ZTE shoots for global markets
Updated: 2013-10-10 00:53
By Michael Barris in New York (China Daily)
Cheng Lixin (center), CEO of ZTE USA, stands with Houston Rocket Chandler Parsons and Tad Brown (right), CEO of the Houston Rockets, at the unveiling of the ZTE Rocket phone on Oct 5 in Houston, Texas. Provided to China Daily
It all began with Yao Ming.
The Houston Rockets aggressively began marketing the National Basketball Association club to Asian fans living both in the United States and overseas in 2002, with the signing of the 229-centimeter Chinese center who would go on to become an eight-time NBA All-Star.
After Yao retired, the Rockets kept the Asian trend going, snapping up Jeremy Lin, the former New York Knick and namesake of the media phenomenon known as "Lin-Sanity".
Among the Texas franchise's Chinese admirers was Cheng Lixin. Cheng is CEO of ZTE USA, the US unit of smartphone maker ZTE Corp, based in Richardson, Texas, near Dallas.
He acknowledged at a news conference on Saturday that was one reason why his company struck the first corporate sponsorship deal in its 15-year US history with the Rockets. But Houston's status as an important market for ZTE's Shenzhen-based parent also figured prominently in the decision.
"ZTE and the Rockets are both global brands bringing powerful lineups to excite both sports and tech enthusiasts across the country," Cheng said in a statement. "Houston and the US at large is a key market for ZTE going forward."
Besides giving ZTE the rights to market itself with the Rockets during the 2013-14 season, the deal announced Saturday will see ZTE participating in a Rockets community charity program called Season of Giving. ZTE also announced an endorsement deal with forward Chandler Parsons, including social media engagement with fans. Financial terms of the agreement were not disclosed.
For the Rockets, the deal helps them continue their push into Asia. Rockets CEO Tad Brown emphasized the global focus of the partnership, saying "together we aspire to create a partnership that will go above and beyond a simple sponsorship, into a joint effort that will attract fans locally and globally."
The pact dovetails with ZTE's launch of two new smartphones, the ZTE Grand S and the ZTE nubia 5. The devices are being sold "unlocked" and can be used on GSM-based networks, including those operated by AT&T and T-Mobile. Both have 5-inch displays and come with older versions of Android. Android-powered phones and Apple Inc's iPhone together account for about 90 percent of the global handset market.
Analysts see the Rockets marketing deal as capitalizing on the promising future of both organizations. ZTE's surging sales have compelled research firm Strategy Analytics to name it the fastest-growing US smartphone vendor of the past year. ITG Market Research ranked the maker of telecommunications gear the third-largest US smartphone maker, with 17 percent of the nation's prepaid handset market, trailing only South Korea's Samsung Electronics Co and California's Apple Inc.
Jason Belzer, a professor of organizational behavior and sports law at Rutgers University in New Jersey, told Forbes magazine that by positioning itself closer to the customers, ZTE is able to operate with a business model that focuses on the needs of the buyer, as opposed to the competition. That view reflects ZTE's customer-centered approach to its products — its success has been built on offering phones that lend themselves well to customization and give users mainly essential functions.
The Forbes article quoted Cheng as saying that "those who focus on the competition instead of the consumer will always be a follower in the marketplace". The article also said ZTE puts 10 percent of its revenue into R&D in an effort to satisfy customers.
Belzer said the Rockets recognize the popularity of Chinese players such as Lin and Yao within the Asian market, and have "leveraged this influence to diversify their sponsorship portfolio".
By targeting sponsors with Asian-based operations, such as ZTE, the Rockets are "able to penetrate the global market", Belzer told Forbes. Other sponsors include Taiwan-based Maxxis Tires and Kenda Tires and Peak, a Chinese-operated shoe manufacturer.
Belzer said ZTE and the Rockets "share a common vision". Cheng told Forbes that both organizations understand "the value of reaching out to global markets while giving back to local communities". Houston will play the Indiana Pacers in an exhibition game in Taiwan on Sunday.
Yao's impact on Chinese fans is summed up in a 2007 game he played against fellow Chinese NBA and Milwaukee Bucks player Yi Jianlian for the first time. The game, which the Rockets won 104-88, was broadcast on 19 networks in China and was watched by more than 200 million people in China alone, making it one of the most-watched NBA games in history. In 2011, when an injury-plagued Yao finally announced his retirement at a news conference in Shanghai, the news sparked more than 1.2 million comments on Sina Weibo, the Chinese equivalent of Twitter.
Yao, NBA commissioner David Stern said, was a "bridge between Chinese and American fans". He remains one of China's most recognizable athletes, along with Olympic hurdler Liu Xiang. As of 2009, Yao had led Forbes' Chinese celebrities list in income and popularity for six straight years, earning $51 million in 2008.