ZTE s star on the rise

Just a week after announcing the acquisition its new US headquarters, Chinese equipment vendor ZTE has been mentioned in dispatches as an increasingly important player in the global communications market, particularly as it moves into new areas such as optical and data communications business.

According to a new ABI Research posting, ZTE has made a major impact in the global market in recent years "by adopting a flexible strategy and making precise judgments about the volatile Chinese market."

The group notes that ZTE has notched up a series of successes in the CDMA, PHS and handset sectors in the past few years, and like its fellow Chinese competitor, Huawei Technologies, continues to increase overseas sales as a proportion of overall revenues.

ZTE continued its strong growth in 2004, and revenues reached US$21.22 billion a rise of 24.6% year-on-year. In 2004, revenues from overseas markets accounted for 21.5% of total revenues, up 10.5% year-on-year, and the company s total revenues from overseas markets reached $4.58 billion (up from $522.8 million), 133% higher, year-on-year.

ABI notes however that ZTE does face some risks in the future. Analyst Junmei He said, "a possible restructuring of the Chinese telecoms market could significantly slash telecom CAPEX by the domestic telecom carriers. Furthermore, if China Telecom and China Netcom gain 3G licenses, their business focus will change from PHS to G, which will affect ZTE s revenues from both PHS equipment and handsets."

Currently ZTE s three biggest business areas are wireless communication systems, handsets and wireline switch and access systems, although ABI expects optical and data communications to replace wireless switch and access business as the third largest revenue generator, something that should give the company more security in China.

Last week, ZTE announced the opening of its new US headquarters in Dallas, Texas. The office will support its already established R&D facilities in New Jersey, Dallas and San Diego, as well as help the company build new business in the US market. ZTE s US operations are closely aligned with its activities in the WiMAX market.