SWOT Analysis of ZTE (Zhong Xing Telecommunication Equipment Company Limited)

Zhong Xing Telecommunication Equipment Company Limited(ZTE)

COMPANY BACKGROUND
Zhong Xing Telecommunication Equipment Company Limited was founded in 1985. It is a multinational organization based in China. It is listed on the Shenzhen Stock Exchange and the main board of the Hong Kong Stock Exchange. It is one of the leading providers of high technology telecommunications equipment in China.
ZTE’s branch in Pakistan is situated in the I-8 Sector, Islamabad. The Group is engaged in the design, development, production, distribution and installation of abroad range of advanced telecommunications systems and equipment, including wireless communications systems; wire line switch and access equipment, optical and data communications equipment, handsets and telecommunications software systems and services. It develops and manufactures telecommunication equipments for fixed, mobile, data, optical networks, intelligent networks and next generation networks. The mobile products also include GSM and CDMA mobile phones and fixed wireless terminals.
Over 10% of ZTE revenue annually is dedicated to the R&D aimed at enhancing product quality, reducing cost, achieving higher sales and thus increasing return on investment. Almost half of all ZTE personnel are involved in R&D, and ZTE currently owns around 700 patents, with more than 87% of these being original innovations.
In order to push boundaries even further, ZTE has set up 13 wholly owned R&D centers worldwide and has undertaken research partnerships with electronics giants like Texas Instruments, Motorola and Agere Systems.
ZTE’s respected position as a forward looking global organization within the industry is also reflected by membership of, and participation in, a variety of International Organizations of Standardization. ZTE was the first Chinese individual manufacturer member of 3GP2 (3rd Generation Partnership 2) and has become a sector member of the International Telecommunications Union (ITU).
ZTE is committed to the future of the telecommunications industry, and is aiming to continue to develop and expand its global operations to ensure that partners everywhere will have the most effective solutions both now and in the years to come.
ZTE Corporation of China is one of the world’s leading network solution providers. In 2003 alone, ZTE achieved revenues of RMB 25.19 billion and continues to show year-on-year compound growth of more than 34%. which is a performance unique in this industry in world terms.
ZTE is now China’s largest network solution provider.

STRENGHTS

· ZTE Corporation is the largest listed telecommunications equipment manufacturer and provider in China.
· ZTE Corporation has been listed as an A-Share company on Shenzhen Stock Exchange since 1997.
· In 2004 it was listed in Hong Kong Stock market.
· ZTE is included in the Top 100 Information Technology Companies by leading US business publications, Business Week.
· ZTE is a total solution provider.
· ZTE has many turn-key project experiences.
· It is present globally and serving locally.
· It has a competitive pricing policy.
· ZTE has high credit prestigious brands.
· Their services are in co-operation with 150 operators in over 90 countries around the world.
· ZTE’s global CDMA handset sales volume exceeded 11 million units.
· ZTE’s global DSL deployment has exceeded a capacity of 18 million units.
· ZTE commits over 10% of its annual revenue to R&D every year.
· ZTE has been granted over 1000 international intellectual properties.
· ZTE has the most complete telecommunications product line in the world, covering every sector of the wire line, wireless and terminal markets

· ZTE employs first-class people and provides world-leading training systems and scientific methodologies.
· ZTE provides continuous training, career advancement opportunities and a self-motivated work environment to its employees.

· The corporation has also launched joint laboratory partnerships with:

o Microsoft (China)
o IBM
o Nortel
o Intel
o Accenture
o Alcatel-Lucent
o Cisco Systems
o Texas Instruments

· ZTE’s partnered operators are:

o BSNL
o Etisalat
o Telenor
o Vodafone
o Reliance
o Hutchison
o Telefonica
· It is an active member of over 50 international standardization organizations and ZTE has 4000+ domestic patents and over 350 international patents.
· ZTE’s capacity of wireless network is over 150 million lines.
· It has 14 regional offices and 70+ countries branch office worldwide.
· It is the world’s 3rd largest DSL vendor.
· ZTE has its own university facility based in China. University considers the customer’s demand and provides multilateral training service to its employees. More than 112,000 Chinese people have been trained and more than 40,000 foreigners from 90 countries have been trained. ZTE University has 132 Full-time trainers and 500 Part-time trainers.
· ZTE has a corporate culture of mutual respect and is an excellent service provider.
· ZTE maintains solid partnerships with its customers.
· It has broad product lines and strong technical support systems that can satisfy all kinds of customer needs and adapt to ever changing market demands.
· It has strong R&D capability and wholly owned intellectual innovations and property.
· ZTE was certified ISO 9000 award in 1995. It was the first certification awarded to any telecom industry in China.
· ZTE has quality department and quality management system for each division and it do not compromise on quality issue.
· It gives considerable importance to the process of 6? management. The project 6? has saved up to $200 millions in 2002.
· In 2001-2003 it was awarded the Annual Award of Top 3 of Most Promising Companies by Asian Business Association.

· In 2000-2004 it was awarded the Annual Award of Best Information Disclosure Listed Company by Shenzhen Stock Exchange Hong Kong.
· Mr. Hou Weigui, Chairman, ZTE, was awarded “Top 10 Economic Persons in China’s IT Industry” in 2003 by China Electronic Information Industry Development Institute.
· ZTE won the “Value Talents” Award issued by the Chinese Ministry of Education in 2001.
· It was ranked fourth among the 289 Chinese state-level enterprise technical centers in 2002.
· In 2003 the company was awarded the “Best Employer” title by Chinese IT industry.
· In 2005, ZTE was included in the “Most Respectable Enterprise of China” by Economic Observer Magazine.
· In 2006 ZTE was listed in China’s Top 20 Brands.
· In 2007 ZTE was included in “The Top 10 Most Influential listed Companies in China” for 3 years continuously by China Stock Com. This award has been recognized as a crown award in China’s capital market.

WEAKNESSES:

· It is spending too much revenue on the training of its employees which is a risk because the trained pool sometimes does not seems to be productive for ZTE and chances are there that they may switch to other companies.
· The company is also losing out to competitors on the technology front as its systems are very much prone to the virus attacks.

· Although it is growing very fast but at the same time it is losing its customers as well because the competitors are chasing close behind.

· Although it is investing too much in R&D but its marketing skills are below average.

OPPORTUNITIES:

· It can retain its customers by improving its marketing skills.
· If it designs such software that will make the products less prone to viruses it will help ZTE to hold a leading position in the major technology fields, such as mobile communications, next generation networks, and data communications.
· The company can sustain rapid business expansion underpinned by growing market shares in the GSM, CDMA and handset sectors.
· It can strengthen its ties with domestic mainstream carriers like China Mobile, China Telecom, China Unicom and China Netcom for opportunities in the carrier transition process.
· ZTE has an opportunity for increasing operational transparency and rapid development of the home markets for 3G products, handsets and optical communication systems as it is a total service provider.
· As there is a continued growth of the international market for communication products it can grow by starting its operation in many African countries.
· The Group can strengthen and expedite research and development in order to deliver products of top international standards.
· In the years ahead it can actively solicit high-caliber people on a global basis and develop a pool of management personnel to ensure that human capital is adequate to match its corporate development.

· It can establish a world-wide knowledge-broadcast system via the Internet.
· ZTE can establish a multi-way training system for domestic and overseas customers.
· It can establish a world-leading corporate university in telecom field as it has a university for its employees and of partners.

THREATS:

· Competitors like Huawei, Alcatel and NSN can be a threat because they are the main competitors of ZTE who are competing side by side to ZTE.
· External factors like political instability and economic instability which are affecting the business environments.
· The devaluation of Pakistani currency against US dollar which results in loss for the multinational companies as dollar gets expensive for them.
· The other threat can be the market saturation in terms of business opportunities available in the conventional telecom business.
· Training the workforce and investing on them might be a threat to ZTE because some employees may switch to other companies.
· Investing too much in R&D is also a threat.
· Divulgence of confidential corporate information can be a serious threat to the company because ZTE has many competitive advantages over its competitors.
· ZTE might face problems because of the increase in the taxes.
· New entrants into the market pose serious problems to ZTE with lower costs and good quality products.
· Growing bargaining power of the customers and suppliers.

· Changes in government policies.
· Changing stakeholder needs and tastes.