How ZTE started: the importance to enter China market in time

High-tech and communications are largely encouraged by government in China. The companies, which could predict such a demand in 80’s, are now the leaders of telecommunications industry. ZTE is one of such companies, which was established in 1985 by Hou Weigui. Our focus is on How ZTE started.

Nowadays, the company is headquartered in Shenzhen and has subsidiaries all around the world including Brazil, Australia, Germany and the United States. It implements B2B as well as B2C business. B2B includes equipment for network operators; while it also interacts with consumers directly by offering mobile phones.

Early development of ZTE

It was initially established as Zhongxing Semiconductor with support of investors from China’s Ministry Aerospace. In 1993, the company changed its name again-now to Zhongxing New Telecommunications Equipment-and introduced RMB 3 million capitals. The company comprised the characteristics of both, public and private entity, implying public ownership and private (or independent) operation. In 1997, ZTE, yet called by its current name, made an initial public offering(IPO) on the Shenzhen Stock exchange, and later in 2004 on the Hong Kong stock exchange.

ZTE International recognition

Since the company entered the Hong Kong stock exchange, it has been investing money from IPO to develop globally and raise awareness of the company on international scale. By 2006, the company was serving 40% of new global orders for CMA networks. It became a member of Wi-Fi Alliance and signed a contract with Canadian Telus the same year. In 2007, the number of international customers significantly increased; it signed contracts with major international companies including the British Vodafone, the Spanish Telefonica, and the Australian Telstra. By 2008, the company’s customers and orders were truly global, coming from 140 countries. One year later, ZTE became world third-largest supplier of GSM equipment.

ZTE Financial report: good news for shareholders

According to company’s 2013 annual report, total revenue reached RMB75.23 billion, which is 10.6% lower than last year. However, net profit, attributed to shareholders, increased by 147.8% reaching RMB1.36 billion. This resulted in an increase in basic earnings per share ratio, which was 147% as well. From the report, it can be concluded that the company has a stable and confident position in international market: more that 50% of the revenue comes from abroad.

Major goals of ZTE: R&D and innovation

As a major goal for 2014, the company highlights innovation. In its 2013 financial report, it states: “To address the increasingly volatile telecommunications industry, the Group will endeavor to integrate its resources in a scientific manner in 2014, based on the core principle of “Innovation and Intensification.” In particular, the combination of technological integrations with business model innovations will be sought to realize breakthroughs in its profit model, while achieving cost savings and optimization in efficiency through innovation”

More about Branding in China _ SJ Grand