For ZTE and more Chinese tech firms, the Promised Land in 2016 may be the United States

More consumer technology companies in China see the recovering US market as a key growth engine as they battle an economic slowdown in their domestic market, industry insiders say. Loctek Visual Technology, a market leader in mounts for tablets and flat-panel TVs, even set up an independent brand in the US last year to reinvigorate ailing sales. It now plans to set up two warehouses in the country and relocate its factory to Vietnam. READ MORE: The latest in gadgets at CES: robots that think, and a HK$1,000 smart mug for your coffee “We’re depending in the US to grow our sales in 2016. We’ll definitely focus on designing and launching more products for that market,” said Loctek sales manager Linda Shen. The company, which is based in Ningbo in Zhejiang province, part of the Yangtze River Delta region, has doubled its investment in this year’s Consumer Electronics Show in Las Vegas to boost its presence among US and other firms. The CES began its four-day run on Wednesday, and Loctek now has two booths totalling 230 square metres. Last year, it only had one. Loctek is one of 1,120 Chinese companies with booths at the world’s largest annual consumer technology trade show, according to Chinese tech news website ifanr.com. Together, they make up over 27 per cent of the 4,119 exhibitors, also double last year’s share. Most of the Chinese firms come from the Pearl River Delta region in South China and the Yangtze River Delta near the country’s affluent East Coast. The nation’s two top manufacturing hubs saw a huge drop in exports last year, and many firms are now gambling on the US to restore parity. READ MORE: Chinese firms spend record US$61 billion on outbound M&As in 2015 focusing on tech, entertainment, financial services and property “The US dollar and US market are going from strength to strength, whereas many other countries, including China, are expecting to see the value of their currencies fall,” said Shen. “We saw zero growth for our original equipment manufacturing business [OEM] in 2015. But we were surprised to see our sales in the US shot up past US$10 million,” she said, adding that she expects US sales to double this year but those in China to stay flat. OEM companies specialise in making equipment or components that are then marketed by their clients and resellers. Global sales of consumer tech products are projected to drop 2 per cent to US$950 billion this year, following an 8 per cent decline in 2015, according to an industry report by the Consumer Technology Association (CTA). One of the reasons why Loctek is shifting its manufacturing base to Vietnam is because the Southeast Asian nation is part of the Trans-Pacific Partnership, a US-backed Pacific Rim trade agreement from which China is excluded. READ MORE: China’s Huawei and ZTE up their game at CES 2016 to rid image as budget smartphone vendors, bid for global domination Another reason is China’s soaring labour costs. Shen said the company can save 50 per cent of its payroll in Vietnam. “Our first factory will open in Ho Chi Minh City in March and span 35,000 square metres,” Shen said. “If all goes well, we will establish a bigger one there in early 2017.” Not only small- and medium-sized manufacturers but also heavy hitters from China are getting in on the action. ZTE, China’s largest-listed telecommunications equipment supplier, also sees the US market as a crucial part of its 2016 expansion strategy, according ZTE USA chairman and chief executive Cheng Lixin. The US now ranks as ZTE’s No. 1 foreign market for smartphones. It sold over 15 million units there last year to make up more than 25 per cent of all its smartphone shipments, Cheng said. Shenzhen-based ZTE has quietly climbed up to become the No. 4 smartphone vendor in the US with a 12 per cent market share after Apple, Samsung and LG, according to the latest data from Strategy Analytics. Part of ZTE’s appeal undoubtedly lies in its lower-priced handsets, but it is now keen to shake off its image as a maker of cheap products and diversify to stake a claim in the top end of the market, it said. Moreover, Cheng said the company’s overall shipments to the US jumped 30 per cent in 2015 and he thinks it can beat that growth margin in 2016. ZTE is now targeting the No. 3 spot in the market, meaning it will need to dislodge South Korea’s LG. Such is the growing confidence of China’s upstart tech companies, it sees this as a realistic goal for 2017. “In the US$200 to US$400 price bracket in the US, our smartphones are the most cost-effective in light of their premium features,” Cheng said. According to ZTE, it is preparing to throw down a bolder challenge to the likes of Samsung and Apple this year with higher-spec phones in the US$400 and above price range.

For ZTE and more Chinese tech firms, the Promised Land in 2016 may be the United States

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Chinese companies’ presence at CES 2016 has doubled this year as more firms target the US market amid China’s economic downturn

.css-jfmysa{display:inline;word-break:break-word;}.css-1ankfgb{cursor:pointer;display:inline;word-break:break-word;}READ MORE: The latest in gadgets at CES: robots that think, and a HK$1,000 smart mug for your coffee

Chinese companies’ presence at CES 2016 has doubled this year as more firms target the US market amid China’s economic downturn

READ MORE: The latest in gadgets at CES: robots that think, and a HK$1,000 smart mug for your coffee