JP/ZTE shows success in expansion, eyes 30% growth in Indonesia

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JP/ZTE shows success in expansion, eyes 30% growth in Indonesia - 10 Sep 07 14:07

ZTE shows success in expansion, eyes 30% growth in Indonesia

The Jakarta Post, Jakarta

Staying below the radar is one of the strategies applied by many Chinese companies in competing in the global market.

Many of these companies do not identify themselves through brands, at least not until the company has grown so large it is impossible to ignore, as happened with Zhong Xing Telecommunication Equipment Company, or ZTE.

ZTE is among the world's fastest growing telecommunications companies, with total revenue of 23.03 billion yuan (about US$3.05 billion) last year. Since it was founded in 1985, it has grown to operate in 120 countries with 96 representative offices worldwide.

Now the company is becoming known in Indonesia through the distribution of its cellular phone handsets, which are often "bundled" with services provided by mobile telecom operators here.

ZTE founder and chairman Hou Weigui recently visited the country and met with The Jakarta Post's Andi Haswidi to talk about the company's operations:

Question: Who would you describe as your biggest competitor and what is your competition strategy?

Answer: Our operations can be found in 120 countries, and we have established 96 representative offices globally, which makes all the major global telecommunication players our competitors. They are big names like Ericsson, Nokia, Alcatel Lucent and Siemens. Plus there are also several Chinese players.

In the telecommunications market, the technology is developing very fast. There are a lot of new technologies coming out all the time. I think we need to speed up the development of our products and technology.

The other thing is to constantly improve our services to our customers through our local representative offices.

Q: How do you differentiate yourself from your competitors?

Compared to the international players, I think we have an advantage in software development, where we allocate about 10 percent of our annual turnover for our R&D department.

We have more than 15,000 research engineers and we also have 15,000 technical service employees. The remaining 10,000 are the technical workers, so in total we have 40,000 staff.

Based on this kind of capability, we can quickly respond to the market requirements.

Q: We see an increasing trend of mergers and acquisitions in the industry. Is there any plan to join the bandwagon?

Today we have no plans for acquisitions. Actually, in our 23-year history, we have grow by our own accumulation and our own ability. We don't use the acquisition model to expand. That makes us different from Western companies.

Q: Your handset products are becoming known to the world. How much are you going to focus on this market?

The ZTE handset business is mainly in bundling programs with the operators, as we are still focusing on infrastructure system products like the broadband access network, etc.

However, our handsets have indeed been accepted everywhere.

The handset business itself started in 1998. Because of our technology accumulation, we have already achieved good success in the handset business. And actually we have already sold about 50 million handsets globally.

For Indonesia, we already shipped 1.5 million handsets last year. This year we are expecting more sales for our handsets.

Q: Where does Indonesia sit in the global market for ZTE?

We have been providing our services to the Indonesian market since 1999. I am pleased with our operation here. I am positive about the investment environment as it is efficient in terms of sales.

Indonesia is a very important market for ZTE considering its large population and an average GDP that is much higher than India.

I regularly visit Indonesia once or twice every year. In our company, we encourage the higher management in ZTE to visit different countries and meet with different customers globally to gain knowledge and insight.

The main purpose is basically to understand the local market and provide customized and good quality products to the market, just like what we have been doing for several mobile telecommunication operators here.

Q: What is your plan for the ZTE operation here?

The telecom market in Indonesia is growing very rapidly, shown by the mobile applications used by many customers here, which have become very demanding and advanced. We are committed to provide more applications and services for them.

In doing so, we will continue to partner with local operators whether it be GSM technology-based operators or the CDMA technology. As you know we have expertise in both systems.

This year alone, we are going to have equipment shipments worth about US$300 million. From our point of view, we expect 30 percent growth in Indonesia every year.

We have also been conducting training projects in Indonesia, where we train a lot of young people for the local operators here. Of the 200 ZTE workers here, mainly we employ local staff.

In the near future, we are planning to expand the capacity of the training.