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ZTE looks to expand mobile phone business overseas

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A ZTE Corp booth. [File photo]

ZTE Corp, China's second-largest telecom equipment maker, aims to expand sales at its mobile phone business to 100 billion yuan ($16 billion) by 2015, accounting for more than 50 percent of the company's total annual revenue, according to the executive vice-president.

The target underscores ZTE's ambition to grab a bigger share of the global mobile phone market and catch up with international competitors such as Apple Inc and Samsung Electronics Co Ltd.

In 2011, ZTE was the world's fifth-largest mobile phone manufacturer and sold 56.9 million handsets, according to the research company Gartner Inc.

Speaking on the sidelines of the Mobile World Congress on Monday, He Shiyou, executive vice-president of ZTE, said the company's mobile phone business achieved a global revenue growth rate of more than 50 percent in 2011. The US market led the growth with a doubling of both smartphone sales and shipments last year, He said.

The consumer-device business, including handsets, contributed about 33 percent of ZTE's total revenue in 2011, and the figure is likely to climb to more than 40 percent this year, He added.

"The next two to three years are critical for ZTE to catch up (with other leading cell phone makers such as Apple and Samsung)," said He.

Unlike the traditional telecom-equipment industry, which has experienced relatively stable development in recent years, the global mobile-phone industry is changing quickly. "The rapid industry growth will create chances for ZTE to catch up with our rivals, but if we are not on the right track, we will quickly lose the opportunity," He added.

ZTE aims to sell at least 30 million smartphones this year, rising from 12 million in 2011. The company will make greater efforts to develop and launch mid- to high-end smartphones in the near future, as it looks to lift its profit margin by aggressively increasing its sales.

He said ZTE will step up the pace of development and launching of new models - a strategy to help the company closely follow strong rivals. "The rule is that when our competitors launch new smartphones, ZTE will introduce a model in the same rank within the following three months."

ZTE has just joined the quad-core (processors that use four cores) race by launching the ZTE Era at the World Mobile Congress. The 4.3-inch handset runs on the Android 4.0 operating system and has the Nvidia Tegra 3 quad-core processor.

Roberta Cozza, principal research analyst at Gartner, said ZTE and Huawei Technologies Co were the fastest-growing vendors in the fourth quarter of 2011, behind only Apple. "These vendors (ZTE and Huawei) expanded their market reach and kept on improving the user experience of their Android devices," she said.

ZTE's move also reflects its determination to mine rich sources of revenue, and to turn the company into a multibusiness giant in both the telecom and mobile phone markets.

Since 2010, the Chinese makers of telecom gear, Huawei and ZTE, have both actively explored new business fields, including mobile phones and the enterprise-business sector, in the hope of avoiding the negative impact of a stagnant telecom-equipment market.

"The European debt crisis and the economic downturn has affected the telecom-gear industry, especially in the US and European markets. Except for some Chinese telecom-gear companies, most global network equipment manufacturers have seen their business going down," said a research note from the research company Frost & Sullivan Inc.