ZTE aims to sharpen focus on US enterprise market

Embattled firm is still under fire in Washington over alleged sale of banned technology to Iran and ties with Chinese military, but aims to grow

PUBLISHED : Tuesday, 12 February, 2013, 12:00am
UPDATED : Tuesday, 12 February, 2013, 5:30am

ZTE plans to refocus sales of telecommunications network products in the United States to the country's enterprise market, as the Chinese company remains under scrutiny by Washington over alleged security issues.

Shenzhen-based ZTE, the world's fifth-largest supplier of telecommunications equipment, expects to accomplish that expansion over the next few years after initially growing its new business segment across the Asia-Pacific region, South America and Africa.

"We have very aggressive targets," Xu Ming, the senior vice-president at ZTE's nascent enterprise and government solutions business, told the South China Morning Post. "We're hopeful that enterprise and government solutions will make up one-third of ZTE's business in the next three to five years."

We're hopeful that enterprise and government solutions will make up one-third of ZTE's business in the next three to five years

Xu said this business segment offered a larger opportunity worldwide, compared with supplying equipment to telecommunications network operators. ZTE's targeted enterprise sectors include energy, utilities, education, healthcare, and small- and medium-sized businesses.

Research firm Gartner last month forecast global spending on information technology by enterprises and governments to advance 4.2 per cent this year to US$3.7 trillion, up from US$3.6 trillion last year.

"After developing this business in our domestic market over the past 10 years, we decided last year to grow overseas," Xu said. More than half of the firm's enterprise and government sales last year were from overseas customers, he said. But ZTE warned of up to a 2.9 billion yuan (HK$3.57 billion) net loss for its financial results last year.

Huawei Technologies, the world's No 2 telecommunications equipment supplier, also started to sell into the enterprise market last year. Unlike ZTE, Huawei has actively marketed to US companies. ZTE's US subsidiary has focused on selling smartphones, media tablets and internet-access devices like modems in the world's biggest telecommunications market.

ZTE spokesman David Dai Shu said smartphones are the firm's top priority in the US, and where most of its US$1 billion revenue there last year came from. "It's difficult for ZTE to sell our network solutions to the US network operator market," Dai said. "The situation is different when providing solutions for the enterprise market."

In October, a US congressional investigation report found ZTE and Huawei to be national security threats allegedly because their infrastructure products could be used by the Chinese military for cyber-attacks.

ZTE was in hot water in July when a US subsidiary unit was investigated for allegedly selling a surveillance system to Iran.