China’s ZTE (0763.HK) was the world’s No. 4 smartphone vendor in the third quarter, behind Samsung, Apple and Research In Motion. The company’s entry-level smartphones have helped it to overtake rivals like HTC, Huawei and Nokia, and now ZTE is launching a high-end offering, the ZTE Grand S. The super-thin smartphone was recently awarded the 2013 iF International Design Award, and ZTE says the Android 4.1 LTE phone will be available this quarter in China, and will come to the United States later this year.
While most of the 35 million ZTE smartphones shipped last year stayed in China, the company clearly has its eye on the United States, and says close relationships with U.S. carriers are helping it to gain a foothold. “One big reason why we can be successful in the [United States] is because we are working very closely with carriers to address their needs,” said Lixin Cheng, CEO of ZTE USA.
“Normally our competitors, when they define the product with the carriers, until they launch the product in the [United States], it takes 12 to 18 months. For us, it takes six to eight months,” said Cheng. “And how we can do that is first of all, when we design the product we are working with the carrier. … and also we have set up a lot of investment in our [research and development]environment to simulate the SIM testing environment and also the network environment of our carriers in our lab. So when our engineers are doing the design they can already, early stage, design to the specs and meet those kinds of requirements and also test and verify in those kinds of environments. So that’s why when we come to the carrier’s lab most of the time we can pass it with one time, there is no retesting. And a lot of our phones now also become the benchmark phones in our carriers’ labs.”
U.S. consumers may be less familiar with the ZTE brand because the company does not have a huge marketing budget. Cheng said that ZTE is zealous about controlling cost on everything from advertising to travel; everyone who works for the company flies coach and avoids high-end hotels.
Lower costs help ZTE bring to market handsets that offer some of the same features found in the iPhone or the Galaxy S III, but at a significantly lower price point. ZTE is happy to leave the high end of the market to Apple and Samsung. “We don’t see Apple and Samsung as our competitors,” said Cheng. “They have full respect from us, the two companies, because they are so innovative and have created so much excitement in the smartphone segment. We do believe, the more successful they are, the better off for ZTE.”
ZTE may be riding the smartphone wave that was created by Apple and is now fueled by Samsung, but the company does not see itself as a follower. “We have our own innovative DNA from the very beginning, the foundation of the company,” said Cheng. “We have created so many ‘firsts’ in the industry … now we are not focusing on any competitor; we are focused on our customers, and our consumers, because we always believe if we only focus on the competitor we only can become a follower, but if we focus on our customer and consumer, we can win them and we become the ultimate winner.”
Watch the full interview with Lixin Cheng: