We've seen it coming for the past 12 months or more. We've talked about it on the Android Headlines Show. Chinese companies are coming for the U.S. and are looking to make a big splash here. Two of those companies, ZTE and Alcatel, both made a lot of noise at CES 2015 about wanting to bring better quality products and wanting to get their name out more in the States. Both companies are growing like gangbusters in China. The U.S. is a big step for these companies, but they are making the leap.
Both ZTE and Alcatel focus on prepaid customers with what they already offer in the U.S. Both companies said at CES that they are gearing up to spend a lot more on advertising in order to get U.S. consumers to a place where they recognize their brands. The biggest hurdle for both of these Chinese OEMs is brand recognition, right now. No one knows who they are. The phone market here is shifting to these lower-cost Chinese manufacturers, especially in the pre-paid and unlocked sectors. Alcatel and ZTE are watching this closely and taking steps to be in the forefront of this growth as it happens. "Most US consumers don't know the Alcatel or ZTE brands, so in addition to product marketing, they'll need to bring compelling brand advertising to create awareness," said Charles Golvin, an analyst at Abelian Research.
Both companies are also focused on increasing the quality of their products and also looking at other areas to grow, like wearables. The quality of devices that they can sell in some Asian markets won't pass muster when compared to some of the devices available here already. ZTE and Alcatel need to establish a strong sense of quality around their smartphones if they want consumers to take notice. The wearable space is a growing area for everyone. No one company has that figured out, so making and selling fitness bands, watches, and other wearable devices is a prime space for both of these companies to expand.
ZTE has been in the handset business for a while, and they made it into the top five worldwide mobile phone vendors in 2012. They have an established base to work from and they know how the process works. "The good thing about ZTE is that it has already secured distribution and significant sales in the US for its relatively inexpensive smartphones," says Avi Greengart from Current Analysis. ZTE just has to figure out how the U.S. market works. Alcatel, on the other hand, is new to smartphones. They just entered the smartphone game in 2013. Their parent company, TCL, is ranked as the sixth-largest handset maker as of the third quarter of last year. ZTE, meanwhile, has slipped to the ninth largest. Even so, both of these top-ten companies are coming for the United States.
ZTE is building their brand through marketing and a push to get developers on board, making apps that will launch on ZTE handsets first. "It's providing a launching pad for startups looking to reach a bigger market and broader distribution," said ZTE USA chief executive Lixin Cheng. He thinks that developers will want to work with ZTE and grow with the company, with both parties leveraging each other's brands. Alcatel is pushing the One Touch smartphone line and is focusing on marketing, getting their name out there. "We're taking brand investment seriously," said Alcatel's president of Americas and Pacific regions, Nicolas Zibell. "Building a brand is expensive." He's right, but that's not stopping Alcatel or ZTE.