ZTE Chief Operating Officer Xie Junshi: Strengthening ZTE’s resilience to achieve rapid

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“Facing the next strategy period, ZTE will achieve leap-forward development with the principle of ‘three strategies, two curves’. ‘Three strategies’ here lie in  innovation, globalization and end-to-end product solutions. ‘Two curves’ mean that on one hand, ZTE sticks to solidifying its position, keeping the steady growth of operators’ business in the first curve while on the other hand, ZTE will create its new horizon to achieve the rapid growth of government and enterprise business, terminals business and new business in the second curve.

Meanwhile, ZTE will be committed to becoming a highly resilient operating organization to adapt to the challenge of the uncertainty in the new normal, and adhere to a green and low-carbon strategy to achieve the company’s long-term sustainable development.

According to Mr. Xie, ZTE aims to be included in the Fortune Global 500 list in next two to three years by maintaining a robust annual growth rate.

Here comes the original speech as follows:

Dear friends, good morning, good afternoon, and good evening. It’s a pleasure for me to share with you ZTE’s role, objective, and strategy in the era of digital economy. Five years has passed since our last Global Analyst Conference. During this period, we have witnessed great changes in the global environment and in ZTE. Today, ZTE has defined its new vision and mission, and is forging ahead towards the goal of creating greater value despite various challenges. Through the Global Analyst Conference, we hope you will know more about ZTE and feel free to voice your opinions.

Committed to becoming “the driver of digital economy” in the new era

As you may know, ZTE was founded in 1985, with the aspiration of bringing everyone affordable phone calls and thus realizing convenient communication. From the very beginning, ZTE has been committed to telecommunications and independent innovation.

For 36 years, we have been staying true to our original aspiration, and striving to connect “individuals, families, enterprises, and society” with ceaseless efforts and innovation. We are determined to fulfill our vision and mission, that is, “to enable connectivity and trust everywhere,” and “to connect the world with continuous innovation for a better future.”

Now, ZTE has grown from CT to ICT field. We have developed core digital technology, such as chipsets, databases, and operating systems; we provide complete cloud-network-end solutions; and we use intelligent and efficient tools for network deployment, O&M, and management. In addition, we are committed to sustainable development with green technology. With our digital solutions, we aim to be “a driver of digital economy”, providing efficient and reliable digital infrastructure.

Solidifying its position with innovative initiatives, towards the Fortune Global 500

To fulfill this role, we have formulated the specific development strategy, to which the year 2021 is really crucial. In the strategy period from 2020 to 2021, our goal is to maintain robust growth of the business in the 1st curve by further participating in China’s 5G construction and improving the market position of our key products overseas. Meanwhile, we hope to promote the business development in the 2nd curve through strengthening investment in the enterprise business, adjusting the structure of consumer business, and expanding new business. In the next strategy period, we resolve to maintain high-quality growth with a solid foundation in the 1st curve, and more importantly, create new horizons in the 2nd curve to achieve rapid growth.

Our objective for the next period is to strengthen ZTE’s resilience to agilely address risks and seize opportunities in new business, and sustain annual growth to be ranked among the world’s top 500 companies.

Now, let’s take a look at our performance in the current strategy period. Against the backdrop of the pandemic and ever-changing global environment, we have basically achieved our goal of high-quality growth by promoting technological innovation and strengthening healthy and efficient operations. In 2020, our operator, enterprise, and consumer business witnessed noticeable growth, with the revenue increasing by 11.8% and the operating cash flow increasing by 37.4%.

In 2021, we have maintained high-quality growth and increased profitability. As shown in the financial report of the first half year, our revenue has scaled RMB53 billion with a year-on-year growth of 12.4%, and the revenue has grown by over 10% in both Chinese and overseas markets. Through continuous cost restructuring, our gross profit margin has increased to 36.1%, an increase of 2.7%. The net operating cash flow in the first half year also reached a record high. In operator business, we have maintained steady growth with a larger market share of 5G wireless, core network, and bearer network products in China. Our revenue of enterprise business grew by 17.7% in H1, with Chinese enterprise business increasing by over 50% and server and storage products doubled. The revenue from consumer business hit RMB12.3 billion, with an increase of 66.6%. Specifically, the revenue from home terminals and smartphones witnessed an increase of over 90% and 40%, respectively.

Sticking to the principle of “three directions, two curves” to achieve the sustainable development

We are embracing the next strategy period in 2022, which is essential to ZTE’s future development.

In that period, we will focus on innovation, globalization, and end-to-end solutions to pursue progress while ensuring stability in the 1st curve, and seek rapid enhancement in the 2nd curve, so as to achieve sustainable development.

First, innovations. ZTE has been a company dedicated to independent innovations since its foundation. Our core competence lies in innovative technology that can create value for customers. For instance, we launched the ZXJ10 in the 1990s, which was China’s first large-capacity digital SPC switching system; we presented the SDR base station in 2009; and with the Pre5G Massive MIMO solutions, we won the Best Mobile Technology Breakthrough award at MWC 2016 and the CTO’s Choice 2016 award. Concentrating on “connectivity” and “computing power”, we will strengthen the development of such core technologies as chipsets, algorithm, and architecture, and further the exploration and R&D of key products and technologies.

Regarding connectivity, we aim to speed up the R&D of 5G-advanced technology to create the greatest value. Also, we have started the research on 6G, and will strive to accelerate the application of key technologies, such as reconfigurable intelligent surface (RIS). In addition, we are putting in more efforts to enhance optical network performance. For example, we have significantly increased the transmission capacity of all-optical networks. As for computing power, we will enhance the R&D of the next-generation cloud infrastructure, and further integrate AI and big data into PaaS and SaaS. What’s more, we attach great importance to green design for sustainable development. To be specific, we adopt new materials, components, and design to reduce power consumption of equipment, and use such technologies as AI to improve power efficiency during network operations via intelligent control.

ZTE will increase investment and provide strong support for innovations. We have established the “Future Lab” for the exploration and R&D of prospective technologies. We have also partnered with top universities and research institutes, thus establishing long-term cooperation mechanisms for innovations. At present, we have launched over 800 projects jointly with our partners in the fields of CT and advanced manufacturing. Through all these efforts, we expect to promote technological innovation and create more value with partners from different industries.

Second, further globalization. The company is committed to globalization based on our commitment to compliance, cybersecurity, and business continuity management. In operator business, namely the 1st curve, we aim to maintain solid growth in global markets.

In Chinese markets, we are devoted to growing from a main supplier to a top-tier supplier, which requires a larger market share of our key products. More importantly, we should stimulate customers’ demands instead of meeting requirements only, making a leap from a follower to a leader in the market. To achieve this goal, we will make further improvement in product innovation, agile R&D, and…

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