ZTE Corp eyes the Indian Telecom Market, plans to launch self-branded mobile handsets
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ZTE Corporation is one of the world’s leading provider of telecommunications equipment and network solutions including VAS (Value Added Services), based in the Republic of China. ZTE has been undertaking contracts in India, ever since 2001. In July 2002, ZTE Corporation was awarded the contract to construct the country´s national transmission backbone network, supplying DWDM devices to more than 40 states.Currently, ZTE Corporation supplies handsets to a select CDMA and GSM service providers to be bundled along with contract plans.Now, the company is trying to make its presence felt in the Indian Market, particularly the rapidly growing Telecom Industry.
Currently, India is the second largest market for ZTE products after homeland China. ZTE also claims that India is the most strategic market destination for them, outside China. It plans to further recruit more than 500 engineers in 2008. ZTE India has also revealed its Contract Revenue for the year 2007, which apparently has already crossed $800 million.The company now plans to achieve an annual turnover of $1 billion from all its operations in the country, up from the current figure of $750 million.
For this, the Chinese giant plans to introduce a range of low-end mobile phones in the market. These products will be directly marketed, independent of any service provider under ZTE’s own brand name. It now aims to manufacture 50 million handsets in 2008 (up from 30 million in 2007) and supply over 15 million of these to India (as against 10 million last year). There are plans to sell broadband, WiMAX and IPTV solutions too, all of which are emerging markets in themselves. However, the present day handset market is already saturated with a number of international and smaller brands. Brands like Spice, MBM, Haier Intex, Sagem and Fly are clearly over-shadowed by multi-scale brands such as Nokia, Sony Ericsson or Samsung. The kind of success that Apple has had with the iPhone may not necessarily act the same for these smaller companies. It has almost become an instinct these days, that when someone mentions about “mobile handsets”, the names that pop up in the head are Nokia and SE/Samsung. Usually, it is found that most of the lesser known brands’ handsets are found in the market because they are bundled with the plans provided by CDMA service providers a la Reliance and Tata.
Do you know anyone who has ventured out with the thought of buying a mobile handset without thinking about the larger brands? True, competition always benefits the customers. Competition drives brands to release newer and better handsets in the market. However most of the times, the smaller brands only cater to a small segment of consumers. Unlike most other firms which set up units in India to reduce the high manufacturing costs, being from China, where the costs are even lower than India, ZTE has nothing to worry about. The company has fixed its keen eye on DoT’s 3G spectrum auction and is hoping to get the contract for BSNL’s GSM lines expansion for 90-million.
Ruchi adds: Interesting factor to ponder over, is that all the major and minor Telecom players bet on India as the most profitable market, but there is no single Indian company which designs and manufacture handsets. The only exception being Digebee Microsystems which got funded by Clearstone Ventures last year.
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I feel that there is a huge market waiting to happen for the low end phones and electronic devices. Although the lower entry barriers reduce the information divide, they are not so good for the ARPU.