ZTE to improve branding for consumer push

China telecom equipment maker ZTE is aiming to improve its branding and corporate image by setting up more training centers in emerging markets, shares one senior executive, even as it faces scrutiny over its business practices by foreign regulators.

ZTE's senior vice president Zhang RenJun noted that as the company makes a deeper push into the consumer space with its smartphones and tablets, its efforts to work on its global image will help.

"We used to be a very strong business-to-business (B2B) player, but now we're moving more into business-to-consumer (B2C)," the executive added during an interview. He was in Singapore recently to attend the imbX trade show.

Part of the plan includes setting up more facilities to provide training services, especially in emerging markets, he said. "These are like schools where the public and our employees can learn more about the latest technology, and where they can get more knowledge," he explained, but declined to share details on how many training centers will be built and the timeframe for this.

ZTE currently has 14 training centers in countries such as Indonesia, Pakistan, Myanmar and Russia. Its syllabus covers areas such as MCS (Management Consulting Service), CTS (Competency Transfer Service) and ECS (Evaluation and Certification Service). A certification is awarded after training, he said.

Scrutiny won't derail growth
Zhang also dismissed the threat of scrutiny from overseas governments, saying that it would not derail the company's business plans. He noted that the company is currently the fourth largest mobilephone maker globally in terms of shipment and is on track to hit its target of being in the top three by 2015.

"It's no problem, it won't affect," said Zhang. "We always do business in accordance with local law. Sometimes in some countries it may be individuals or politics involved, [but] as a listed company we do everything legally."

Earlier this month, ZTE along with fellow Chinese telecom equipment maker Huawei Technologies were slapped with a two-year ban from state tenders in Algeria after being found guilty of resorting to bribes for contracts. It is also currently facing a probe by the European Union for unfair trade practices. It has been accused of attaining illegal subsidies from the Chinese government to sell goods below cost to gain market share.

Focusing on smartphones to drive profitability
The senior vice president pointed out that growing smartphone sales will be a key strategy going forward, event as it aims to boost profitability. In its full year results for 2011, revenue for the company grew 23 percent last year to 86.25 billion yuan (US$13.7 billion), but net profit fell nearly 37 percent to 2.06 billion yuan (US$327 million). "Handset margins are going down, that's why we are aiming to focus on selling more smartphones than feature phones," Zhang said.

He said the company aimed to sell at least 30 million units this year--double that of 2011. "The main markets are developed ones like the U.S., Japan and Australia, but there is also growth potential in emerging markets like Indonesia, Thailand and Russia," he added.

Earlier this week in a statement, the company had pledged to increase investments in the United States by 10 percent a year, betting on its smartphone market. This commitment came amid an ongoing investigation by U.S. authorities on whether the company’s possible ties to the Chinese government were a security threat.

The company is also looking out for business opportunities in integrated ICT solutions, especially cloud computing for the government sector. In 2012, ZTE is targeting to achieve US$2 billion in revenue in the segment, up from US$1.38 billion last year.

"The modernization of networks will also be a market opportunity for us," he said, referring to Long Term Evolution (LTE) and 4G services, in terms of both handsets and network services.

Zhang also believed that the current European debt crisis presented an opportunity for ZTE, with companies cautious over spending.

"When they are more cautious, they will look at more competitive products, and that is where we come in," he said.