ZTE Signage Reuters

China’s ZTE Looks to the High-End Market to Boost Smartphone Profits

June 9, 2014 - Written By Cory McNutt

In no small part, due to China’s massive customer base, ZTE is actually the fourth largest manufacturer of smartphones in China and ninth in the world, even though their presence and brand name here in the U.S. is rather unknown to the average consumer.  ZTE has always manufactured lower to mid-range devices for their homeland and other emerging nations, but if ZTE’s Executive Vice President Zeng Xuezong has anything to say about that, things will soon change – “We will make more and more premium smartphones.  After our efforts in the past two years, I believe our brand awareness and approval rating from customers could rival those of Apple and Samsung in China.”

With the extreme competition for low-end devices in China – Xiaomi, Huawei, Lenovo, Coolpad, Oppo and more – the profit margins are cut so close that while everybody, including ZTE are selling millions of devices, there is very little profit to be made. ZTE believes it is time to make some money selling higher-end devices not only in China, where many can now afford them, but also in the U.S. – hoping to raise global shipments by one-third next year to become a rival brand to both Samsung and Apple…quite a feat.

Zeng told Reuters that ZTE plans to boost its U.S. marketing budget by 100-percent and they will invest “more and more premium smartphones.”  ZTE began making inroads into the U.S. market with devices such as the Grand S and the Nubia 5, however, U.S. carriers did not seem to bother with the devices, but chose to stay with the Apples, Samsungs, Motorolas and LG models that everybody knows and loves.  Another obstacle that ZTE faces is the U.S. Government – in 2012, both ZTE and Huawei tried to convince lawmakers that they were not trying to spy on the U.S. via their smartphones and telecommunications equipment.  Questions have since died down, but there is still a tinge of doubt among U.S. consumers that ZTE and other Chinese manufacturers must work hard to remove.

As 4G networks are introduced into China, the largest mobile market in the world, the need for 4G devices will increase.  ZTE claims that at least 60-percent of 2015 devices will be 4G ready, as compared to only 40-percent this year – and if ZTE has any hope of becoming a household name in the U.S. then 4G capability is necessary.  Zeng said there is true gap between brand awareness of the Chinese companies and the global brands, and he believes that more marketing is the key.  He expects to raise the U.S. market share to 10-percent by 2017 – up from 6-percent last year. Last year ZTE released a smartphone in collaboration with the Houston Rockets basketball team and plans to develop other market strategies by increasing the U.S. budget by at least 120-percent this year over last year.  Their phone and tablet business account for about 28-percent of overall revenue in 2013 and hopes for it to grow by 20-percent this year.

Please let us know on our Google+ Page if you are familiar with the ZTE brand and if their high-end devices were sold in the U.S. would you consider purchasing one…as always, we would love to hear from you.