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ZTE SWOT & PESTLE Analysis

ID : 52421853| Jul 2018| 15 pages

COMPANY PROFILE -ZTE

Business Sector :Telecom and Information technology

Operating Geography :China, Asia, Global

About ZTE :

China’s ZTE Corporation engages in the design, development, production, distribution, and installation of telecom equipment, communication system and information system for various lines of businesses such as government, businesses, carriers etc. The company was founded in 1985 and is headquartered in Shenzhen, Guangdong province. ZTE services ranges from providing wireless, wired line, telecom overall solutions and core services to consultation services to various markets entities such as governments, consumers on Big Data, Cloud Computing in 160 countries across the globe. ZTE Corporation, a limited company incorporated in China, which features on the Shenzhen Stock Exchange and the Hong Kong Stock Exchange, respectively This global leader in telecommunications and information technology, “is committed to a vision of balanced, sustainable development in the social, environmental and economic arenas.” ZTE’s vision statement reads “To become a distinguished global leader in the M-ICT era.” ZTE’s mission statement reads “We will spare no effort in providing cool, green and open ICT products and experiences to the world. For our partners who share in this vision, we will establish a safe, open and collaborative platform to help them achieve their goals.”

ZTE Revenue :


RMB108.82 billion – FY ending 31st Dec 2017. (y-o-y growth 7.49%)
RMB 101.23 billion– FY ending 31st Dec 2016.  

Competitive Analysis of ZTE

SWOT
PESTLE
The SWOT analysis for ZTE is presented below:
Strengths
Weaknesses
1. Extensive customer and dealer network globally
2. Strong presence in GSM telecom equipment worldwide
3. Robust R&D
4. Focus on three specialty units
1. Poor ethical standards
2. High dependency on domestic markets
3. Vulnerability to malware and phishing
Opportunities
Threats
1. Growing market share internationally
2. Expanding IoT efforts
3. Explore emerging economies
4. Growth through partnerships and alliances:

1. Lowering of tariffs under China’s 13th five-year plan
2. Ban levied by the US Government
3. Forbidding sale of ZTE phones across US military bases globally
4. Brand loss due to involvement in bribery & security violations
5. Intense competition and pricing pressures
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of ZTE

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 positionas 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 applicationbase 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

1. Lowering of tariffs under China’s 13th five-year plan: There are various strategic objectives behind lowering of tariffs under China’s 13th five-year plan. Apart from alleviating poverty in the rural and western areas, the Chinese Government is also having long terms plans for upgrading economy through improved efficiency in wide range of industries. But at the same time, there is a great threat to all major telecom players including ZTE Corporation for enabling minimal earning growth and financial performance as they pursue national service and face steep price cuts.

2. Ban levied by the US Government: The US Government banned American firms from selling components to China’s ZTE for seven years in light of violating terms in a sanction violation case. As a result, stocks of related optical equipment makers are sliding. This ban will have great impact on overall survival of ZTE Corporation as 25-30% of the telecom components that ZTE makes are provided by American Companies. This has sent stocks in the sector spiralling lower, taking ZTE Corporation down with it.

3. Forbidding sale of ZTE phones across US military bases globally: The Pentagon has disallowed the sale of Huawei and ZTE phones on US armed force establishments around the globe. The blacklist is based upon the potential security threat the Pentagon attributes in the phones from the China-based organizations may pose. There have a series of crackdowns on the two organizations by the US government, which is suspicious that they could hack into their phones and use them to spy for the Chinese government. US military work force are still allowed to buy ZTE and Huawei phones for singular use from elsewhere, in spite of the fact that the Pentagon is at present picking whether to issue a more broad cautioning about the purchase of phones from the two brands.

4. Brand loss due to involvement in bribery & security violations:ZTE has been involved in various controversies since as early as 2006 in various parts of the world. Recent example would be when the company files discovered by a media company said that ZTE not only bribed foreign representatives but had a full department committed to overseeing bribe payments. It was found that $12.8 billion in bribes were paid in 2005 and 2006 to 29 individuals in the African country Benin to win contracts for mobile phone networks. They have also been involved in such practices to get shortlisted for 5G biddings. Hence, countries like US and Australia have phased out their usage in certain ways and plan to continue doing so.

5. Intense competition and pricing pressures:The woes that ZTE faces lately have boosted the spirits and market projections for companies like Nokia and Ericsson. This is also evident from the positive speculations about these companies in the share market. Ericsson has shown indications of recuperation in a couple of key markets however the company cautions that it has more work to do in order to hit profit improvement targets it has pledged to deliver by 2020. A Reuters survey demonstrates that experts, by and large, anticipate that sales of ZTE will fall 9 percent in the principal quarter, with its principle systems business declining 11 percent. Nokia has said it expects its results to plummet this year, and has estimated a recovery in profits by 2020, encouraging investors spooked last year by the general decline in global network spending and acquisition integration missteps.

SWOT & PESTLE (combined)
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in ZTE Analysis Report

1. https://www.zte.com.cn/global/about/investorrelations
2. https://www.zte.com.cn/global/
3. http://wwwen.zte.com.cn/pub/en/about/corporate_information/

Copyrights and Disclaimer
ZTE SWOT and PESTLE analysis has been conducted by Medha Sharma and reviewed by senior analysts from Barakaat Consulting.

Copyright of ZTE SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.