rival Huawei Technologies Co Ltd, by achieving a growth rate of more than 20 percent this year, according to the company's executive vice-president.

That beats the recent revenue forecast from Huawei, which expects an increase of less than 10 percent in sales to 199 billion yuan ($31 billion) this year, from 185.2 billion yuan in 2010. ZTE's revenue was about a third of Huawei's in 2010, at 70.26 billion yuan.

ZTE's sales are expected to be strongly boosted by its terminal business, while the growth of the networking-equipment sector may achieve a "normal level" in 2011 because of intense global competition, Xie Daxiong, executive vice-president of ZTE Corp, told reporters at a company event in the southern city of Shenzhen.

Xie said he is satisfied with ZTE's present business performance and the 20 percent growth rate "is still strong".

Compared with a 36 percent rise in revenue in 2009, ZTE posted an increase of 16.6 percent last year. The slowdown reflected the fact that telecom equipment makers were facing limited growth prospects in their business with global carriers.

The company has experienced a fundamental change in strategy since the beginning of this year, as it looks beyond the traditional network infrastructure market to new areas such as smartphones and cloud computing.

At a news conference in Beijing last month, ZTE announced that it hopes to become one of the worlds' top five manufacturers of smartphones running on Google Inc's Android operating system this year.

The company expects to ship 12 million smart terminals in 2011, with total terminal shipments reaching 120 million, up from 90 million in 2010.

"ZTE wants to become one of the world's top three mobile phone vendors by 2015," Xie said. In addition, the company hopes revenue from cell phones will surpass that of networking equipment during the same period.

Fan Jiongyi, who is responsible for ZTE's terminal business, said the overseas market accounted for more than 60 percent of the company's terminal sales last year, while China accounted for the remaining 40 percent.

The company's flagship mobile phone, the ZTE Blade, achieved unexpected success in the European market last year, with more than 1 million sold on the continent since it was launched. Fan said that in some European countries, the sales have been surpassed only by those of Apple Inc's iPhone 4.

ZTE also plans to become a leader in the cloud computing market by 2015, and around 3,000 employees are currently working in the company's cloud-computing research and development department.

"We hope the products and services related to cloud computing will exceed $2 billion this year," Wang Wei, ZTE's vice-president, said at the Shenzhen event.

The midterm aim of ZTE's cloud computing business is to contribute one third of the company's total sales in the next five years, according to the company's president, Shi Lirong, who was quoted in the China Securities Journal. The company plans to invest 16 billion yuan in Nanjing, Jiangsu province, to build a global cloud-computing center there.

According to figures from the State Intellectual Property Office, ZTE topped the list by applying for 107 patents for cloud-computing technology in 2010. Huawei was second with 94 patent applications.

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