ZTE Corporation

ZTE Corporation is a Chinese manufacturer of telecommunications equipment and provider of network solutions. ZTE Corporation was founded in 1985 in China, the city of Shenzhen, where its headquarters are still located today.

The company employs 62 thousand employees, of which 10 thousand are employed in 107 offices outside China.

ZTE's product range covers almost every sector of the wired and wireless communication, mobile and fixed terminal market. The company has concluded strategic partnership agreements with 47 of the world's 50 largest mobile operators.

ZTE is the only company in the world, five years in a row (from 2010 to 2014) for its patent applications ranked among the top three companies according to the World Intellectual Property Organization (WIPO).

Owners

• 51.8% owned by the Chinese government
• 31.5% - is traded on the Shenzhen Stock Exchange,
• 16.7% - Listed on Hong Kong Stock Exchange.

Performance indicators

2022: Revenue growth of 7.4% to RMB122.95 billion

In 2022, Chinese telecommunications equipment manufacturer ZTE received a training of 122.95 billion yuan (approximately $17.9 billion at the exchange rate as of March 13, 2023). This is 7.4% more compared to the result for 2021. Such data are provided in the financial report published on March 10, 2023.

Net annual profit reached 8.08 billion yuan (about $1.18 billion). Growth compared to 2021 was recorded at 18.6%. It is noted that 2022 marked the beginning of the expansion stage of the company. During the year, ZTE invested approximately 21.6 billion yuan ($3.14 billion) in research and development, which corresponds to 17.6% of revenue. The company continues to carry out digital and intellectual transformation, increase organizational flexibility, elasticity and stability.

In 2022, ZTE's revenue in the carrier network segment amounted to 80.04 billion yuan (approximately $11.65 billion), which is 5.7% more than in 2021. The company ranked second in the world in annual deliveries of 5G base stations, equipment for 5G backbone networks and 200G ports.

ZTE sales in the state and corporate sectors in 2022 reached 14.63 billion yuan ($2.13 billion). This is 11.8% more than the previous year. It is noted that the main ZTE products, such as servers and storage systems, software and hardware distributed databases GoldenDB and cloud systems, were in demand in various industries, including finance and the Internet.

In the consumer market, ZTE's revenue in 2022 amounted to 28.28 billion yuan ($4.12 billion), rising 9.9% year-on-year. The company speaks of success in terms of integrating smartphones, mobile Internet solutions and home information terminals. Various products under the Nubia and Red Magic brands were introduced.^[1]

2020: Revenue growth of 11.8%, to RMB101.5 billion

ZTE ended 2020 with revenue of 101.5 billion yuan ($15.6 billion at the exchange rate as of March 23, 2021), obtained as a result of work for this 12-month period. Compared to 2019, sales from the company increased by 11.8%.

The increase in turnover was registered in all ZTE divisions. Thus, in the division for the production of equipment for telecommunications operators, revenue rose by 11.2%, to 74.02 billion yuan.

In the division offering solutions to government and commercial customers, there was a 23.1 percent increase in turnover - up to 11.27 billion yuan. Another business - consumer products - increased annual revenue by 7.8%, to 16.16 billion yuan.

According to ZTE, the company in 2020 managed to achieve revenue growth in both domestic and foreign markets, which is associated with the active promotion of 5G communication standard communications in China, as well as stable operations in international markets.

In the home market, the company, using the opportunities for the development of 5G and new infrastructure, has achieved great success in 2020 in terms of both market share and revenue growth, ZTE said in a statement. - In the international market, ZTE's gross margin rose 4.9 percentage points to 37.2%, the highest in the last decade, thanks to the company's drive to continually increase its profitability by sticking to healthy corporate activities and exploring high-value-added markets.

In China, ZTE's revenue at the end of 2020 increased by 16.9% compared to a year ago and reached 68.1 billion yuan. In the rest of the countries combined, turnover increased by 2.7% to 33.4 billion yuan. In countries, Europe Oceania, North and South America, sales decreased by 1.3%, to 13.8 billion yuan.

ZTE's net profit in 2020 was 4.26 billion yuan (about $665.2 million), which is 17.3% less than the profit a year earlier.^[2]

Business in Russia

Main article: ZTE in Russia (ZTI-Svyaztekhnologii)

Sales in Russia began in 1991. The ZTE office in Russia has been operating since 2000.

Together with ZTE Corporation (PRC) in 2008 China in "" Sitronics created Ltd. Sitronics-ZTE for the production of telecommunications equipment, communication systems and terminal equipment.

History

2023

Mass recruitment of employees in Kazakhstan and Uzbekistan with knowledge of the Russian language

In early October 2023, it became known that the Chinese manufacturer of telecommunications equipment ZTE is massively recruiting employees in Kazakhstan and Uzbekistan. At the same time, in many cases, good knowledge of written and oral Russian is a mandatory requirement.

According to CNews, ZTE requires dozens of specialists. In particular, we are talking about sales and customer service managers, as well as engineers in planning and optimization of radio networks, installation and installation of base stations, etc. In addition, the company is looking for a lawyer, deputy chief accountant, documentation control manager and warehouse managers. Vacancies are published on behalf of ZTE Kazakhstan LLP in Kazakhstan, ZTE in Belarus (Minsk) and IP ZTE Investment in Uzbekistan.

Job descriptions indicate that the worker will be English. But in many cases, the candidate is required to know the Russian language at the level of conversation, reading and writing. Applicants are promised comfortable working conditions, a decent level of wages, payment for mobile communications and overtime, official registration from the first day and social guarantees (vacation, sick leave, etc.), a working laptop, etc.

In total, between October 1 and October 3, 2023, ZTE published more than 20 job proposals in Kazakhstan and Uzbekistan. The responsibilities are to find partners and customers, receive and send telecommunication equipment, implement engineering projects, sign contracts, certify, build effective communication with warehouse service providers, control over equipment storage, etc. One of the main requirements is also the ability to prioritize and multitask.^[3]

Dismissal of 2,075 employees

In mid-August 2023, it became known that ZTE, one of the largest Chinese manufacturers of telecommunications equipment, was forced to cut thousands of employees due to financial difficulties.

ZTE supplies network products primarily in the interests of Chinese providers and state-supported carriers. Therefore, the company has suffered less from US sanctions compared to its main competitor in the PRC - Huawei Corporation. The topic is no less, due to lack of money, ZTE reduces the number of personnel: between January and June 2023, 2075 employees were laid off. The costs associated with the cuts and restructuring have not been reported. As of June 30, 2023, the company had a staff of 72,736 people.

In the current macroeconomic situation, high level inflations and crisis, ZTE, according to market participants, may face a number of difficulties. One of the problems is that the development of the 5G cellular market is China slowing down. Such networks cover the entire territory of the country, and the number of base stations 5G by the end of the first quarter of 2023 in the PRC reached 2.64 million. Against this background, demand for 5G equipment from Chinese operators is falling, which could seriously hit ZTE's business.

At the same time, revenues from the supply of products to state and corporate customers are reduced. Companies began to reduce the cost of developing their IT infrastructures amid market uncertainties. Given European and U.S. concerns about the use of Chinese technology, ZTE is unlikely to gain a significant stake in the telecommunications market outside of China. All this forces the company to revise its organizational structure and reduce the number of employees.^[4]

2022

Banning the import and sale of equipment in the United States

U.S. Federal Communications Commission banned the import and sale to the country telecommunication of equipment manufactured by Huawei ZTE Hytera and a number of other companies from. PEOPLE'S REPUBLIC OF CHINA This became known on November 26, 2022. More. here

Canada bans Huawei and ZTE 4G- and 5G equipment

On May 19, 2022, Canada announced a ban on equipment for 5G networks manufactured by Chinese companies Huawei Technologies and ZTE in order to protect national security, joining the rest of the countries of the so-called Five Eyes intelligence-sharing network. Read more here.

US court won't extend ZTE probationary period

On March 29, 2022, it became known that the American court did not intend to extend the probationary period of ZTE any longer.

In 2017, ZTE admitted that it supplied telecommunication equipment made from American components DPRK to and, Iran which violated sanctions against these. countries After the proceedings in the case of violation of the sanctions regime, the American court fined the Chinese the company 892 million. And dollars appointed it a probationary period for five years.

The term expired on March 22, 2022, but the company was accused of violating the terms of probation - the former director of research at ZTE and a lecturer at the Georgia Institute of Technology, the indictment alleged, was invited to the United States under a visa program for scientists from China, allegedly to work at the institute. In fact, they worked in the ZTE laboratory in New Jersey.

The violation could have caused the probation period to be extended. However, the court decided that, despite the fact that ZTE should indeed be responsible for these violations, it is impossible to extend the period, since it has already reached its maximum duration - in 2018 it was already extended for providing false information about the punishment of managers involved in deliveries to Iran. The company was completely banned from buying components made in the United States. In exchange for lifting the bans, ZTE agreed to a change of management and an extension of external supervision of the company's work^[5].

2021

US President signs law banning ZTE telecom equipment

On November 11, 2021, US President Joe Biden signed a law that would ban companies such as Huawei and ZTE from obtaining licenses for network equipment in the United States. Read more here.

US authorities will pay telecom operators $2 billion to abandon ZTE equipment

In mid-July 2021 U.S. Federal Communications Commission (FCC) , she decided to reimburse medium and small American telecommunications companies that refused to use network equipment Huawei and ZTE. More. here

2020

ZTE unveils 5G strategy and products

ZTE experts at the GSMA Thrive Eurasia online forum spoke about the prospects for the development of fifth-generation networks and the company's 5G products. Read more here.

Sweden bans Huawei and ZTE equipment in 5G network development

In mid-October 2020 Sweden , it banned the use of telecommunications equipment Huawei and ZTE in the deployment of networks 5G in the country. Thus, Sweden joined other European states that limited the role of Chinese suppliers for security reasons. More. here

Opening of information security lab for industrial 5G Internet in China

On July 31, 2020, it became known that ZTE founded the Laboratory information security for Industrial Internet 5G in Nanjing,. China

In order to study and verify technologies, models for the industrial Internet, this laboratory was included in the list of the first laboratories of the Alliance of Industrial Internet (AII).

The lab will focus on 5G network, MEC technologies and a collaborative production cloud platform, as well as research on the integrated '5G + Industrial Internet Security' architecture. The main task of the division will be to create opportunities for a self-adapting, self-developing and independent security system of the industrial Internet, which will allow building networks on the principle of zero trust (Zero Trust) in contrast to the traditional concept of designing security systems based on 'Trust Boundary' (Trust Boundary).

In addition, the laboratory will also create an industrial 5G Internet security network to facilitate the verification and implementation of security solutions based on service scenarios.

With the help of the 5G Internet Industrial Security Laboratory, ZTE will accelerate innovative research, validation and implementation of technical solutions for industrial Internet in various scenarios, which will serve as an incentive for the development of the security of industrial Internet 5G ^[6]].

Companies using Chinese equipment will lose government contracts in the United States

The administration of US President Donald Trump intends to introduce rules that will prohibit the US government from buying goods or services from any company using the products of five Chinese tech giants - Huawei, Dahua, ZTE, Hikvision and Hytera.

As the Reuters news agency reported in July, this ban could have far-reaching consequences for companies selling goods and services to the US government. Any firm that uses the equipment or services of these Chinese companies will no longer be able to sell them to the US government without obtaining permission from the authorities.

"The danger our country faces from foreign adversaries like China seeking to infiltrate our systems is too great. The Trump administration supports our government in the fight against malicious networks such as Huawei by imposing a ban on federal purchases, "explained Russell Vought, acting director of the US Administration and Budget Office.

The US government contract market has an annual turnover of about $500 billion, and now access to it may be difficult for those companies that use Huawei, Dahua, ZTE, Hikvision or Hytera equipment. For example, Dahua and Hikvision are the world's largest suppliers of components for video surveillance systems, and it may not be so easy to do without their products.

According to the official, the new rules are introduced not only to prohibit government agencies from using products from Huawei, Dahua, ZTE, Hikvision or Hytera, but they are also an attempt to limit the influence of Chinese companies. In other words, American companies are given the choice of doing business with the US government or with Chinese firms.

The new rules will come into force on August 13, but it remains unknown whether they will affect only future contracts, or existing ones.

Lawyer quits board after rape allegation

In early April 2020, it was reported that the well-known Chinese lawyer Bao Yuming left the board of directors ZTE after articles appeared in the online media stating that a rape case had been opened against him. More. here

Scandal with bribery of officials to win tenders for the supply of telecom equipment

In mid-March 2020, it became known that ZTE was convicted of bribing foreign officials to win international tenders for the supply of telecommunications equipment.

Under a 2017 agreement the company entered into with the U.S. Department of Justice, ZTE agreed to implement and maintain an ethics compliance program to assess sanctions violations and export controls. Such measures stem from ZTE pleading guilty to violating U.S. sanctions against Iran and North Korea. However, while ZTE's probation under the 2017 plea agreement has already ended, a new investigation could change the distribution of power. It is not yet known which ZTE transactions and in which countries US federal prosecutors are investigating.

ZTE's code prohibits employees from paying or accepting bribes in China or abroad. However, ZTE has been accused of corrupt activities carried out in more than ten countries, including Algeria, Liberia, Kenya and Zimbabwe. A document published by WikiLeaks in 2010 raises the question of how ZTE won a 2009 contract to install telecommunications equipment for Kenya's National Intelligence Service. ZTE is understood to have been awarded the contract after paying remuneration to senior officials.

In 2016, Norway's state pension fund banned ZTE from participating in an investment program on the grounds of "serious corruption risk." ZTE turned out to be one of 150 companies whose shares cannot be bought back by the Norwegian fund. At the same time, most companies were on the banned list due to the fact that they produce cigarettes or nuclear weapons or use non-ecological energy sources. Only three other companies along with ZTE made the list due to "gross corrupt activities."^[7]

US companies banned from buying Huawei and ZTE equipment for public money

In mid-March 2020, American companies were officially banned from buying Huawei and ZTE equipment with government-provided money, since the products of these Chinese manufacturers were recognized by the authorities as unsafe for the country. Read more here.

2019

Revenue growth 16.7% to 90.74 billion yuan

ZTE ended 2019 with revenue of 90.74 billion yuan ($12.77 billion). The company brought most of this amount - 66.58 billion yuan - to the telecommunications equipment division. Here, the annual revenues of the Chinese vendor rose by 16.7%.

Contracts with government and corporate clients in 2019 brought ZTE revenue of 9.15 billion yuan, which is 0.8% less than a year ago. The consumer product category recorded a 22 percent decline in sales, to 15 billion yuan.

China remains the largest market for ZTE products. There, the company earned 58.22 billion yuan at the end of 2019. This is 7% more compared to 2018. In Asia, excluding the Chinese market, the company's turnover increased by 11% and amounted to 13.18 billion yuan. In Africa, revenue rose 30.2%, to 5.32 billion yuan, and in Europe, North and South America, as well as Oceania, revenue amounted to 14.02 billion yuan, showing a decline of 7.2%.

At the end of 2019, ZTE made a net profit of 5.15 billion Chinese yuan ($725.7 million), while a year earlier the company's net losses were measured at almost 7 billion yuan and were associated with the payment of a fine to the US authorities for violating anti-Iranian trade sanctions.

In its financial statements, ZTE reported an increase in investment in research and development in the field. In 5G 2019, ZTE spent a R&D total of RMB12.55 billion or 13.8% of its revenue on -direction. Compared to 2018, the ratio increased by 1 percentage point.

ZTE noted that in 2019, the company entered into 46 commercial contracts in the field of fifth generation (5G) networks and established partnerships with more than 70 operators around the world.^[8]

$1 billion to replace telecom equipment will be provided by ZTE and Huawei

In mid-December 2019, the US Congress approved a bill according to which small telecommunications operators will be provided with $1 billion to replace equipment purchased from Chinese manufacturers Huawei and ZTE. Read more here.

Opening a cybersecurity lab in Brussels

On July 12, 2019, ZTE Corporation, a provider telecommunication Internet The European of solutions, as well as corporate and consumer technologies for mobile, announced the opening of a cybersecurity laboratory in,. Brussels Belgium

Located in the administrative and political center of the European Union, the European Cybersecurity Laboratory will provide enhanced access to external security checks of ZTE products, services and operational processes, and will promote the company's external security cooperation with stakeholders.

The opening of a laboratory in Brussels is another component of ZTE's initiative to ensure transparency of its activities. So, in May, the company launched two other cybersecurity laboratories - in Nanjing (China) and Rome (Italy).

Four areas are implemented on the basis of the laboratory, including source code verification, document verification, black box testing and testing for protection against unauthorized access. In addition, in the laboratory, ZTE plans to conduct in-depth security research in partnership with industry-leading security organizations.

The opening ceremony was attended by representatives of the European Commission and the European Council, as well as telecom operators, GSMA and other industry associations.

The primary task of ZTE's European Cybersecurity Laboratory is to provide global clients, regulators and other stakeholders with greater transparency through verification and communication. Security for the ICT industry cannot be protected by a single provider or single carrier. ZTE is ready to take an active part in ensuring the safety of the industry along with its customers and all other stakeholders, 'noted Zhong Hong, Director of Security at ZTE '

ZTE strives to provide customers with comprehensive, secure products and services, meeting security requirements for every aspect of the product lifecycle. Given the challenges of information security in the 5G era, the company will continue to adhere to its principle of organizing opportunities for widespread communication with secure connections guaranteed.

Signing of Protocol of Intent with China Mobile Research Institute

On February 27, 2019, ZTE Corporation, an international provider of telecommunications solutions, as well as corporate and consumer technologies for mobile Internet, announced the signing of a protocol of intent for the joint development of the operator-defined latest generation intelligent network RAN (O-RAN) in collaboration with the China Mobile Research Institute.

Under the terms of the protocol of intent, ZTE and the China Mobile Research Institute will conduct joint research and design development of the architecture, interfaces and scenarios for the application of the intelligent network based on O-RAN.

By signing this document, ZTE and the China Mobile Research Institute confirm their intentions to test and verify technical solutions for the large-scale implementation of O-RAN technologies. The signatories also plan to jointly verify the technologies of the latest generation network in various application scenarios, including load balancing based on radio configuration and interlevel optimization of services.

In the status of strategic partners, ZTE and the China Mobile Research Institute will demonstrate the results of the joint development of O-RAN at upcoming exhibitions and conferences, as well as share the accumulated experience with standardization organizations.

On February 27, 2019, the partners presented a joint solution for load balancing on the basis AI using the agreed O-RAN architecture. The demonstrated Radio Fingerprint technology is able to predict the load on the cellular network, ensuring the timeliness and accuracy of its alignment processes, which allows you to improve the quality of customer service.

The Protocol of Intent with ZTE focuses on software and hardware development, verification of experimental solutions and expansion of the capabilities of future networks. The result of this collaboration will be further refinement and optimization of O-RAN technologies, which will provide a solid foundation for simplifying the processes of operational and maintenance of wireless networks. 'Huang Yuhong, Vice President of China Mobile Research Institute '

In collaboration with the China Mobile Research Institute, ZTE will continue to develop advanced AI and machine learning technologies for wireless telecommunications networks, taking an active part in O-RAN research.

2018

Record losses - $1 billion; revenue fell 21.4% to 85.5 billion yuan

In 2018, ZTE received revenue of 85.5 billion yuan ($12.7 billion), a decrease of 21.4% compared to the previous year. Analysts surveyed by Refinitiv Eikon expected the company to sell at 87 billion yuan.

At the end of 2018, ZTE recorded a record loss of 7 billion yuan (about $1 billion). American sanctions affected, due to which the company's activities were almost completely paralyzed for several weeks. The vendor paid a fine of $1 billion, which was taken into account in the financial results of 2018.

Experts expected an average of 6.2 billion yuan in annual cash losses to ZTE, and the Chinese telecommunications equipment manufacturer itself was preparing for losses in the range of 6.2-7.2 billion yuan.

As part of the financial report, the company reported increased investment in 5G technology R&D and cybersecurity-related initiatives to help roll out next-generation mobile networks around the world. By the end of February 2019, ZTE collaborated with 30 telecommunications companies in terms of conducting research and development of 5G technologies. But at the same time, only six contracts were concluded for the supply of 5G equipment. For comparison, competitors - Huawei, Nokia and Ericsson - had 25, 22 and 10 such contracts, respectively.

In 2018, ZTE spent 10.91 billion yuan on R&D activities, which was 12.8% in the company's operating revenue. These investments resulted in the fact that by the end of 2018 ZTE had more than 35 thousand patents issued in different countries of the world, as well as 73 thousand applications for new^[9]

On March 27, 2019, when the financial results were published, ZTE shares were worth HK $21.9 by the close of the exchange, which is approximately the same as the indicator of day ago. In April 2018, when the USA company's business was frozen due to government restrictions, its securities cost only HK $9.56.

Japan ditches ZTE equipment

On December 10, 2018, the main Japanese ministries and armed forces received instructions not to use personal computers, servers and telecommunications equipment manufactured by Huawei Technologies, ZTE and other Chinese companies. Read more here.

Xu Ziyang is the new CEO of ZTE

On July 5, 2018, Xiu Ziyang was appointed CEO of ZTE. The company has updated the top management and board of directors at the request of the American authorities, which have put forward an appropriate condition for lifting the sanctions.

Before taking over ZTE, Xu Ziyang ran the company's German division and was president of product portfolio development at ZTE Telecom Cloud and Core Network. Read more here.

Loss of €700m contract in Italy due to US sanctions

In early July 2018, it became known that ZTE had lost a large contract in Italy due to US sanctions. The Chinese telecommunications equipment maker is still unable to return to normal operation despite the restrictions lifted by the United States.

Italian mobile operator Wind Tre has announced a tender for the supply of mobile equipment worth 600 million euros. ZTE was considered a favourite but a deal was struck with Ericsson as the Chinese company was banned from buying American technology due to US sanctions.

On July 3, 2018, the Bureau of Industry and Security (BIS) under the US Department of Commerce issued ZTE a permit that allowed the company to continue servicing existing networks and equipment, as well as provide technical support for smartphones under contracts concluded before the imposition of sanctions.

The permit was issued for a period until August 1, 2018. It is by this period, according to Bloomberg, citing an informant familiar with the situation, that ZTE will be able to fully fulfill its obligations under the agreement concluded with the American government and return to work as before.

The restrictions on ZTE were lifted too late for the company to get Wind Tre's contract. The Italian operator began working with ZTE in 2016 and was expected to continue. However, Ericsson became the new partner of the cellular company, which, as part of a multi-year agreement, will supply base stations for about 60% of Wind Tre mobile networks in Italy. According to Bloomberg estimates, ZTE's losses from business downtime caused by the lack of the ability to purchase American components and software exceeded $3 billion.

Despite news of the loss of a major contract, ZTE shares rose 2.6% by the time the Shenzhen exchange closed on July 4, 2018. Ericsson quotes, on the contrary, decreased - by more than 1%.^[10]

The office cannot fix the urinal due to the ban on the supply of components from the United States

The continued ban on the supply of ZTE components from the United States does not allow the Chinese company to fix the urinal in one of its offices in Shenzhen. This was reported on June 22, 2018 by The South China Morning Post (SCMP).

The situation became known thanks to a picture published on the Internet, which captures a notification of a pissur malfunction posted in the toilet of the ZTE office. The authenticity of the photo was confirmed to the publication by one of the ZTE employees, who refused to disclose his name due to the private nature of the information.

In the text of the notification, the ZTE administration explains that due to the ban on the export of American components, the Chinese vendor cannot purchase the necessary spare parts for the repair of a plumbing appliance manufactured by the American company American Standard. It is further said that the urinal will be repaired and will work again as soon as the American authorities lift the sanctions imposed on ZTE.

We are not allowed to purchase American components and accessories, - said the source. ZTE did not respond to a request from journalists to comment on the incident.[11]

On June 7, 2018, ZTE officially announced that it had agreed to a record fine and a change in company management in order to lift the ban on the purchase of components from the United States. According to SCMP sources, by June 22, the company had already transferred the agreed amount of $1 billion to the American side and was finalizing an escrow account on which another $400 million would be placed, subject to write-off in case of new violations by ZTE.

Although the Chinese vendor has already begun to fulfill the terms of the agreement with the United States, its future is still in doubt due to the opposition of American senators. On Monday, June 18, the US Senate blocked the Washington administration's agreement with ZTE to lift sanctions in exchange for a fine and a change of leadership.

On Wednesday, June 20, US President Donald Trump met with a group of Senate and House Republicans to discuss the situation around ZTE, but the parties did not reach a compromise.

Raising $10.7 billion in business recovery loans

On June 14, 2018, ZTE announced the attraction of government loans in the amount of $10.7 billion necessary for the company to restore its business after the lifting of US sanctions.

According to the Reuters news agency, the Chinese telecommunications equipment manufacturer will open a credit line at Bank of China worth about 30 billion yuan ($4.69 billion at the exchange rate as of June 14) and will take about $6 billion from the China Development Bank. ZTE did not specify exactly what the loan funds would go to.

The Financial Times writes that a six-week downtime in business could cost ZTE $2 billion - based on revenue in 2017 of $17 billion or $1.4 billion per month. In addition, the company paid a fine of $1 billion in favor of the American authorities and put $400 million into a special bank account, which will be debited in case of violation of the terms of the contract in the future.

Analysts interviewed by the publication believe that ZTE may continue to restructure sales if customers revise their supply channels or American cellular operators purchasing ZTE phones begin to make backup plans due to changes in the timing of the development and production of devices.

On June 13, 2018, trading in ZTE shares resumed after a nearly two-month hiatus. On this day, the company's quotes on the Hong Kong stock exchange collapsed by 41.6%, and the company's market capitalization fell by $3 billion. On June 14, the company's shares continued to fall in price.

In addition, ZTE changed the composition of the board of directors, as demanded by the US authorities. The majority shareholder of the Chinese company ZTE Holdings (30.34% of the shares) named eight new candidates for the board of directors, with a total of 14 members. Five of them represent state-owned companies in China, which are shareholders or investors in ZTE Holdings.^[12]

ZTE chief apologizes for 'catastrophic price' the company paid US

On June 8, 2018, the chairman of the board of directors and the actual head of ZTE, Yin Yimin, apologized for the fact that the company had to pay the United States at least $1 billion to lift restrictions on doing business.

This negative moment reflects challenges in the corporate culture of compliance and governance, "Yin Yiming said in a post apologizing to employees, customers, shareholders and business partners.

According to him, the sanctions brought ZTE huge losses, and the company paid a "catastrophic price" for resolving the conflict. The head also added that the company intends to punish employees and managers, due to the mistakes of which ZTE was in a difficult situation.

As one of the ZTE employees told Reuters, the payment of the fine is the lesser of the troubles for the Chinese telecommunications equipment manufacturer. Real difficulties are still ahead, since the company has lost its credit of confidence in the market, the source said. According to him, staff fear the possible deprivation of bonuses, cuts in salaries and jobs.

Another person working for ZTE told the news agency that the company is holding group meetings among employees, at which he urges to "think deeply" about what happened, to take part in teaching the principles of following corporate policy and compiling reports.

One of the demands made by the American authorities against ZTE was changes in the composition of the board of directors and management. These changes are most likely. will create instability - at least in the short term, Reuters notes.

If many bosses leave at the same time, what will be the process of changing leadership? There will be a big struggle for power, "another ZTE employee believes.

Analyst Edison Lee and Timothy Chau of Jefferies are confident that what happened will give young ZTE specialists a chance to join the leadership team.

We will not be surprised if the central government includes its representatives on the board of directors, since it played an important role in assisting ZTE in concluding a settlement agreement, experts write in a note to clients.

Another employee interviewed by the publication, surnamed Liu, said he was not worried about a possible reduction in staff or the unfortunate situation in which ZTE found itself.

According to Jefferies analysts, another large fine (in 2017, ZTE already transferred $1.2 billion to the American treasury for the supply of American technology to Iran and North Korea bypassing the trade embargo) will become a heavy burden for ZTE, but it will not harm the company, and it does not need to borrow money or sell shares to pay compensation in favor of the US government. By the end of March 2018, ZTE had about 30 billion yuan ($4.7 billion) in its accounts in the form of cash and short-term investments.

Analyst at research firm Canalys Mo Jia says that after the conflict with the United States, ZTE will find it very difficult to maintain its fourth place in smartphone sales in the American market in 2018, as the company's brand has suffered serious damage.

It is noted that the agreement with the US authorities, which will return ZTE to the market, will not come into force until ZTE transfers $1 billion and puts $400 million into the escrow account. It could take several days, Reuters reported, citing an informed source. By June 8, 2018, trading in ZTE shares had not yet resumed. Mobi Development, which is heavily dependent on ZTE, jumped more than 10% after announcing the lifting of sanctions on the Chinese vendor.^[13]

The United States imposed a fine on ZTE and lifts sanctions on the company

On May 7, 2018, the U.S. Commerce Department named the terms of ZTE's lifting of sanctions. The Chinese telecommunications equipment manufacturer has agreed to them and thereby may return to the market.

Under the terms of the deal, ZTE will have to pay $1 billion to the US government and place $400 million in an account from which money can be debited in case of repeated violations by the company. In addition, ZTE pledged to change the composition of the management and board of directors within 30 days.

Another condition of the contract is the preservation in ZTE of a special group that monitors compliance with export requirements and is appointed by the Ministry of Trade for a period of 10 years. Also in the company remains an observer appointed by an American court.

According to US Commerce Secretary Wilbur Ross, this situation will serve as a "strong deterrent" not only for ZTE, but also for "other potential violators." He added that the fine of $1 billion was the largest among those imposed by the US Department of Commerce.

According to The Wall Street Journal, ZTE took quick measures to eliminate violations of the terms of the agreement with the regulator in order to speed up the signing of a new agreement with the authorities. The interlocutors of the publication say that the Chinese company relieved a number of senior managers from their posts, issued written reprimands to them, and also took measures to return bonuses paid to 35 employees.

Meanwhile, senators in the United States intend to present a number of legislative initiatives with the aim of canceling the agreement concluded with ZTE.

I can assure with 100 percent confidence that ZTE is a much more serious threat to national security than steel from Argentina or Europe, Senator Marco Rubio wrote on his Twitter blog.[14]

He previously said that fines and changes to ZTE's leadership would not prevent the company from "spying and stealing."

Total shutdown due to sanctions

On May 9, 2018, ZTE "ceased operations" after it lost the opportunity to purchase components from American partners due to sanctions. Thus, the Chinese manufacturer of telecommunications equipment and mobile devices has become the largest victim of the trade war between Beijing and Washington, the Financial Times (FT) newspaper notes.

As a result of ZTE's entry into the American restrictive list, the company's main activities ceased, ZTE said in a statement made to the Hong Kong Stock Exchange, on which the vendor's shares are located.

At the same time, the company announced the presence of a sufficient stock of funds and intentions to continue to fulfill its "commercial obligations."

Earlier in May 2018, ZTE filed with the Bureau of Industry and Security; part of the US Department of Commerce) a motion to lift sanctions. After submitting the request, the company provided additional information to the authorities. Details on this matter are not reported. The company hopes, if not to lift the ban, then at least change its terms.

With the business suspended, ZTE has closed its online stores on its own website as well as Taobao's marketplace, Reuters reported.

Nikkei reports that some Chinese operators continue to sell ZTE smartphones, but there are very few of them left. Production stopped.

The CEO of the American cellular operator Consumer Cellular, John Marick, said that ZTE was unable to continue supplying phones after the sanctions were imposed, but asked the company to conduct an open inventory due to the fact that ZTE is trying to solve the problem with the export ban.

According to Marik, ZTE did not say anything about whether its phones would be able to continue receiving Android updates, and negotiations between the companies concerned the possibility of providing ZTE with spare parts and services to fulfill the terms of warranty service.

An employee of ZTE, speaking on condition of anonymity, told Reuters that the company's staff continues to work in the same mode, but "does a little." In addition, business trips have been stopped, he added.

Staff at ZTE's headquarters at the South China tech hub in Shenzhen have been reluctant to talk to reporters since the US sanctions were imposed, but some have expressed concern. One worker described the situation as the "biggest challenge" for ZTE since joining the company 10 years ago. Another person working for ZTE expressed hope that the Chinese government would help the company cope with this problem.

The decision on ZTE will lead to increased Balkanization of the IT world and the acceleration of the technology arms race between China and the United States. The main appeal of ZTE for help will be carried out through diplomatic channels, and not from the position of the law, "the lawyer who wished to maintain anonymity told the FT.

According to IDC analyst Kiranjeet Kaur, due to ZTE's heavy reliance on American component suppliers and smartphone sales, it was obvious that the sanctions would hurt the company's business.

The current picture for ZTE looks very gloomy, says Kaur.

In her opinion, smartphone sales have already suffered, and the only hope of the company to revive the business, as usual, is associated with the withdrawal of the ban.

In early May 2018, trade negotiations between the US and Chinese authorities were held in Beijing, but they did not bring results, Bloomberg reports. According to Xinhua news agency, the parties agreed on some points, but there were relatively large disagreements over others.^[15]

Taiwan bans companies from supplying ZTE components

On April 27, 2018, microprocessor maker MediaTek announced it would stop shipping its products to ZTE after Taiwanese authorities banned local businesses from trading with a Chinese manufacturer of telecommunications equipment and mobile devices.

During a conference on the publication of MediaTek's financial statements, CEO Rick Tsai said that the company was forced to suspend shipments of chips for ZTE, as it required the Taiwanese government, which imposed a ban on Washington.

As MediaTek spokesman David Ku clarified to the Nikkei Asian Review, earlier in April 2018, the company received an order from the Bureau of Foreign Trade, which is subordinate to the Taiwanese Ministry of Economy. This document stated that Taiwanese companies should coordinate with the authorities the supply of products and components for ZTE.

MediaTek is preparing the materials needed to apply for renewed cooperation with ZTE and hopes to get approval as soon as possible, Koo said. The Foreign Trade Bureau officially confirmed information about restrictions imposed on business with ZTE, but did not say whether this decision is related to pressure from the United States.

According to analysts at Bernstein Research, orders from ZTE bring MediaTek less than 2% of revenue. At the same time, the Chinese company is more dependent on Taiwan: many ZTE smartphones are equipped with MediaTek processors. ZTE's other semiconductor partner was Qualcomm, but the collaboration was ended after American authorities banned local companies from selling their ZTE components.^[16]

A director at one Taiwanese IT company says the U.S.-China trade war is increasing uncertainty for global companies and their supply channel. If the Celestial Empire retaliates against Apple and other American companies, it is unclear which country will suffer more.

Ban on the purchase of components from American companies

On April 16, 2018, it was announced that the American authorities had banned local companies from selling components to Chinese telecommunications equipment manufacturer ZTE for violating the terms of the agreement with the government.

In March 2017, ZTE agreed to pay almost $900 million in favor of the United States for bypassing sanctions, the company supplied products including American technology to Iran and North Korea. For this violation, the US authorities imposed sanctions on ZTE, the entry into force of which, however, was repeatedly postponed.

According to the Reuters news agency, citing representatives of the US Department of Commerce, ZTE promised to dismiss four high-ranking employees responsible for violating the sanctions regime, as well as to discipline 35 other workers, reducing their bonuses or severely reprimanding them. However, the company fulfilled only the condition with the dismissal of top managers.

ZTE has provided us with information in which it essentially admits that they made false statements. It was a response to a U.S. request for data. We cannot believe that they are telling the truth. In international trade, truth is very important, the US Department of Commerce said.

As a result, the agency banned American companies from supplying components for ZTE equipment for seven years. Most likely, the Chinese vendor will need to pay $300 million for violating the terms of the contract with the United States, since such a clause was spelled out in German. Thus, the amount of the fine increases to $1.2 billion.

However, the total losses may turn out to be much larger, since American companies supply 25-30% of the components used in smartphones, network equipment and other ZTE devices.

In addition, in addition to American companies, cooperation may cease with British ones. According to the Financial Times country's authorities recommended that businesses refrain from using ZTE network equipment, since otherwise this "may lead to a long-term negative effect on security." Great Britain

A letter recommending the end of operation of ZTE equipment to companies and the British State Committee on Television, Radio Broadcasting and Postal Services (OFCOM) was sent by the technical director of the National Cyber ​ ​ Security Center (NCSC) at the UK Government Communications Center (GCHQ) Ian Levy.

Reducing the risk of external interference in the operation of equipment supplied by a particular supplier largely depends on the availability of equipment from other suppliers who are not at the same risk of external interference, he said, adding that ZTE is a Chinese state-owned company, and the new legislation of the PRC allows the state to influence a variety of decisions of individuals and legal entities.

According to the publication, the main suppliers of equipment for British telecommunications operators are Huawei, Ericsson and Nokia, and ZTE's share is significantly less. According to Ian Levy and the NCSC, the deployment of ZTE products on a comparable scale will lead to an unacceptable result for national security. A special unit of GCHQ monitors the operation of Huawei equipment in order to prevent external interference.

The ban imposed on ZTE on the export of American technology from the United States arose amid the aggravation of trade relations between the United States and China. Earlier, US President Donald Trump threatened to impose trade duties against China in the amount of up to $150 billion a year.^[17]

2017

290% profit growth

On February 2, 2018, ZTE announced that at the end of 2017, its net profit increased by more than 290% due to successes in the division for the production of equipment for telecom operators and growth in consumer areas of business.

In 2017, ZTE received a net profit attributable to the owners of ordinary listed shares in the amount of 4.55 billion yuan ($720 million). The company will name the profit in accordance with international financial reporting standards later - as part of the publication of the full annual report. ZTE's annual revenue rose 7.5% to 108.82 billion yuan ($17.3 billion).^[18]

Judging by the published data, the financial health of the company has improved markedly after solving problems in the US market. In 2016, ZTE had to pay the American authorities $892 million for the supply of equipment to Iran and North Korea, bypassing the trade embargo imposed by the United States on these countries.

The company indicated that the financial recovery was facilitated by the investments of telecom operators in the construction of telecommunications networks, the expansion of consumer lines of business, as well as orders from government organizations and corporate clients. All three segments recorded growth in 2017. In addition, ZTE improved cash inflows and improved the effectiveness of sales revenue management, the company noted.

ZTE added that a more detailed analysis of 2017 financial results, with data on individual divisions, will be presented in the final report, which the company will publish on March 15, 2018.

Meanwhile, Jefferies analyst Edison Lee has already called the results released by ZTE impressive, especially in comparison with the performance of its two main competitors - Nokia and Ericsson, which registered a decrease in revenue in the telecommunications equipment market in 2017, reports South China Morning Post.

According to the publication, news of ZTE's return to net profit in 2017 contributed to the growth of its quotations. On February 2, during morning trading on the Hong Kong Stock Exchange, the company's shares rose by 6.5%.^[19]

Forecast of financial indicators

ZTE Corporation in February 2018 released a forecast to increase revenue to 108.82 billion yuan ($17.30 billion) for the annual period ended December 31, 2017, which was made possible by sales growth in the carrier networks and consumer electronics segments . The growth compared to the same indicator of the previous year was 7.49%. Meanwhile, net profit attributable to owners of ordinary listed shares is projected at 4.55 billion yuan ($723.4 million).

In 2017, ZTE recorded revenue growth in the carrier networks, mobile devices, solutions for the government and corporate sectors. Over the past year, the company has managed to optimize the movement of cash and the process of managing sales revenues.

ZTE's net cash flow from operating activities in 2017 is estimated at about 6.78 billion yuan ($1.08 billion), which is 28.88% higher than the previous year. Excluding deductions imposed by the US authorities, the net cash flow from the company's operating activities is estimated at 12.44 billion yuan ($1.98 billion), which corresponds to an increase of 136.58% compared to the previous year.

Plans to build a plant for the production of telecom equipment in Belarus

The Chinese company ZTE plans to build a plant for the production of telecommunications equipment in Belarus, Minister of Communications and Informatization of the Republic Sergei Popkov said in April 2017.

"ZTE plans to build a plant for the production of telecommunications equipment. I cannot name the deadlines, but as soon as the site and the production base are ready, the corporation will come to the implementation of this project, "the^[20]

.

Sergei Popkov said that directions that "may be of interest to the Belarusian market" were discussed with the Chinese. But he again did not disclose the details, specifying that all decisions "in any case will depend on the interests of the company."

ZTE agreed to pay up to $1.2 billion to lift US sanctions

On March 7, 2017, ZTE announced its consent to pay up to $1.2 billion for violating US law prohibiting the sale of American technology to Iran. This statement provoked a 7% rise in quotations of the Chinese telecommunications equipment manufacturer.

Under the terms of the agreement, ZTE will pay a $892 million fine in favor of the US government, and will also be fined another $300 million if the terms of the agreement are violated. We are talking about the largest monetary recovery in the case of export control or sanctions imposed by the US Department of Justice, Bloomberg notes.

In 2016, ZTE came under sanctions due to a violation of the ban on the export of American technology to Iran. Then ZTE lost the opportunity to purchase IT equipment and software for its electronics from American partners. The restrictions lasted for two weeks, and then the US authorities repeatedly postponed the return of sanctions. The company provided all possible assistance in the investigation and warned that the incident would greatly affect the vendor's financial results.

In 2016, ZTE recorded a net loss of 2.36 billion yuan ($342 million) against 3.21 billion yuan in profit a year earlier. At the same time, the company predicts an increase in revenue by 10-20% in January-March 2017.

Analyst Gartner Peter Liu says ZTE has managed to solve a potentially bigger problem for its business at a "relatively reasonable price."

ZTE can now operate cautiously in volatile markets such as Iran, Iraq, North Korea and some African countries, however this will have little impact on the company's entire business as it tries to focus on developed more cost-effective markets.[21]

Creating a Lab with Intel for IoT Research

On March 1, 2017, ZTE Corporation announced the conclusion of an agreement with the corporation Intel on strategic cooperation. According to the joint statement, the parties will establish a laboratory for research and development of future technologies, IoT including experimental testing, evaluation and creation of related technologies to provide integrated market-oriented solutions. Internet of Things

According to Intel's vision, 5G will bring us smarter internet and more flexible and cheaper networking options. We look forward to the endless possibilities created by 50 billion smart devices. Intel and ZTE will work together to create the IoT Lab. Leveraging our wealth of experience and ongoing innovation efforts, we will create a new generation of IoT solutions to drive the development of the IoT application ecosystem and the prosperity of the industry. Rose Schooler, Vice President, Intel Sales Group and Intel CEO, Global IoT Solutions Sales

The Internet of Things is not only an important component of the Made in China 2025 plan and the Internet + strategy, but also an important path to promoting industrial innovation and revitalizing the Chinese economy. As a leader in innovation, ZTE continues to invest in research and development to maintain competitiveness. In addition, ZTE is actively studying business models and focuses on creating two key support systems - the IoT ecosystem platform and the capital platform. I am very pleased with the progress made by Intel and ZTE in R&D for the Internet of Things and the creation of the IoT Innovation Lab. I hope the two sides will continue to work together on advances in terminals, networks and IoE PaaS. We will promote the creation of an applied IoT ecosystem and drive the prosperity of the IoT industry by strengthening industrial partnerships, eliminating information storage, and achieving a massive industrial impact. Chen Jie, ZTE CIO

2016

Losses due to fine in favor of the United States

On March 23, 2017, ZTE published its annual financial statement. The Chinese telecoms equipment maker suffered major losses due to a fine paid to the United States.

At the end of 2016, ZTE's revenue amounted to 101.2 billion yuan ($14.7 billion), which is 1% more than in 2015. Net losses reached 2.36 billion yuan ($342.7 million). If not for the fine, the company made a profit of 3.83 billion yuan ($556 million), which would have surpassed the 2015 figure by 19.2%.

On March 7, 2017, ZTE announced its agreement to pay the US government $892 million (in case of violation of the agreement, the amount of the fine will increase by $300 million) to resolve the conflict over the sale of equipment using American technology to Iran and North Korea, bypassing the trade embargo imposed by the United States on these countries.

On March 22, ZTE formally pleaded guilty to three counts: conspiracy to export U.S.-made goods to Iran without a U.S. government license, obstruction of justice and making false statements.

The ZTE report said that in 2016, the Carriers Networks division responsible for the development and sale of solutions for telecom operators amounted to 58.9 billion yuan ($8.6 billion), which is 2.9% higher than a year ago.

The volume of consumer business increased by 3%, reaching 33.4 billion yuan ($4.8 billion). Deliveries of products to corporate and government customers brought the company 8.9 billion yuan ($1.3 billion) in revenue, which is 15.2% less on an annualized basis.

Most of ZTE's revenue comes from the Chinese market, where the company earned 58.6 billion yuan ($8.5 billion) in 2016. In Europe, Oceania, the Americas, annual revenue decreased by 11.5% to 22.4 billion yuan ($3.2 billion).^[22]

Completion of testing of key phase-1 5G technologies

During the tests, the corporation ZTE led the verification process of key high and low frequency technologies 5G and passed all tests for the main technologies of the radio interface, including high-frequency communication channels, multi-user sharing (MUSA), new waveforms and mass multi-channel input - multi-channel output (MIMO) technology. ZTE verified its unique tagging technologies, which once again demonstrated the company's tremendous experience in the field of research and development (R&D), as well as its competence in the field. 5G

Chinese 5G trials are the first 5G trials in the world to be planned and regulated by the government, coordinated by the PRC Ministry of Industry and Informatization and implemented by the Chinese IMT-2020 Promotion Group (5G). The tests are divided into two phases: R&D technology tests from 2016 to 2018 and R&D equipment tests from 2018 to 2020. R&D technology tests can be further divided into three stages: verification of key technologies, verification of technical solutions and verification of systems. China's 5G trials include comprehensive research and demonstration of key 5G technologies and contribute to standardizing competitive solutions in order to accelerate the industrialization process and achieve the goals of commercial use of 5G by 2020.

The use of high-frequency communication channels is one of the key technologies in the 5G format. ZTE is the first supplier to successfully test high frequency signals for both indoor and outdoor coverage scenarios, and is the first supplier to conduct 5G field high frequency tests and Beamforming technology. During the tests, the high-frequency ZTE prototype demonstrated its effectiveness in various indoor and outdoor scenarios within line of sight (LOS) and outside the line of sight, with the peak speed for one user reaching 1 gigabit per second. This prototype also supports automatic beam capture and ray tracking, as well as adaptive beam switching depending on channel quality, which confirms ZTE's leading position in the field of high-frequency prototype technology in this industry.

ZTE has met all the key requirements of testing radio interface technologies. With the introduction of short spreading codes into the end-to-end field, ZTE's MUSA technology is the industry's only multi-access solution that enables high-load data transfer, which is critical for future high-performance Internet of Things (IoT) 5G scenarios. The results of the tests demonstrated that, compared to the fourth generation LTE ( Long Term Evolution) standard, MUSA supports overloads of up to 300% in uplink tests and at the same time achieves high and stable performance indicators. With regard to new waveforms, the FB Orthogonal Frequency Division Multiplexing (FB-OFDM) technology fully utilizes scattered narrowband frequency resources to meet the needs of different types of services, reduces time domain and frequency domain synchronization requirements, and allows economical access from the terminal. The FB-OFDM interference power loss for adjacent bands is significantly lower than in the case of CP-OFDM.

MassiveMIMO uses innovative pilot beam and adaptive codebook feedback concepts to achieve a level of spectral efficiency four to six times that of traditional macro base stations.

Signal transmission tests 800G

On July 21, 2016, ZTE Corporation announced the results of testing the trunk transmission of the 800G signal over one carrier using 16QAM modulation. The developers set a record for the main transmission of WDM signals 800G PDM-16QAM over Tera Wave fiber-optic communication lines with a length of more than 1.2 thousand km.

The experiment was carried out at the maximum, as of July 2016, declared for ETDM (electric time division multiplexing) 16QAM signals modulation rate.

Trial history

In 2013, ZTE carried out signal transmission at a speed of 400 Gbps over a distance of more than 5 thousand km. via 25 configurable optical I/O multiplexer (ROADM) nodes without electrical regeneration. In 2014, ZTE received 20 DWDM channels, over which polarization division multiplexing-quadrature phase shift keying (PDM-QPSK) signals were transmitted at 400 Gbit/s on a single carrier, and transmitted data over a distance of 3600 km over a standard single-mode fiber with an increase in spectral efficiency to 4 bit/s/Hz.

In 2015, the ZTE US Optical Lab, located in the United States, in collaboration with OFS America, organized the transmission of the PDM-QPSK signal at a speed of 400 Gbps per carrier for a distance of more than 10 thousand km - a record for a transmission speed of 400 Gbps.

In January 2016, together with T-Mobile Austria, one of Austria's leading telecom operators, ZTE tested hybrid 10G/100G/400G data transmission based on existing networks, as a result of which it was demonstrated that optical transport networks (OTN) 400G became available for complex applications in long-distance communication.

Resumption of trading in shares on the Shenzhen Stock Exchange

On April 7, 2016, trading in ZTE shares on the Shenzhen Stock Exchange resumed a month after the suspension caused by a statement by the US authorities to impose sanctions on ZTE.^[23]

In March 2016, the US Department of Commerce announced the imposition of trade sanctions on ZTE due to the fact that the company violated the ban on the supply of IT goods with American-origin technologies to Iran and some other countries.

As a result of negotiations with the American authorities, ZTE managed to delay the imposition of sanctions until the end of June 2016. The company continues to actively cooperate with the government, hoping to avoid a ban.

The company still cannot fully assess the legal responsibility or potential impact on revenues and financial situation as part of this investigation, says Zhao Xianming, Chairman of the Board of Directors and CEO of ZTE. - The investigation is ongoing and could lead to criminal and civil penalties under American law.

Zhao Xiangming is the new head of the company

In early April 2016, ZTE announced the resignation of Shi Lirong as CEO and president of the company after six years in charge. The change of chapter could be linked to US sanctions imposed on the Chinese telecoms equipment maker.

The place of Shi Liron was taken by the technical director of ZTE Zhao Xianming (Zhao Xianming). He was appointed the new chairman of the board of directors instead of the 75-year-old founder of the company, Hou Weigui.

2015

Revenue overhaul due to US sanctions

On April 6, 2016, ZTE published the final financial statement, which revised the company's revenues due to US sanctions.

In 2015, ZTE's revenue amounted to 100.19 billion yuan (about $15.45 billion), which is 23% higher than a year ago. Net profit during this time rose 22% to 3.21 billion yuan ($490 million), operating profit jumped 431% to 320 million yuan ($48.8 million), while preliminary statements released in January 2016 included profit indicators of 3.8 and 1 billion yuan, respectively.

According to a statement ZTE made to the Shenzhen Stock Exchange, where the company's shares are traded, the revised earnings data is due to the revaluation of future contract cash flows as a result of U.S. export restrictions.

Scientific developments and patents

According to 2015 data, ZTE invests 10% of income in research projects. The company has 19 own research centers in France, Sweden, Canada and China, as well as 6 design centers (ID design centers) in India, Shanghai and Hong Kong.

In 2015, more than 26,000 employees (approximately 37.5% of the total number of employees of the company) were employed in the field of research and development of ZTE. The development of ZTE was facilitated by the accumulation of high-quality patents:

• According to the World Intellectual Property Organization (WIPO), ZTE ranks third in the world ranking in terms of the number of accumulated patents that meet the requirements of the International Patent Cooperation Treaty (PCT).
• ZTE has applied for more than 60,000 patents worldwide, 17,000 of which have already been approved.
• For the 5th year in a row, ZTE is among the top three companies in terms of the number of patents accumulated, according to WIPO.
• More than 90% of ZTE-registered patents were derived from proprietary inventions.
• ZTE has applied for more than 12,000 global patents for, smartphones including 1,000 camera patents, more than 300 for a voice control system, and more than 200 security patents.
• ZTE dropped its application to register more than 3,200 trademarks about the world and registered more than 1,500.

New Business Strategy

On July 13, 2015, ZTE spoke about the main areas of the company's work for the coming years. In addition, a major share buyback program was announced, after which the quotes of the Chinese manufacturer of mobile devices and telecommunications equipment jumped by the largest amount in the last seven years.

According to ZTE, the company intends to increase investments in technology research in the field:

• 5G networks,
• cloud computing,
• Big Data
• SDN (software-configurable networks) and
• NFV (Network Function Virtualization).

The size of investments in these decisions is not specified.

Shortly before the announcement of the new operating strategy, ZTE entered into contracts with mobile operators China Mobile and Softbank regarding the supply of pre5G solutions. This communication standard provides data transfer at speeds over 1 Gb/s thanks to the combination of LTE and 802.11ad.

ZTE plans to focus on SDN and NFV technologies to help mobile operators expand their network infrastructures and make them more flexible.

The ZTE division responsible for corporate and government contracts will pay increased attention to vertical industries such as transport engineering, power, financial services, Internet economics, etc.

Another area of ​ ​ ZTE's activity will be its proprietary Smart City 2.0 smart city concept. By mid-2015, it was already deployed in more than 110 cities around the world, helping residents receive various kinds of public services, including those related to medicine and education.^[24]

In the mobile device market, ZTE will focus on smartphones, tablets and wearable electronics, created taking into account user preferences and supplemented by a lot of useful software.

Meanwhile, on July 14, 2015, ZTE announced its intention to redeem shares worth about 1 billion yuan ($161 million) in China. After this statement, the company's securities on the Hong Kong stock exchange rose by 37%, which has not happened since 2008.^[25]

2014:94% profit growth

On 19 January 2015, ZTE released its 2014 financial results. Thanks to strong demand for smartphones and equipment for LTE networks, the Chinese company's profit jumped 94.2%.^[26]

At the end of 2014, ZTE's net profit amounted to 2.64 billion yuan ($424 million) against 1.35 billion yuan ($217 million) a year earlier. Revenue growth turned out to be less significant - by 8%, to 81.2 billion yuan ($13 billion). Those polled by Thomson Reuters had forecast sales and profit for ZTE at 84.12 and 2.82 billion yuan, respectively.^[27]

It also follows from the ZTE report that the operating loss of 104 million yuan ($16.7 million) received in 2013 was replaced by an operating profit of 1.5 billion yuan ($241 million) in 2014.

LTE business helps ZTE double profits

By December 31, 2014, the total value of ZTE's assets reached 105.9 billion yuan ($16.9 billion), an increase of 5.8% over the year. The cost of equity is estimated at 24.85 billion yuan ($4 billion), which is 10.3% higher than the end of 2013.

One of the main catalysts for the financial rise of ZTE was the telecommunications market, especially the home market. In China, the company and its main competitor Huawei received 25% of orders in a tender of $3.2 billion for the supply of LTE equipment to the local operator China Mobile. In addition, in the status of a leading partner, ZTE cooperates with other major cellular compatriots such as China Telecom and China Unicom.

Another factor contributing to the growth of ZTE's annual profit was smartphones. The vendor did not name the number of devices sold, but according to TrendForce analysts, in 2014 the Chinese company released about 36.1 million smart phones globally. In 2015, ZTE expects to release approximately 60 million smartphones, while reducing the range to two or three of the most significant devices.

ZTE intends to emphasize the international arena, and for this the Chinese manufacturer changed its logo and revised its marketing policy, focusing on increasing the recognition of its brand outside the Celestial Empire.

2011

Optical Network Device Supplies

As of the first quarter of 2011 ZTE , it delivered 93 million passive optical network (xPON) devices, including 47 million broadband ports, in various countries around the world, including in,, Russia,, China,,, Great Britain Italy Holland Romania Argentina, Lithuania,, Sweden Hong Kong, Malaysia, Thailand, Saudi Arabia, Indonesia and. India

Huawei files legal challenge against ZTE

Huawei filed lawsuits in Germany, France and Hungary in April 2011 against ZTE Corporation (ZTE) for infringement of patent and trademark rights. The lawsuits are filed on the grounds that ZTE violated the rights to a number of Huawei patents related to data cards and LTE technologies. Also, according to Huawei, ZTE illegally used the registered Huawei trademark on some of its terminal products.

Huawei Legal Director Song Liuping explained: "Huawei was forced to launch these actions in order to protect our innovations and registered intellectual property in Europe. Our goal is to curb the illegal use of Huawei's intellectual property. We would like to reach an agreement with ZTE, but at the same time achieve the legal use of our technologies. "

Those lawsuits came after ZTE failed to respond to warning letters demanding an end to illegal acts on intellectual property. Huawei has also reportedly repeatedly invited ZTE to negotiate a cross-patent license, but those efforts have also been unsuccessful. Since Huawei did not receive any response or comment from ZTE regarding the cessation of illegal actions, the company had no choice but to use legal means to protect its legitimate interests, the company explains.

It is noted that in 2010 Huawei spent $222 million on patent licenses to obtain legal rights to use patents and technologies of other leading companies in the industry. Huawei also invests a significant portion of its annual Huawei in research and development. R&D costs in 2010 alone amounted to 16.556 billion Chinese yuan ($2.5 billion).

"Intellectual property is Huawei's most valuable asset. Since we are responsible to our customers and shareholders, we consider it necessary to protect these assets by any legal means around the world. Wherever the violation occurs, we will do everything necessary to guarantee the use of Huawei's intellectual property by any company based on recognized international laws and practices, "Song Liuping emphasized.

2004: Going public in Hong Kong

Since December 2004, the company has been listed on the Hong Kong Stock Exchange. The turnover at the end of the year amounted to $4.1 billion.

1998: First large-scale order outside China

• ZTE received the first large-scale order from a Chinese telecom company outside the country for $95 million in Pakestan.

• The first ZTE R&D center in the USA has been opened, developing CDMA2000 1x software and technologies

1997: Listing of Shenzhen Stock Exchange

In 1997, the company was listed on the Shenzhen Stock Exchange.

Notes