International business

----Analyzing ZTE’s international business

No. 15844011    John Liu （ox tendon 牛筋）

Introduction

ZTE Corporation is China's largest listed telecommunications manufacturer and wireless solutions provider. Founded in 1985, ZTE Corporation has been listed as an A-Share company on Shenzhen Stock Exchange since 1997. In December 2004, ZTE was successfully listed on the Main Board of The Stock Exchange in Hong Kong, becoming the first Chinese company that held both A shares and H shares. ZTE Corporation is the pioneer of China’s telecommunications equipment manufacturing industry, and a comprehensive provider of telecommunications equipment, mobile terminals and services. With its three product series, i.e. wireless, network and terminal (mobile phone). In the field of wireless products, ZTE is capable of providing total network solutions in CDMA, GSM and PHS products. In China Unicom’s CDMA network construction project, ZTE’s mainstream products were used in 18 provinces. To date, ZTE has been the only Chinese vendor with complete package of independently developed base stations and switching systems with self-owned brands. By the end of 2004, the wireless capacity of ZTE CDMA equipment has exceeded 20 million lines. Mobile phones are the extension of ZTE’s operations. ZTE is the only Chinese mobile phone manufacturer that provides products of the three systems, i.e. GSM, CDMA and PHS by now. ZTE is one of the major high-tech enterprises involved in the China Torch Program and an experimental company for technology innovation. In addition, as the high-tech achievement transfer base for China’s 863 Program, ZTE has undertaken several important projects including 3G, high-performance Ipv6 routing platform and 3Tnet  ZTE invests nearly 10% of its. ZTE has become the definite “Top Wireless Brand” in China.

Operation of International business

Globalization refers to the shifty toward a more integrates and interdependent world economy (note 1). Today, smart marketers of all kinds are taking advantage of  2new opportunities fore connecting with their customers, their marketing partners, and the world around them. ( note 2 ). For maximizing to enlarge communication market and accommodating to challenge of globalization as well as becoming a top of the world brand. utilities of enormous success in domestic market ZTE initiate its new strategy transferring from interior business to international business.

Five major drivers leading international firms to globalize their operations (note 3 )

Political: the target of international business are focused on highly free trade country in which the society is relatively stable and the law is quite perfected.

Technology:: As the international telecom network solutions provider, ZTE provides telecom system equipment, engineering installation, network maintenance, service development, technology support and training for network operators ZTE is capable of providing global customers with diversified integrated telecommunications networking solutions and a wide range of professional services on a 24×7 basis, and has been involved in the market of international telecommunications operation services.

Market 1.actively organize the Road Show in European and North America 2. participate the international bidding. 

Cost & competition: Chinese people low labour force and ZTE’s high technologies are the advantage of market competition.

Due to ZTE’s successful strategies of international business, and accordingly ZTE has become the biggest telecommunications equipment exporter in China.

Since 2003, ZTE GSM equipment has scored historical breakthroughs and its market shares steadily went up at home and abroad. Currently, ZTE’s GSM equipment has successfully entered the market of over 20 countries around the world, and ZTE has ranked itself among the leading GSM equipment providers in the world. ZTE recorded the International contract sales of approximately USD 4,111 million (RMB 34 billion)

 in 2004 In the 3G handset area, ZTE rolled out the smallest and lightest foldable WCDMA handset in the world.

On the basis of its strong CDMA technology and brand, in 2004 ZTE released the first global digital trunking architecture standard – GoTa, which is the first proposed by a Chinese enterprise. ZTE has become the first to achieve the patent authorization of Chinese telecommunications enterprises to other internationally renowned vendors. The GoTa products have entered dozens of countries, including Malaysia, Norway, and Russia. GoTa is expected to become one of the leading technologies that may change the pattern of the international digital trunking market in the future.

In the PHS market, ZTE continued to consolidate its position as China’s largest homegrown PHS system supplier. With a good understanding of the 3G market in China and the world, 2004 saw the arrival of ZTE 3G technologies covering three modes, WCDMA, CDMA2000 and TD-SCDMA. ZTE has become one of the few successful telecommunications equipment vendors in the world that are capable of delivering all these three kinds of 3G technologies.

ZTE’s network products cover data, optical transport, switching, videoconferencing, power supply, and monitoring etc. In the field of data products, ZTE can provide total solutions in narrowband, broadband, wired and wireless products. ZTE’s Softswitch products have been put into commercial applications in the networks of all operators in China and the markets of many countries and regions including Hong Kong SAR, Philippines, Romania, and Pakistan. ZTE has edged itself into the Tier 1 Softswitch equipment vendor in the world. ZTE successfully undertook the ADSL broadband access projects of 16 venues and press centers for the Olympic Games in Athens. ZTE’s data products have won the operators’ favors in developed countries and the recognition of the international telecom industry.

ZTE’s optical transmission products have entered the market of over 20 countries and regions abroad, thanks to the leading high-end optical communication technologies and customized solutions in MAN OADM, large-capacity DWDM and MSTP. ZTE has definitely become a leading international optical transmission equipment provider to the global market.

ZTE provides timely and efficient services for customers home and abroad through domestic and overseas marketing & engineering network.

ZTE offers support for customers through cooperation agency, engineering contract, network optimization and financing service etc.

The difference in management strategy and organizational culture between china and western

What is culture? In the 1870’s the anthropologist Edward Tylor defined cultures “the complex whole which includes knowledge, belief, art, morals, law, custom, and工other capabilities acquired by man as a member of society” (note 4 )

Here I will focus on the major differences between the Chinese and Western cultures about Power distance and “face”

What came up first was the huge difference between social relationships. While the western people tend to keep things informal, aiming for social equality and comfort, the Chinese rely on a more traditional, very hierarchic “pyramid” of relationships. It could be said that the Chinese people are at their most comfortable when they know their social placement and when they can be at the right level of status. The westerners may sometimes have too much ambition and pride to stick on a lower place and try to overrun a higher member of the structure, and therefore we have the good potential of causing a cultural misunderstanding.

  The second thing that came up was the balance between the truth and “harmony”. the Chinese culture has a tendency to avoid open criticism and controversial topics. People have the need to keep their “face” at almost any cost. This is partly true to the westerners also, but not to the same extent. The willingness to attack the higher social levels and open criticism is considered to be almost a virtue. Western people tend to show how they feel about things and demand that the other party responds similarly. 

Although there are enormous differences of organizational culture between China and western, in the trend of the globalization, many Chinese people have worked for multination or come back from abroad. ZTE usually employs these persons for management who are familiar with western organizational culture and modern management, which could shorten the cultural difference between China and western. Therefore, ZTE’s human resource strategy really benefit for the company’s international business. the goal of strategic management in an organization is to deploy and allocate resource in a way that provides it with a competitive advantage.(note 5)

Competitive advantage for the business from TBL or Sustainability Strategy.

Triple Bottom Line that consists of three main component people, profit and planet (note 6) which has deeply impacted on the international business of the enterprises. The strategic-management process is based on the belief that organizations should continually monitor internal and external events and trends so that timely changes can be made as needed. (note7). ZET critically emphasizes the TBL for its international business and maintain its sustainability development.

People : ZTE employs 7,000 people, of whom 70 per cent hold bachelors degrees or above and more than 2,000 have masters or doctors degrees. the people create a tremendous success, those who work in ZET also share in their success 

Profit : It has set up five research and development centers in Shenzhen, Beijing, Nanjing and Shanghai, with two of them located in Shanghai. It has also sponsored a postdoctoral station and a joint digital signal processing laboratory with US-based Texas Instruments. Therefore ZTE has independent intellectual properties to all the core software, hardware circuits, core chips and overall design & integration. Every year ZET invest 10% of the profit in R&D to maintain its high technologies advantage in the international market.

Planet:  since establishing firm, ZTE always pay attention to environmental conservation, from product design, production to project implement, they all meet the criterion of environmental conservation. for the company’s sustainability strategy . ZTE implement a diversity strategy and invest on environmental conservation industry. As China’s water resource is quite lacked and water pollution is serious, ZTE focus on industry of cleaned foul water and manufacturing the equipment of monitoring environmental pollution. Now it has being booming and become a famous brand in the environmental conservation field. Meanwhile it rewarded the “China Environmental Conservation Industry Outstanding Contribution Prize”.

Recommendations to improve the performance of the company in terms of international business.

Now ZTE has entered into the mature period of high-speed development. At this stage, it carry out the new strategy in terms diversity of investment. From the analysis of current investment status, the investments are mainly concentrated on China. It is likely to gallop if through the corrective operation of capital.

First, merging with other company is the best methods for current stage strategy of ZTE’s international business. Particularly merging with the Western company, through the local company’s channel it is able to reduce various obstacle to directly enter European and North America market. Otherwise, it is hardly to get all kind of the approval.

In addition, intensifying direct investment in oversea. ZTE should directly establish the production line in the developing country to lower the costs. Such as in Africa, south east Asia or south America

Bibliography

1 Charles W. L. Hill 2nd edition p 6

2 Philip Kotler Gary Armstrong  Principles of marketing 9th edition p35

3 Sharon Moor  Lecture Note of International business p 33

4 Charles W. L. Hill 2nd edition p88

5 Noe,  Hollenbeck,  Gerhart,  Wright  Human Resource Management 3rd  edition p42

6 Sharon Moor   Lecture Note of Strategic Management  p58

7 Fied R David strategic management 8th  p7