James: ZTE, and China’s boom


Thirty years ago, Shenzhen, in southern China’s Guangdong province, was a fishing village of around 300,000. It is now a sprawling megalopolis with a towering and endless skyline, and an estimated population of 14 million.

Its growth has spiralled since the country’s economic liberalisation in the 1980s under reformist leader Deng Xiaoping, which saw it designated the country’s first special economic zone, and is mirrored in all China’s major urban centres.

Shenzen is home to Chinese telecoms equipment vendor ZTE, which hosted Mobile News for five days earlier this month around its Shenzen headquarters and its Shanghai handset design centre – and for a further five in Beijing as Icelandic volcano Eyjafjallajökull spewed its guts and shut airspace across Europe.

ZTE saw revenue jump 36 per cent last year (to $8.8bn) and net profit surge 48 per cent (to $360m). Shenzen is also home to ZTE’s country rival Huawei. At pace, the pair are taking 3G and 4G infrastructure business from incumbent vendors Ericsson and Nokia Siemens Networks – which both posted declines in sales of nine per cent in their first quarters of 2010.

ZTE plans to close ground on this western duopoly in next three years. It is also running an ambitious project in tandem to break the top five ranked handset manufacturers in the same period, in the first instance at least by selling to specific segments under network brands in developed markets and in volume under its own name in emerging markets.

Shenzen lies just across the water from Hong Kong, another stop-off on ZTE’s press tour and home to Telstra-owned network operator Hong Kong CSL.

CSL appointed ZTE in March 2008 to tear out its entire network 2G/3G infrastructure, which had been installed and managed by Nokia Siemens Networks, to replace it with an SDR (software definable radio) based HSPA+ network; launched commercially under the Next G brand in March 2009, delivering 21Mbps download speeds across Hong Kong, and charging punters for speed, not data consumption.

Hong Kong spectrum is technology neutral and ZTE’s SDR platform allows CSL to run any transmission technology in any frequency band without swapping out hardware.

CSL’s was the second commercial HSPA+ network to launch, following parent Telstra’s debut in Australia some weeks earlier, and the first to run off an all-IP core – a data network optimised for voice, rather than a voice network optimised for data, as CSL chief Tarek Robbiati puts it.

And CSL will launch LTE proper this year, with a fair wind. In its Hong Kong technology centre, after some false starts because of engineers fiddling with the controls, CSL and ZTE oversaw a demo of download speeds close to 80Mbps. Lightning fast, zero latency, seriously good. And 80 visiting operators that have passed through its nerve centre for a glimpse of the future in the past six months must surely have left town similarly impressed.

In interview later, Mobile News asked Robbiati to review and rank the customer experience offered by UK mobile operators in comparison. Robbiati refused to take names, but did not hesitate to kick ass. “Shocking,” he summed up, describing the feel-good factor that comes for an executive of a technically-advanced operator with visiting these shores.

ZTE was a terrific host. Its showcase in China was persuasive, its network partner in Hong Kong was fairly smitten and its growth strategy looks well-rounded. And its homeland is awesomely potent as sponsor and exporter of smart technology.

China will overtake Japan as the second largest economic power this year.

The downtime in Beijing, as we waited for the skies over Europe to clear of volcanic ash and fill again with aircraft, allowed for a spot of site-seeing, and for ZTE to explain China’s rich, remote and introverted history – a neat counterpoint to China’s new industrial empire-building, on show to journalists visiting ZTE the five days previous.