Chinese Giant ZTE Becoming International Telecom Competitor, Says ABI Research

ZTE Corporation, China s largest listed telecommunications manufacturer and wireless solutions provider, is transitioning from a trend follower to a market leader among telecom equipment suppliers, says ABI Research. By adopting a flexible strategy and making precise judgments about the volatile Chinese market, ZTE has notched up a series of successes in the CDMA, PHS and handset sectors in the past few years.

ZTE continued its strong growth in 2004, and its revenue reached 21.22 billion (over US$2.56 billion), a rise of 24.6% year-on-year (YOY). Wireless communication systems, handsets and wireline switch and access systems are the company s three business main lines, but ABI Research is expecting optical and data communications businesses to replace wireless switch and access business as the third largest revenue generator for ZTE.

Meanwhile, by gaining more contracts from overseas markets, ZTE is gradually becoming an international equipment supplier. In 2004, revenues from overseas markets accounted for 21.5% of its total revenues, 10.5% up YOY, and its total revenue from overseas markets reached approximately 4.58 billion (over US$522.8 million), 133% higher, YOY.

But according to ABI Research analyst Junmei He, ZTE may face some risks in the future. "A possible restructuring of the Chinese telecom market could significantly slash telecom CAPEX by the domestic telecom carriers," she notes. "Furthermore, if China Telecom and China Netcom gain 3G licenses, their business focus will change from PHS to 3G, which will affect ZTE s revenue from both PHS equipment and handsets."