Saturday, September 25, 2010

ZTE Hou Weigui: 5-10 years with the international giants on an equal footing

Hou Weigui did not think, in 1985, his venture south from Xi'an and now this is ZTE Corporation (the "ZTE"), chairman of the board, then the processing industry has become China's telecommunications manufacturing industry's largest listed company, today ZTE enough eyebrows around the world.

Recently, ZTE chairman Hou Weigui accepted the "First Financial" channel and "First Financial Daily," a joint interview. ZTE is the first financial "innovation of China Road" series of reports in the fifth station.

The international market, "28 Law"

In 1985, when the time ZTE has just established, the domestic telecommunications market is the domination of foreign communications companies. Since 2000, the international telecommunications industry experienced an unprecedented downturn, many business downturn, research and development are eroded. "It is in this opportunity, we have catching up." Hou Weigui said.

On the ZTE, the domestic market is far from its target, Hou Weigui view, the international company's future performance will be the development of major growth. In 2005, ZTE foreign markets for 35.1% of total revenue.

But the choice of the foreign markets, ZTE, and not the average development effort. According to Hou Weigui, ZTE invest in foreign markets and the strategic deployment of resources to meet basically the "28 rule", that is, 80% of the investment in developing countries, 20% in developed countries, the developed countries is still in the investment income on small stage, with the developed countries, the increase in orders, investment in the developed countries will be more and more.

Currently, ZTE overseas markets continued to focus on the Middle East, Southeast Asia, Africa and other developing countries, Europe and the United States and other developed markets is the focus of this year's breakthrough.

Hou Weigui said that because Europe and the United States market, ZTE, or just entering, the traditional supplier relationships with carriers is strong, even come up with a lower price, it is difficult to immediately enter the market; while for developing countries, and the more cost concern, ZTE more obvious cost advantage.

Hou Weigui pointed out that overall, the ZTE in the international market, the average purchase orders lower than Europe and the United States about 10% of large enterprises, as competitive conditions change rapidly, some orders even if the profit is low, because of market strategy considerations must be done .

3G R & D target

Although ZTE now has 4,000 patents, but acknowledged Hou Weigui, ZTE products in the application has no gap with foreign enterprises, but the core patents in a gap still exists.

Appears in the Hou Weigui: "We may also need 5 to 10 years of time trying to accumulate, to seize the opportunity, it is possible in some of the core patents to achieve equal footing with foreign enterprises."

"Ericsson and other foreign companies accounted for more than 90% of the 2G era market, we look inside is more difficult to squeeze. But not the same as 3G, we are all in the same starting point, especially in the domestic standard TD-SCDMA as the standard, So we are definitely better than 2G 3G era with relatively large market share growth. "

According to Hou Weigui, ZTE has three 3G standards to do a long format input and preparation, as many as in 2078, have three years minimum.

But still coming ZTE 3G business to keep cool enough. Hou Weigui that, due to licensing hours, and has the number of licenses and other factors, 3G can bring hundreds of billions of people have imagined, on the one trillion yuan of investment is hard to say. Although 3G can bring significant growth market, but the contribution rate of growth may not be like 56 years ago, you'd think.

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