ZTE SWOT and PESTLE Analysis

Strength

1. Extensive customer and dealer network globally: ZTE has consumers, dealers, carriers, businesses and public-sector customers in over 160 countries around the world to enable increased connectivity and productivity; this has built for them a strong distribution network. The global telecommunications and information technology giant, can leverage these connections for business maintenance and expansion when needed. Presence of such extensive network lends the company a competitive advantage over new entrants and increase their margins. The ZTE Group actively pursued global network building and technical evolution and enhanced its global market positions 43.1% of the Group’s overall operating revenue, totalling RMB46.86 billion came from international markets.

2. Strong presence in GSM telecom equipment worldwide: As an aggregate arrangement supplier, ZTE gives an end-to-end GSM/GPRS/EDGE network solution for operators, which includes system equipment, service platform and terminals. ZTE has additionally finished its GSM solutions for 850M, 900M, 1800M, 1900M and EGSM. Besides, different benchmarks and customized services can be produced on ZTE VAS platform, and adaptable O&M techniques are provided for the whole system. ZTE´s GSM network features high integration, stable performance, good compatibility and strong adaptive capabilities. After years of market development, ZTE´s GSM products have been adopted by more than 40 operators located in over 30 countries. With about 50 million lines installed, ZTE ranks itself amongst the leading GSM equipment providers in the world. ZTE´s GSM growth follows major wins in India, Sri Lanka and other markets. In 2017, ZTE in a joint venture with Wind Tre and Open Fibre of Italy, heralded the first 5G pre-commercial network in Europe. It also launched ThingxCloud, a new-generation IOT platform and SBA 5G core network products. The Corporation announced the launch of a full range of 5G pre-commercial application base stations which is a big leap for the industry’s 5G commercialisation process. ZTE pioneered in the application of 5G technologies in 4G setting and came out trumps in launching the commercialised Massive MIMO products. In network architecture, ZTE set up Cloud ServCore, a service-oriented prototype 5G cloud solution, which was successfully deployed over 240 SDN/NFV commercial/experimental bureaus around the world.

3. Robust R&D: ZTE has confidence in innovation and advancement as core values of the organization, hence they invest over 10% of yearly income in R&D. The organization has set up best in class R&D centres in USA, Canada, Sweden, China et cetera, and utilizes more than 30,000 research experts in the advancement of cutting edge technologies including 5G, the Internet of Things, NFV, SDN, Cloud Computing and Big Data. ZTE has filed applications for more than 69,000 patents, with more than 30,000 granted. Since 2010, ZTE has been positioned among the world's Top-3 for patent applications under the Patent Cooperation Treaty (PCT) every year, as indicated by the World Intellectual Property Organization and secured first place in international patent application in 2017. It is also credited with launching RoseFinch7100, the first NB-IoT secure IOT chip developed in China. The XTE Group was also a pivotal member in the research of 5G technologies and standards. As a core participant of IMT-2020, ZTE spear-headed over 30% of its topical research projects and served as the leader of three core research groups: the IEEE group, network technology group and transmission technology group, respectively.

4. Focus on three specialty units: Carrier networks (54%), terminals (29%) and media telecommunication (17%). ZTE's centre items are wireless, exchange, access, optical transmission, and data telecommunications gear; mobile phones; and telecommunications software. It likewise offers products that provide value-added services, for example, video on request and streaming media. ZTE fundamentally offers products under its own particular name but is also an OEM (Original Equipment Manufacturer). ZTE is one of the top five largest cell phone makers in its home market.

Weakness

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Opportunity

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Threat

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Political

">1. Goodwill of Chinese government: The benevolence of the Chinese government has helped ZTE penetrate into the African market. The primary supply of Chinese Government aid to ZTE is via export credit facilities from the Export-Import Bank (China Exim) and the China Development Bank (CDB). These facilities are loans provided by CDB or China Exim to a Chinese exporter’s foreign customers for the purpose of purchasing the Chinese firm’s products, which is repaid either directly to CDB/China Exim (export buyer credit) or indirectly by means of the Chinese exporter (export seller credit). In 2012, ZTE’s loan facility from CDB was increased to $20 billion. The largest single loan of this type was $1.5 billion in 2006 from CDB and China Exim to Ethiopia’s state monopolist network operator Ethio Telecom, which then awarded a large telecom contract to ZTE. However, these credit facilities charge interests below market rates. While export credit is provided by most countries, China provides it on an unparalleled scale, with available credit exceeding the annual revenues of ZTE. Government credit thus constitutes a clear advantage for ZTE in winning contracts. China also helps through the Diplomatic routes with having a high ZTE official in the President delegation.

">2. Ban imposed by US govt. on ZTE phones in the US: The Pentagon has requested retail outlets on US army installations to quit offering Huawei and ZTE telephones. The Department of Defence says utilizing the gadgets could be a security risk. "Huawei and ZTE devices may represent an unsuitable hazard to the office's work force, data and mission," a Pentagon representative said in an announcement to The Wall Street Journal. "In light of this information, it was not reasonable for the office's exchanges to keep offering them. US government authorities have said that China could arrange its producers to make indirect accesses for spying in their gadgets, albeit both Huawei and ZTE have denied the likelihood. Military pioneers are vigilant that Beijing could utilize ZTE and Huawei gadgets to find soldiers' exact coordinates and track their developments. In a Senate declaration in February 2018, six noteworthy US insight heads cautioned that American natives shouldn't use Huawei and ZTE items and services. In January 2017, US officials declared a bill that would prohibit US government organizations from using the two organizations' telephones and hardware.

">3. Trigger of trade wars with Trump’s protectionist policies: The newly deployed US organization started a point by point analysis of US trading relations with rest of the world. Its major focus is to recognize apparently expanding "unfair trade practices" by other nations that debilitate "well-paid american jobs". The heated political debate over fair trade centers around the US' most critical regional trading partners – Mexico and Canada – however large trade balance deficits with major partner nations like China and Germany have likewise experienced harsh criticism. On account of China, the US administration sees endowments and discrimination against US companies as an unfair trade policy. On account of Germany, it criticizes domestic shoppers' frail appetite for US products. The administration has introduced three protectionist trade policy measures as conceivable strategies for rectifying what it sees to be unfair trade, and for building up a "level playing field." The three measures are withdrawal from NAFTA, introduction of a Border Adjustment Tax and Protectionist U.S. Trade Policy with Respect to the Rest of the World. One more factor of contention is the reverse taxation tensions prevailing between US and China which has given birth to a trade war. Both countries have imposed tariffs on imports of certain goods from each other which might impact the business they used to have in respective domestic industries. In context of USA, President Trump has imposed steel and aluminium tariffs and has announced 25% duty on $50 billion to $60 billion in Chinese exports to the US, including aerospace, information and communication and machinery. This factor might also influence the rates and services that the customers get due to sudden and gradual restriction in trade.

Economical

Social

Technological

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Legal

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Environmental

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