China's ZTE expects exports to pick up
* Sees export growth accelerating after sluggish 2009
* Targets 70 pct of revenue from foreign sales in five years
* Expects 3G spending in China to be flat this year vs 2009
* Company says was never approached to buy Palm
By Doug Young and Fion Li
SHENZHEN, April 16 (Reuters) - ZTE Corp (0763.HK), China's No.2 telecommunications equipment maker, said it expects overseas sales growth to pick up this year after a sluggish 2009, amid an ongoing export drive as 3G sales remain flat in its home market.
ZTE's (000063.SZ) said revenue jumped 36 percent to 60.3 billion yuan ($8.8 billion) in 2009, fuelled by a 3G spending binge in China. But its exports rose by a more modest 11.3 percent to 29.9 billion yuan, accounting for just under half of its total revenue.
"This year we hope exports will grow faster than last year," Chairman Hou Weigui, one of ZTE's founders, told Reuters on Friday in his first interview with a foreign wire service.
He predicted that faster growth in exports would push foreign sales back above half of ZTE's total this year, after the figure slipped below 50 percent in 2009 as foreign markets pulled back during the global downturn, and China spent more as its companies built 3G networks.
"I think within five years exports should be about 70 percent of our sales," he said. "We hope to have more than 20 percent of our sales in the U.S. and Europe in the next five years."
Last December, China's telecommunications regulator said domestic investment in 3G systems reached $21 billion in 2009. Hou, whose company won about 36 percent of China's 3G contracts, said he expected 3G spending in China to stay roughly the same this year.
He said ZTE expected China Mobile (0941.HK), the nation's largest mobile carrier with more than 500 million subscribers, to keep spending at a robust rate, while the country's two smaller carriers, China Unicom (0762.HK) and China Telecom (0728.HK) could see 3G spending slow.
"I think total market spending will be a little less than last year," he said of the broader China market in 2010.
25 YEARS ON
Hou, still spry at age 68, was one of ZTE's founders when he first came to the then-sleepy backwater of Shenzhen, across the border from Hong Kong, in 1985 not long after the city was declared a special economic zone.
Twenty-five years later, Shenzhen has boomed and ZTE has become one of China's biggest technology success stories, with 60,000 employees and 15 R&D centres, including two in the United States, one in Sweden and one in India.
The company has had the most success exporting to developing markets in Asia, Africa and Eastern Europe, but has made less inroads with major contracts in developed markets like the United States and Europe.
Its cheaper mobile phone handsets, often sold under carriers' own brand names, have made better progress, with 42 million units sold last year to a client roster that includes Vodafone (VOD.L), Verizon (VZ.N) and AT&T (T.N).
ZTE and crosstown rival Huawei Technologies [HWT.UL] have been two of China's biggest technology success stories, using their home market as a base to become major exporters competing with global giants Ericsson (ERICb.ST) and Nokia Siemens Networks [NSN.UL]
Both companies have largely used an organic approach to growth over riskier acquisitions, and Hou said that his company would largely continue that tack.
He said ZTE had never been approached about buying struggling smartphone maker Palm PALM.O, despite reports that speculated ZTE might have been queried after a source at Huawei confirmed that company had been contacted.
Sources have previously said that Palm had hired bankers to explore several options, including a sale of the company. [nLDE63C01S]
"Costs are too high in places like the U.S. and Europe," said Hou, who celebrated ZTE's 25th anniversary this year by sending a congratulatory SMS to all company employees earlier this year. "We have no plans for big acquisitions."
((Editing by Chris Lewis))
((doug.young@thomsonreuters.com; +852 2843-1631; Reuters Messaging: doug.young.reuters.com@reuters.net))
((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: ZTE/EXPORTS Keywords: ZTE/EXPORTS
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