Telecom Products Manufacturing In China Adds To ZTE's Bottom Line

Chinese telecom equipment maker ZTE has published its semi-annual financial results for the first half of 2011, stating that its operating revenue increased by 21.55% year-on-year to CNY37.345 billion.

Due to the influences of its market expansion strategy, product structure change, and delay of export tax rebate, ZTE's gross margin declined during the reporting period. The company's net profit also decreased by 12.42% year-on-year to CNY768 million.

In the first half of 2011, ZTE continued its expansion and its revenue from international business reached CNY20.81 billion, accounting for 55.7% of its total operating revenue. Meanwhile, its revenue from Chinese business reached CNY16.535, despite the delay of investments by the three major Chinese telecom operators.

In regards to product, ZTE believed that facing the current market situation, it is necessary to realize coordination among scale, profit, and customer layout, and adopt specific strategies for various products. In the wireless communication sector, the company aims to establish wider quality customer relationships in the starting stage of the fourth-generation construction; for wired communication, ZTE said it needs to rely on the new opportunities from the PTN, IP-RAN, and xPON industries to change the market structure; and for the smart terminal sector, the company needs to rapidly establish its star products and brands to expand market share. Therefore, the company increased targeted investments on major production lines and made strategic choices during the first half of 2011.

ZTE reported that its sales of terminal products increased significantly during the reporting period. Its revenue from mobile phone products accounted for 30.03% of its overall operating revenue. The company sold 60 million terminal products, including 35 million mobile phones and five million smartphones. Meanwhile, its star products such as Blade and Skate contributed to improve customers' recognition of the company.

In addition, ZTE made strategic investments in fields like telecom services, cloud computing, and the Internet of things. It also set up an internal venture capital fund to seek new products and market growth points.

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