Telecom giant keys into US market for expansion
Updated: 2013-02-27 12:11
By Hu Haiyan (China Daily)
A visitor tests a ZTE smartphone at the ZTE Corp pavilion at the Mobile World Congress in Barcelona, Spain, on Monday. Simon Dawson / Bloomberg
China's second-largest telecommunications equipment manufacturer, ZTE Corp, aims to rank in the top three by sales globally by 2015, with the US market as one of its major revenue contributors, according to a company official.
"The US market is of great importance for ZTE's overseas expansion, where per capita consumption is much higher than that of China and the potential is huge," said Dai Shu, spokesman for the group's overseas business. "Although ZTE is faced with great difficulties in this market, we believe it will become another major moneyspinner for us in the future."
He also said it is likely that global telecom carriers, including those in the US market, will make consistent investment in network construction and upgrades, bringing big opportunities for ZTE's business growth in this market.
So far about more than half of ZTE's revenue comes from its overseas market, with the EU and US contributing roughly 20 percent, said Dai.
"It is hard to predict how much percentage the US market will contribute to our global business revenue in the future," he said. "I am sure the figure will definitely increase as we enjoy a close relationship with various small US telecom carriers and are always looking to continuing our investment in this market."
However, overseas expansion process is rarely smooth for Chinese telecom companies.
A congressional committee urged US firms to stop doing business with ZTE and China's largest telecom equipment maker Huawei, saying they could pose a security threat because of ties to the Chinese government.
Dai, who is based in Shenzhen and spent four months in the US last year dealing with the accusation, said that it is normal for foreign governments to have security concerns.
"To deal with this situation, we should be quite familiar with the rules," he said. "What's more important, we should be transparent in business management to show them that we are a trustworthy partner."
Tan Yanming, senior consultant with Detecon International GmbH, said because of the characteristics of the telecommunication industry, each country has some concern over the equipment providers.
"Yet just going public cannot solve the problem of so-called security concerns," said Tan. "For instance, ZTE is a listed company, yet it is also faced with security charges."
Tian Ying, a telecom industry analyst with Gartner, said that the US market is more closed compared with the EU market, and so far Chinese telecom companies such as ZTE and Huawei haven't built up a complete telecom service network in the market.
"Because of big differences in the telecom industry environment, core technologies and after-sales services, the US market is not a place where they can gain immediate success," she added.