ZTE Wants to Shake Negative Image, Faces Uphill Battle in Rebranding Process

by Matt Klassen on June 11, 2014

No longer satisfied with its traditional quantity over quality approach in the budget mobile market, Chinese telecommunications and mobile giant ZTE has set its sights on the high-end smartphone market, announcing ambitious sales goals and a roadmap towards what it calls “Smart 2.0” products and services. According to Reuters, ZTE is hoping its newfound focus on high-end 4G LTE smartphones will bolster its annual global shipments numbers by a third and help the company establish a reputable mobile brand on par with Samsung or Apple.

While a popular low-cost budget brand in China and other such nations with developing mobile infrastructure ZTE has found itself type cast, its name now synonymous with cheap, trapped in the low-end market where profit margins are so razor thin that company’s are struggling to turn a profit.

It’s really no surprise, then, to hear that ZTE wants to rebrand itself as a smartphone heavy weight, hoping that some premium flagship smartphone offerings will help the company not only change its image, but actually start to make some real money in the mobile market.

As the Reuters’ journalists Yimou Lee and Adam Jourdan explain, “Shenzhen-based ZTE, which also makes telecommunications network equipment, aims to increase its global smartphone shipments from 40 million last year to 60 million this year, 80 million next year and 100 million in 2016.”

It won’t be an easy road to respectability for ZTE, however, as the company seemingly has the deck stacked against it already. Not only are Chinese brands like ZTE generally considered inferior in the mobile market, particularly when compared with Apple’s iPhone 5S or Samsung’s Galaxy S5, but the company is still trying to shake the label of “national security concern” American government officials placed on it and fellow Chinese telecom giant Huawei several years ago.

“There is indeed a gap between the brand awareness of Chinese companies and those top global brands, and this is what our team is trying to build for consumers,” ZTE’s executive vice-president Zeng Xuezong said, optimistically concluding that “After our efforts in the past two years, I believe our brand awareness and approval rating from customers could rival those of Apple and Samsung in China.”

But unlike Huawei, ZTE is confident it can continue to grow its U.S. market share by offering premium smartphones that rival the top brands. The company is hoping this focus on the high-end of the market coupled with increased spending on marketing and brand awareness with help the company finally gain a foothold in this market, as well as help drive revenues upward in Asia as well.

Not surprisingly, Chinese companies strong drive into the premium smartphone sector coincides with the development and expansion of 4G LTE networks, and at least 60 percent of 2015’s smartphone shipment target will be 4G devices, Zeng said, an increase of the 40 percent estimated for this year.

In the end it will certainly be interesting to see if ZTE can shake both its label as a budget brand and its moniker as a national security concern to gain traction here in the North American market. More likely, however, ZTE will become simply one more rank-and-file competitor in this market, meaning its lofty sales and shipment expectations will have to come from a successful rebranding on its own home turf.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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