On April 21, Zte Corporation(000063) ( Zte Corporation(000063) , SZ) held the 2021 annual general meeting of shareholders and performance presentation meeting. Chairman Li Zixue, executive director and president Xu Ziyang and other senior executives attended the meeting. At the meeting, Zte Corporation(000063) exchanged views with investors on the company’s strategic planning, business development, technological innovation and other external concerns.
Zte Corporation(000063) said that after more than three years of recovery and development, the company’s operation has been adjusted to a relatively healthy state, which has created favorable conditions for the company to challenge the goal of “entering the global top 500 in 2-3 years”.
However, it is not easy to achieve these goals Zte Corporation(000063) believes that it is necessary to further consolidate the first curve business represented by traditional wireless and wired products, and quickly upgrade the second curve business represented by servers and storage, terminals, digital energy, automotive electronics, etc.
Zte Corporation(000063) it is estimated that the first curve business will maintain a stable growth of more than 10% in the future and contribute to the scale profit. At the same time, the company will also pay attention to some non main channel and long-term non-profit subsidiaries to reduce the negative impact on the company’s operation. Some subsidiaries will accelerate digestion and treatment this year.
accelerate the development of the second curve
2022 is the first year of ZTE’s surpassing period. In view of this development cycle, Zte Corporation(000063) strategy is, “the first curve strives for progress while maintaining stability and the second curve develops rapidly.”
For the first curve, Xu Ziyang said that the company pursues a higher market share. “I hope that in the future, in the Chinese market, the main products can reach a market share of more than 40%. In the overseas market, we will focus on stability, efficiency improvement and compliance management.”
For the second curve, Zte Corporation(000063) in terms of business selection, it puts forward four basic principles: having market attraction, being in the appropriate entry time window, being consistent with the company’s existing capabilities, and the company can build a competitive advantage. Based on the above principles, Zte Corporation(000063) chose servers and storage, terminals (including smart home terminals), 5g industry applications, automotive electronics, digital energy, etc. for strategic expansion.
In terms of server and storage products, Zte Corporation(000063) believes that “the business is expected to achieve rapid growth and contribute to the increment of scale. We should strive to maintain a high compound growth rate, become the company’s new 10 billion product within 1-2 years and enter the list of mainstream suppliers in China within 3 years.”
It is worth noting that in order to adapt to the new business development mode of the second curve, Zte Corporation(000063) has also made corresponding adaptation in organizational form, and successively established automobile electronic product line, smart home product line, digital energy operation Department, mining, metallurgy and iron and steel industry special teams, etc.
grasp the opportunities of digital economy and computing in the East and West
In recent years, digital transformation has gradually become the consensus of all walks of life. At the same time, with the full launch of “computing from the east to the west”, the upstream and downstream links of the data center industrial chain such as computing, storage, data communication and optical transmission have also attracted much attention.
In the face of the huge blue ocean market, Zte Corporation(000063) said that we should pay close attention to the opportunities of digital economy and counting from east to west. “We focus our business on ‘efficient digital infrastructure’ in digital industrialization and ‘tradable digital capability’ in industrial digitization.”
Among them, “efficient digital infrastructure” is mainly oriented to digital industrialization, including two technical fields: network and computing power. For the former, Zte Corporation(000063) focus on building “minimalist infrastructure” and “intelligent and efficient operation”; For the latter, Zte Corporation(000063) focuses on strengthening chip, algorithm and architecture innovation, breaking through the core bottleneck and realizing the synchronous development of computing network and cloud network capabilities, so as to meet the increasing requirements of high-speed traffic and green and low-carbon for computing power.
The “tradable digital capability” is mainly oriented to industrial digitalization Zte Corporation(000063) believes that the core demand of industrial digitization is cost reduction, efficiency improvement and survival and development. However, due to the differences between industry scenarios and enterprise development stages, the application of industrial digitization obviously presents the characteristics of fragmentation. At the same time, industrial digitization in the expansion period also goes through the process of innovation trial and error, business model exploration and ecological incubation.
In this regard, Zte Corporation(000063) said: “the company encapsulates digital infrastructure capabilities in ‘atomization’, cloud capabilities in ‘componentization’, and then makes secondary innovation in combination with scenario applications, so as to realize capacity reuse. At the same time, there are also organizational forms such as special teams to ensure the rapid accumulation of resources, specialization and deep cultivation of the industry market.”
it is estimated that there will be 10000 end channel camps in 2022
In addition to government and enterprise business, consumer business is also regarded by ZTE as one of the core directions to support the company’s future growth Zte Corporation(000063) believes that the company’s consumer business, including mobile phones, is an important part of an end-to-end complete communication solution.
At the end of November 2020, ZTE announced that its terminal business would return to the Chinese market, and its business progress after its return has attracted much attention from the outside world. For the achievements of terminal business in the past year, the company said that in 2021, Zte Corporation(000063) consumer business revenue increased by nearly 60% year-on-year, including mobile phone product revenue increased by nearly 40% year-on-year. The company will firmly develop consumer business and stick to “product + brand + channel” in 2022.
In terms of product differentiation competition, ZTE terminal will create characteristics from two aspects: display and image; In terms of channels, we will continue to promote the construction of offline channels in China. More than 6000 sales positions will be built by the end of 2021, and it is expected to reach 10000 by 2022. At the same time, strengthen brand investment.
When talking about the specific direction of future R & D, Zte Corporation(000063) n responded that it would focus more on mastering the underlying and basic capabilities. “At present, Zte Corporation(000063) has made enhanced investment in operating system, database, middle stage, algorithm, architecture, key materials, etc.”
In addition, in recent years, repeated covid-19 epidemic, pressure on investment in overseas communication market and international political situation have brought many challenges to enterprise globalization. However, Zte Corporation(000063) said that the company would always adhere to the globalization strategy. However, we will remain sober, not expand blindly, focus on improving efficiency and operate steadily. In the past two years, the business structure and quality of overseas markets have been continuously improved and improved. The revenue of big t accounts for 70%, and the provision for impairment of accounts receivable has decreased significantly.
