The Jakarta Post
Chinese cell phone maker ZTE Corporation, in partnership with Lippo Group-affiliated firm PT Internux, known for its mobile broadband Wi-Fi router Bolt, recently launched the country's first 4G smartphone ' the ZTE Blade V3 ' in anticipation of the application of long-term evolution (LTE) technology in the country. During a recent visit to Indonesia, ZTE mobile devices CEO for Asia Pacific and Commonwealth of Independent States (CIS) Jacky Zhang spoke to The Jakarta Post's Khoirul Amin about his company's strategy to tap deeper into the country's growing smartphone market, particularly for 4G devices. Below are excerpts of the interview.
Question: How big is the Indonesian market for ZTE's smartphone business and how much has ZTE has achieved in the country?
Answer: So far, China and the United Sates are our biggest markets, while Indonesia is maybe around the top 20. We ranked fourth in smartphone shipments by the second quarter in the US and number one in the 4G market in China.
However, I think that the country [Indonesia] may be our biggest potential market and I hope that it can be in our top-three markets in the next three years.
In Indonesia, I think we have just started to get into an open market. We work with a lot with operators; hopefully we will get some [smartphone] market share in Indonesia by end of this year.
Our current market share is single digit and we are still working very hard. We are expecting that it will be above 5 percent next year.
We shipped 200,000 smartphones into the country last year and we expect to ship 500,000 this year. We had achieved half of [the year's shipment target] by the first half of this year.
Globally, the shipment of ZTE smartphones reached 44 million last year and this year it should be 60 million units, with 28 million units having been already shipped by end of the first half of this year.
How will you achieve that goal given the tight competition among many Chinese brands, as well as global and local brands in Indonesia?
We have already engaged with a local distributor, which is Trikomsel, to establish a nationwide distribution sales network. So far we have deployed 1,000 outlets and we target having 3,000 outlets nationwide in a year's time.
Second, we will invest more and more resources in branding. All we need to do is to enhance brand awareness as soon as possible. Since we do have a lot of innovative and perfect products, we need to introduce these to the Indonesian people.
Third, we have worked together with our local partners in establishing 18 service centers to provide after-sales services nationwide.
[To stand out], generally we innovate; we will keep innovating. Every year we invest 10 percent of our sales revenue into the [research and development] division. We have established 18 [research and development] centers worldwide, with which we are able to obtain international talent. We have introduced a design team from [carmaker] BMW in Germany for the design ['¦] Second, we have introduced a user interface [UI] team from South Korea that will enhance the user experience when using our handsets. Third, we have introduced a BlackBerry team from Canada. They will all help us do a lot of innovation in the applications and software, including the security of the smartphones ['¦].
[In addition] we are very strong, we are the leading player in 4G. Not only in infrastructure and networks but also in mobile devices, and in the 4G field we have already obtained 13 percent of global intellectual patents, which allows us to quickly bring the latest technology and innovations to the market. So, this is our very unique advantage and basically we have been in the handset business for 16 years. We have already accumulated a lot of research experience in terms of design, research and development, ecosystems, logistics and also sales networks. We have branch offices in more than 100 countries. We have worked together with 160 operators and also many partners for distribution [worldwide].
We expect that our 4G device will be our product hero to boost our sales in Indonesia. We expect we will have no fewer than 100,000 of our 4G devices sold this year in the country.
How does ZTE see market potential for 4G in Indonesia, when the technology has not been launched yet in the country?
The 4G [technology] is still a new thing in the country. I think the majority is 2G and 3G. However, I believe that 4G is coming soon to Indonesia, because Indonesian people need to enjoy higher speeds and better user experiences. So, ZTE is very open and willing to participate to do more in 4G with our 4G advantages.
For example, for this year we target that our 4G smartphone shipments will be 35 million units [worldwide], and I believe in the next three years the smartphone level for 4G will increase very significantly.
[To grab more attention from the Indonesian market] ZTE will focus on device prices of around US$200 to $400, most of which will be 4G devices.
We have a lot of experience [in selling 4G devices] in other countries, but of course in Indonesia, 4G is not fully ready yet. However in Jakarta, since Bolt [ZTE's partner in launching the ZTE Blade V3] has a license, they have already built 3000 BTS [base transceiver stations] to cover all Jakarta areas ['¦] We have a very good position.
Currently our devices can support different frequencies and different modes. One device can support all frequencies [2G, 3G and 4G].
Do you have any specific investment plan in the pipeline to grow your business in Indonesia?
Yes. In the Asia-Pacific region, Indonesia is definitely ranked number one in our strategic markets. We will invest more in Indonesia and the investment should be number one ' the biggest in the region.
We are in the process of preparing to build a smartphone factory located near Soekarno-Hatta International Airport and we expect that the plant will be in operation by the end of this year. Many things have been readied and we are now waiting for approval from regulators.
The factory will manufacture smartphones not only for the Indonesian market, but also for those of Southeast Asia.
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