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Moving Forward Steadily, Striving for Greater Success in the Indian Market

Release Date:2009-05-18  Author:Zhao Lili  Click:

Ten Years of Hard Work Leads to Great Achievements
The year 2009 marks the 10th anniversary of ZTE's presence in India. To know more about the company's track record in the Indian market, the reporter interviewed Mr. Huang Dabin, CEO of ZTE India, at his office in Mumbai.

Mr. Huang first introduced the overall state of telecommunications in India. The Indian telecom market is basically open to full competition; there are many state-owned and private telecom operators and almost all private operators are financed by international capital. Last year, India granted new GSM licenses and radio frequencies to five new operators, and the traditional CDMA operators such as Reliance and TATA also received their GSM licenses. All this gives rise to an exponential growth of the whole GSM market.

In 2007, the Indian telecom industry entered a stage of rapid development. By the end of 2007, its growth rate of mobile subscribers had reached or surpassed that of China. From the second half of 2008, the monthly increase for mobile subscribers has exceeded 10 million; and the overall increase for mobile subscribers in 2008 reached over 100 million. At present, the number of India's mobile subscribers amounts to approximately 350 million. It is expected that India will have a mobile penetration rate of nearly 70% by the end of 2010.

Due to the great potential in the Indian market, all major global suppliers have chosen India as their key strategic market. But at the same time, owing to the intense competition and low tariff rates, operators make all efforts to minimize their costs, resulting in a relatively large price pressure in the Indian market. Mr. Huang described such market as a "low-price but high-end" market, that is to say, although their networks are built and operated at low price, the operators still insist on stringent technical and quality requirements and attach high importance to the network test, acceptance, and engineering execution. It is a low-price but high-quality market rather than a low-price and low-quality market. Therefore, it is a big challenge to all suppliers including us.

Regarding the rapid growth of subscriber base and market scale, Mr. Huang presented development trends of the Indian telecom market in the next few years: the massive investments in GSM will lead to significant increase in GSM subscriber base; the Indian government will issue 3G licenses this year, and 3G will become another focus in India's growing market; as the investments in CDMA continue to shrink, the future CDMA network will focus on EV-DO data rather than voice service offerings; similar to China, India tends to have a decline in the number of fixed-line voice subscribers; both fixed-line and wireless broadband combined with varieties of value-added services are expected to enter a high-speed development stage.

After giving a detailed introduction and analysis of the network patterns and trends in the Indian telecom market, Mr. Huang talked about the development of ZTE India, a wholly owned subsidiary of ZTE Corporation. 

According to Mr. Huang, the development of ZTE India is basically divided into three phases. "In 1999 when we began to set foot in the Indian market, we had only 4 employees without establishing our own representative office. In 2003, following our winning of DWDM project from BSNL, the Indian state-owned fixed-line operator, ZTE achieved a rapid breakthrough in development in the Indian market. Since 2005, ZTE India has entered the stage of large-scale development with contracts signed one after another with TATA, Reliance and other Indian private operators, which further enhances our position in the Indian market. From the perspective of market share and scale, we begin to enter a high-speed development stage," said Mr. Huang. The above three phases may serve as the milestones of ZTE's development in the Indian telecom market. With its sales increasing year by year from 300 million U.S. dollars in 2006 to over 600 million U.S. dollars in 2007, and to approximately 1 billion U.S. dollars in 2008, ZTE is gradually boosting its strength in India.

Good Engineering Execution Capability Helps Market Exploration
With the robust development of telecom networks around the world, operators pose higher requirements on the project delivery and engineering execution capability of equipment suppliers. Their requirements for the engineering execution are almost harsh. Relying on years of experience in mobile network construction in India and around the world, ZTE has done well in engineering execution. In this respect, Mr. Huang gave us a typical case.

According to Mr. Huang, ZTE's cooperation with Sistema, a Russia's big conglomerate, is a successful case in the Indian market. Sistema is a new player in the Indian telecom sector and also a Multinational Telecom Operator (MTO) that has a great strategic significance to ZTE. In the cooperation with Sistema in a CDMA project, ZTE won 80% share of the project and withstood enormous engineering pressure brought by the large-scale network deployment. The success in the project is attributed not only to the efforts made by relevant ZTE internal departments, in particular the excellent planning, organization and coordination provided by the Director's Office, but also to the excellence of the engineering execution.

"We did very well in engineering execution and this is also an important reason why we win 80% of the whole project," said Mr. Huang firmly. "We have earned favorable acclaim from Sistema in all aspects from engineering progress, equipment delivery, project management and engineering quality to personnel quality and product performance. At present, the entire project has been completely implemented, and put into commercial use in some states of India since March 2009. Among all equipment vendors, ZTE has won the highest praise from customers for its engineering quality."

As ZTE has always been devoted to providing customers with the most appropriate technologies, high-quality products as well as good engineering execution capability, we made successive breakthroughs in cooperation with a number of large operators including MTOs. In 2003, we won a DWDM project from BSNL, which is a significant milestone for ZTE's presence in India, and in the same year we also made a market breakthrough with BSNL in CDMA; in 2005, we made a massive breakthrough in cooperation with TATA in mobile phones and our daily sales hit the highest record in the industry, with amount of 40,000 handsets; at the end of 2005, we made a second massive breakthrough in cooperation with TATA in CDMA; in 2006, we made a market breakthrough with Reliance in CDMA; in 2007, we made successive market breakthroughs with BSNL, Aircel, TTSL and VSNL in NGN, and now our NGN products have captured the largest share of India's local market; in 2008, we made major market breakthroughs with Aircel and TATA in GSM, and with Sistema in CDMA.

Regarding the terminal products, after the high-speed development period, we are now in a stable development. Our annual terminal shipments reached 6 to 7 million units every year in 2007 and 2008, and now our total terminal shipments in India's market are up to 20 million units. Particularly in 2007, ZTE made successive market breakthroughs with leading high-end operators such as Reliance and Vodafone.

With respect to the cooperation with MTOs, ZTE has also obtained outstanding achievements. Mr. Huang said that the Indian market had huge potential to attract a large number of foreign telecom operators to invest in India, such as Vodafone in UK, MAXIS in Malaysia, Sistema in Russia, ET, and Telenor in Norway, which are all major shareholders. In addition, Bahrain Telecom, Japan's DoCoMo, Singapore's SingTel and Telekom Malaysia have all made large investments in India. It can be seen that almost all private operators in the Indian market except the state-owned operators are financed by foreign capital or have large foreign strategic partners. And meanwhile, the local operators in India also gradually begin to invest overseas. For example, ESSAR LOOP is investing in Africa, Bharti is investing in Sri Lanka, and Reliance and BSNL are looking for a breakthrough in overseas investment. "What makes us proud is that ZTE has made breakthroughs with all these MTOs, and 80% of our turnover in the Indian market comes from them," said Mr. Huang confidently.



Leveraging Advantages to Cope with Financial Crisis
Since 2008, the financial crisis has swept the world, and India, as a part of the global economy, is inevitably affected. So, what are the impacts on the development of ZTE in India? The reply of Mr. Huang lets us see the opportunities amid the crisis. He said that the financial crisis has a far-reaching impact on any country, including India. It has an inevitable impact on the telecom sector, an integral part of economy, which is mainly reflected in the following two aspects:

Firstly, there is an impact on the cash flow of operators. Under the financial crisis, it is difficult for operators to get cash support from local or international banks, resulting in the cash flow problem, which is bound to affect the payment methods and investment scale.

Secondly, there is an impact on the newly licensed operators, who had intended to introduce some strategic investment partners after buying the new licenses. But after the financial crisis, the cooperation processes were affected, and as the licenses and frequencies have time limits, the operators can only construct the networks at a trotting speed, which will also affect the equipment suppliers in terms of prices and payment methods. 

However, ZTE, by virtue of its comprehensive advantages, turns challenges into opportunities and copes calmly with the current situation. Its advantages mainly include the three aspects as follows:

 The first advantage is low-cost strategy. ZTE is capable to provide the same quality equipment at a lower price, which is particularly important under the financial crisis.

The second one is the financial support from China. ZTE can obtain financial support from the Chinese government because the Chinese economy has not been seriously affected by the financial crisis and the Chinese government encourages the financial institutions to support high-tech enterprises' efforts to "go out", which can conversely help ZTE's customers make success in the market.

 The last one is technology and customization capability. Since ZTE has maintained high speed growth, it can provide long-term investments in R&D and technology, to make its products keep pace with or even surpass those of other first-class international equipment suppliers technically. 

For the upcoming 3G in the Indian market, Mr. Huang believes that 3G is both an opportunity and a challenge for ZTE. In the recent two years, ZTE has made a breakthrough in the global 3G market, and especially in China, ZTE participated in 3G project tenders of China's three major operators. The deployment of 3G networks in China results in the creation of about 660,000 3G carrier frequency, and ZTE leads among all vendors with about 30% share of the total 3G equipment market. Meanwhile, the world's first SDR-based HSPA+ All-IP commercial network, built by ZTE for Hong Kong's leading mobile operator CSL, was launched. The new network provides download speeds up to 21 Mbps and is considered the world's fastest 3G commercial network. Furthermore, the network has a low TCO solution, paving the way for smooth evolution in the future. These all have proved that ZTE has powerful capabilities in 3G technology, 3G network construction and engineering execution, which will also be given full play in India's future 3G market.


Practicing Localization Strategy for Efficient Management and Operation
ZTE has always believed that real internationalization encompasses both "internationalization" and "localization", of which, localization is one of the key contents of internationalization as ZTE pursues long-term development rather than short-term profits.

 "We are committed to building ZTE India into an Indian company where most of the management officials and employees are Indians. It is one of our long-term strategies. Localization can benefit both our customers and the local government, and contribute to local employment, tax revenues, as well as high-tech enterprise development. And only if we are truly localized, can we survive and develop for a long time," said Mr. Huang.

According to Mr. Huang, ZTE India has higher localization rate, especially the after-sales service department, where 90% employees are Indian and there is also an Indian director. In other departments such as pre-sales and commerce, a local deputy director is assigned for every Chinese director, also for the purpose of developing a localized management team. "In this sense, we have made a great progress in localization for the Indian market, and we have accumulated experiences in management and cultural integration, a certain number of local employees, etc., laying a good foundation for localization," he said.

Especially, the election of D.K. Ghosh, an Indian, as Chairman of ZTE India is an important part of ZTE's localization strategy, he adds.

In the work of localization, ZTE India is still faced with a certain amount of pressure in aspects like knowledge transfer, project management, as well as capability improvement, training, corporate culture acceptance and integration of the local staff. "We have to make unremitting efforts, and indeed, we have been making serious efforts," he said.

At present, ZTE India has about 1,500 employees, including 1,200 local employees, and the localization rate is as high as 80%.


Meeting New Challenges with Full Confidence
The unexpected financial crisis will continue to spread and may expand its impact in 2009, so 2009 is a year of opportunities and challenges for both operators and equipment suppliers. And how does Mr. Huang consider the Indian market? He pointed out that 2009 is very critical for the Indian market.

Firstly, GSM develops rapidly and becomes the biggest market in India; thus, GSM market conditions this year can almost determine the market pattern in the next several years.

Secondly, as for the upcoming issuance of 3G license, when the market is ready to kick off, market entry, customer coverage, the number of customers served, as well as the overall share will have a far-reaching impact on the future.

Thirdly, in the broadband market, both the wired and wireless sectors have entered a high-speed development phase.

Therefore, as a connecting year, 2009 is very important as far as the market is concerned.

Faced with such grim market situation and strong market pressure, Mr. Huang still talked about his strategic thinking with confidence. "This year, the company set a very high development goal for the Indian market, which brings opportunities and challenges to us, and to be honest, the pressure is enormous. But at the same time, we are prepared for such an opportunity," he said.

"For us, we have an in-depth understanding of both the Indian market and the customers, and our team has a considerable scale. If we can give full play to the company's overall advantages including technology, cost and fund, and continuously enhance and improve our project delivery and execution capability, we can turn advantages into victory and achieve our predetermined goal."

Reporter's Note
Upon arrival in India, the reporter got to know that Mr. Huang flies between Delhi and Mumbai almost every week. When asked about the reason, Mr. Huang explained that it is determined by the characteristics of the Indian market. In India, half of the operators are headquartered in Delhi, and the other half are headquartered in Mumbai; by flying between the two cities, he can get closer to the customers and the staff members. According to him, it is the most basic requirement he puts on himself.

When asked about how to keep his body in the best condition since he needs to fly frequently and shoulder enormous work pressure, Mr. Huang replied with a smile: “Indeed, the pressure is huge, but fortunately, I am still young and healthy, and can cope with such pressure.” The reporter learned that since the life conditions are relatively hard in India and there are few means of entertainment, Mr. Huang plays football with the staff members every week as long as he is free, or takes a walk at night, to keep himself in the best spirits and in the best condition.

Finally, Mr. Huang said seriously: “Our real success in India is still a long way, so we must keep on working hard”. His magnetic voice is full of confidence.