Strong Foothold

For the company, India is the second biggest market for its cell
phones. It supplies cell phones to Reliance, which sells it under the brand name
Reliance Classic and Spice Telecom.

He Shiyou, president, handset division, and senior VP of ZTE (Zhong
Xin Telecommunication Equipment) says the company plans to produce 30 mn
handsets this year and hopes to ship over 10 mn phones to India. In 2006, the
company produced about 15 mn handsets and shipped about 6 mn to India.

Expanding Horizon

"Our Gurgoan facility, which facilitates repair and maintenance, is
already undertaking handset assembly on a limited scale. Looking at the market
conditions, we might put up our manufacturing unit in India," Shiyou says.
ZTE is already in talks with various state governments.

"The major purpose is to meet the increase in orders from
the local market and deliver handsets quickly. Another point is to look at cost
benefits in manufacturing handsets compared to China," says Shiyou.

The company also looks at India as its future hub for the South
Asian markets. To start with, ZTE looks at pushing its low-cost handsets to the
Indian market and, depending upon demand, the company is likely to decide on the
high-end handsets.

The NGN Scene

On its next generation networks (NGN), the company is a bit aggressive. It
is aiming to address the NGN market in India, which the Chinese telecom major
believes is worth $600 mn. The company is in talks with BSNL, VSNL, MTNL, and
Airtel for providing the NGN platform.

Wang Xiang, general product manager, Wired Network Product, ZTE,
says there are over 60 mn fixed subscribers in India, which translates to a
market size worth around $600 mn. "Some of the operators in India are in
transition to upgrade their networks. We are trial testing for them. We have
changed the VSNL platform to next generation networks. Others are in the
process," he adds.

The company is also bidding for the Reliance tender for NGN. ZTE
has over 500 next generation network implementations in over forty countries and
is currently looking at India, Brazil, and Russia for market expansion. "As
a trial, we are implementing our next generation network products for one
million fixed lines in India," says Xiang. For ZTE, the NGN group
contributes over 20% of revenues. "We have filed over 900 patents from this
division, which is growing at 30% annually," adds Xiang.

"We have two families of products to address this market.
First is access network and the second is call network. In the access network,
we have the MSG series of products and in the call networks we have the SS1B
series. We are not manufacturing our next generation networks in the India
R&D center, which works on the service networking space," he adds. The
company competes with Alcatel-Lucent and Huwaei in the NGN equipment space.

Other Products

Meanwhile, the company is in talks with several Indian operators to sell its
IPTV solutions in India. Sharing this information, ZTE's VP for IPTV product
line, Wu Ziliang, reveals that the company is in talks with BSNL. ZTE is also
scouting for partners in India to undertake research and development in
broadband and IPTV products, and is already in an advanced stage of discussion
with a private Indian telecom equipment maker.

Without giving much information, Xu Ming, president, broadband
products, says, "We are in discussion with an Indian telecom equipment
manufacturer to develop ADSL (asymmetric digital subscriber line is a form of
DSL, a data communications technology that enables faster data transmission over
copper telephone line) products and to undertake R&D."

The company has shipped over 3 mn lines of ADSL equipment to
India including 2 mn for BSNL's rural network last year, and expects to double
this in 2007. "We have an over 7.9% market share globally in ADSL equipment
market and expect to reach 14% in 2007," Ming adds.

The company has posted a revenue of $550 mn in 2006 from the
worldwide sale of its ADSL equipment and has set a target of $700 mn in 2007.

Srinivas R

The author was hosted in China

vadmail@cybermedia.co.in