With the mobile handset market in freefall in recent months,Chinese telecommunications equipment and network solutions provider ZTE isoffering to remedy the global economic slump after announcing a partnership with thegovernment-backed China Development Bank to extend $16bn worth of credit to itsglobal customers.
ZTE's said its plans were to ramp-up the expansion of itsexisting business as a supplier into virtually every sector of the wireline,wireless, service and mobile handheld markets.
"The Chinese banks have more than two trillion[dollars] of foreign currency reserves. They cannot invest that in the domestic market – it has to goabroad," said Lin Cheng, ZTE's president for Western Europe
In order to channel this, the banks are looking for nationalenterprises with international experience, and according to Cheng, ZTE fits thebill.
Unlike most other Chinese telecom companies, ZTE ispublicly-held and quoted on the Hong Kongstock market. The fastest-expanding sector of its business is the handsetdivision, where year-on-year sales revenues have been growing at around 70%,with more than 50 million handsets shipped last year.
Traditionally it has targeted the low-end segment, with 2Gand 3G devices customised for mobile network operators. However, withestablished vendors like Nokia struggling in the current climate, ZTE said itwas seizing the opportunity to move into the mid- to high-end segments withprice-competitive, customisable offerings.
Lin Cheng surmised that the chief inhibitor to 3G take-offin the Western world was high handset prices, but he added that now, thanks tothe scale of 3G sales in Chinawhere the technology is already well established, "3G handset prices arein free fall", and will soon be on a par with 2G prices.
"This won't make Nokia happy," he said. "But it's a fact."
The $16bn credit line raises the question of whether ZTE maybe trying to buy business, a particularly sensitive subject for the company – a$300m contract with the Filipino government in 2007 was subsequently scrappedfollowing allegations of commissions and kickbacks to high-ranking officials.
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