ZTE In Dire Need Of Rebranding After Surviving US Episode: GD

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Chinese technology giant ZTE is in dire need of rebranding following its troublesome episode in the United States which saw the company escape certain bankruptcy following months of negotiations with the Commerce Department, industry analysts at GlobalData said earlier this week. The Shenzhen-based firm should now be looking to make a number of "structural changes" aimed at preemptively combating any future political pressure that may come from Washington, according to the latest report from the market insight service provider.

ZTE shouldn't just be looking to proactively challenge any criticism aimed at its business but also think about protecting any network operators that may still be willing to carry its devices moving forward, the analysts believe. To that end, a complete rebranding and a possible business split may be the wisest course of action over any given period of time, especially as ZTE is now not only under scrutiny due to its repeated violations of U.S. trade sanctions imposed on North Korea and Iran, in addition to previously breaking the 2017 settlement meant to put an end to that affair, but the latest U.S. episode also saw American politicians renew their skepticism regarding the security of the company's products. ZTE is now once again being labeled as a national security threat that shouldn't be allowed to do business in the U.S. on any significant scale, with its opponents pointing to the fact that its majority owner is a Chinese state company.

Spinning off a separate, rebranded unit and listing it on one of the Western stock markets is hence be something that ZTE should seriously consider in a bid to improve transparency, GlobalData believes, suggesting the firm's high-end "Axon" brand of smartphones may be a good name to attach to that new division. South Korean phone makers Samsung and LG are expected to try to capitalize on ZTE's recent issues and attempt positioning their low-end products as the most secure options in the U.S., as per the same report. ZTE resumed stateside operations earlier this month and is expected to lose billions of dollars due to the Commerce Department's previously imposed denial order that prevented it from acquiring American technologies for nearly three months, effectively crippling the entirety of its business, both in the U.S. and abroad.

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