While today s telecommunications market is still licking its wounds and only beginning to whisper words like growth and expansion, one supplier has maintained a progress that in a buoyant market would be impressive but in the current state of the industry is almost unbelievable.
The track record of growth is also made more dramatic by the fact that 20 years ago the company in question ZTE Corporation of Shenzhen in China did not even exist.
ZTE was created in February 1985. In less than a year it had created its first research and development facility in Nanjing mainly developing switching systems and access network systems. The rest, as they say, is history.
ZTE s last three years of business alone make impressive reading at levels most in the telecommunications market would record as sheer fantasy. In a world market beset by plunging order books, redundancy and often sheer panic, ZTE has:
- Shown year-on-year compound growth rate of 35%
- Increased sales by 50% in 2003 alone with a rise in contracted sales of 49.96 percent to 25.193 billion yuan ($3.04 billion) in 2003
- Moved international sales to 27% of total sales
- Continued to invest more than 10% of its revenues in research and development
It is a performance unique in this industry in world terms. It is also another example of the phenomenon that is the Chinese telecommunications industry.
In the past decade, China has become one of the largest and fastest growing telecommunications markets in the world. According to CCID Consulting, the number of wireless subscribers grew at a compound annual growth rate of approximately 77.4%, between 1997 and 2002. By the end of 2002, China had over 206 million wireless subscribers, making it the largest wireless telecommunications market in the world, in terms of subscribers.
Also, the number of fixed-line subscribers in China experienced a significant compound annual growth rate (approximately 25.5% between 1997 and 2002), reaching approximately 214 million by the end of 2002. China s telecommunications equipment market is likely to continue to grow in the next few years, driven by robust economic growth, strong demand for voice and data services and a relatively low teledensity rate.
ZTE s success was originally based on this market but its growth has spread from Asia, into Africa and South America and is now developing strongly into Europe.
ZTE believes that its success to date is based on a sustained and powerful R&D programme, its abundance of good, low-cost engineering and production skills, attention to quality systems and listening to its customers.
Every year for the past ten years, we have invested more than 10% of our revenues in R&D and almost half of all ZTE personnel are involved in the R&D area. said Mr Shi Lirong, one of ZTE s senior vice presidents.
The ZTE commitment to research and development is best illustrated by the fact that the company currently owns some 700 patents, with more than 87% of these being for original innovations. It operates 13 wholly-owned R&D Centres worldwide including establishments in the USA, Sweden and South Korea.
The company also works hard in developing its people and recruiting real talent. Of its 17,000-strong workforce, more than 6,000 have Masters degrees 500 with Ph.D.s. The average age is 28 and 50% of international staff are of local nationality and ZTE aims to increase that percentage in the future.
In order to push the boundaries even further, ZTE has undertaken research partnerships with companies like Texas Instruments, Intel, Agere Systems, Motorola and Microsoft. In the future, ZTE will continue to invest significant resources to further enhance its position in core technology areas such as networking, software design, and mobile communication, ASIC design and optical transport technologies. said Shi Lirong.
In addition, ZTE will continue to focus on the development of new technologies, such as 3G mobile systems, converged voice and data networks, broadband access systems and intelligent networks.
We realise, however, that we must focus not only on expanding sales, but also on improving internal efficiency. The company intends to achieve this by streamlining internal processes and improving financial efficiency, further improving product and service quality standards - through the continued implementation of a six-sigma quality control program - and by implementing CMM in R&D management.
The quality of ZTE products is already high. They are manufactured and tested above and beyond the most rigorous international standards. The company has ISO-9001 and ISO-9001 (2000) certification for the design, manufacture, installation and service management of its products. In addition, its switches, access, data, GSM, CDMA, SDH products and power products were also granted CE, CB certificates by the TUV.
ZTE s respected position as a forward looking global organization within the industry is reflected by its membership of, and participation in, a variety of International Standardization Organizations. ZTE was the first Chinese individual manufacturer member of 3GPP2 (3rd Generation Partnership Project 2), for example, and has become a sector member of ITU.
The company has grown from being a telecoms gear manufacturer to providing complete end-to-end services, covering pre-sales and after-sales. It has developed a national sales and marketing network, with 27 sales offices nationwide and more than 50 sales offices overseas and offers a quick response, 24-hour technical support service to resolve the majority of technical issues faced by its customers.
ZTE believes that its strong local presence, close relationships with customers and dedicated customer support allow it to better understand and develop products to address the needs of its customers.
In 2003 alone, ZTE moved into 13 new countries and established ten new local maintenance offices. It doubled its international recruitment.
At ZTE we have grown very fast and have been very successful with our international customers. But we can only build on this if we support our customers locally with highly skilled, highly committed people who will be there to support them when needed and help them meet new opportunities when they arise, said Shi Lirong
We a totally focused on making sure our service and support is just as good in any international market as it is and always has been in China.
Initially, the growth of ZTE was greatly assisted by the fact that the market in China developed very, very fast and, of course, continues to offer great potential for expansion in the future. Earlier this year, ZTE announced that it had become the top wireless equipment supplier in China, including contracts to supply three million lines of products under China Unicom s CDMA Phase III construction programme.
To date, ZTE is the sole Chinese telecom equipment manufacturer to provide the full series of CDMA system to China Unicom. Its PHS equipment also successfully captured new market shares in Guangdong, Tianjin, Hunan, Jiangsu, Shanxi, Beijing and Shanghai and market share increased to 40%, with more than 20 million lines of equipment operating over the network.
Last year, even by ZTE s standards, was remarkable, with major growth in CDMA, GSM and DSL particularly and an overall increase of 50%. Sales of handsets alone topped US$580m year-on-year growth of 66% - and overseas sales in general doubled that of 2002.
At home, China also provided ZTE with massively increased sales of its GSM equipment, more than five million lines of ADSL sales and a position where it is the market leader in the 3.5G broadband wireless access market.
But Shi Lirong is now looking to build from ZTE s home success, and targeted international achievements to become a true world-scale company.
Our strategy to go global is a very important one for the company. said Shi Lirong. Our experience and success at home has enabled us to transfer solutions to developing countries that were in a similar situation to ourselves. These markets also continue to offer great potential for us and we intend to build upon our relationships there.
The next big step for us is to focus on more developed countries. They, also, have considerable potential - because they have recently been through a period of reduced telecommunications investment and have been waiting for new technologies to become available. Already we have had some successes both in Europe and North America and we are looking at strategic alliances and ways to develop local partnerships in those areas so that we can access these markets more fully.
Europe had its first chance to see the globally focused ZTE at the ITU (International Telecommunications Union) exhibition in Geneva last October. It was impressed and later this month ZTE is back for the 3GSM World Congress in Cannes, where it will unveil its entire range of 3G solutions, including some of the world s fastest Streaming Media applications, new JAVA download capability and Video on Demand (VoD).
3GSM offers a second chance for Europe and the world s telecommunications players to check out ZTE for themselves.
ZTE s success may almost be the stuff of fairy tales. But the facts speak for themselves and they are impressive from the company s China heartland to deepest Russia, Africa and South America.
