Jiwei network news, on the morning of February 9, ZTE held an important media communication meeting, at which Wang Xiang, senior vice president and chief strategy officer of ZTE, focused on the origin, program and goal of the company's major strategic plan of "building a second curve" to jiwei network and other media - this is also the first important strategic interpretation of ZTE after the beginning of 2022.
For a leading ICT enterprise in China like ZTE, the forward-looking, sustainable and stable strategic planning is self-evident for the future development of the enterprise.
Xiang Wang, Senior Vice President and Chief Strategy Officer of ZTE
ZTE recently said that while the CT business as the "first curve" has steadily consolidated its costs, ZTE is constantly increasing its expansion in the fields of IT business, digital energy and terminals, and actively creating a "second curve" of the company's growth to achieve self-transcendence and industry cycle in the strategic transcendence period and achieve sustainable development of enterprises.
Taken together, ZTE's "second curve" for enterprises is closely consistent with the technological and route evolution of the entire ICT industry and the changes in the market pattern. Wang Xiang said: "The strategy is a long-term stable work, not a whim, from the strategy of 2018, when we set a plan for an eight-year cycle. In 2022, ZTE has reached the strategic goal of recovery and development and entered the transcendence period as scheduled, Wang Xiang said that the "second curve" of the enterprise has ushered in a new stage of development: "This not only conforms to the development trend of the industry and the market, but also better supports and meets the needs of operators and government and enterprise customers' business transformation and upgrading, as well as the increasingly personalized and diversified needs of individual consumers." ”
From the company's publicly released financial reports, it can also be seen that ZTE has a good performance foundation before planning the "second curve": the company increased by more than 50% in net operating cash flow last year, net profit also increased by 50%, and deducted non-net profit reached 200%, profit and cash flow indicate that ZTE is in the best healthy state in history after more than 3 years of development.
Integrating the two levels of external market and enterprise development, ZTE has established the "second curve" of the new era with IT, digital energy and terminals as the core business.
"Second curve" three major business analysis
So, why did ZTE choose the three major businesses of IT, digital energy and terminals as the main focus of the "second curve"? Wang Xiang told Jiwei Network that such planning and layout is mainly based on four perspectives of exterior and interior. The external two perspectives can be summarized as market potential and market entry timing; the internal two perspectives can be summarized as their own ability matching degree and whether they can build a core technology competitive advantage that enters the forefront of the industry.
Specific to the IT part of these three major businesses, Wang Xiang focused on several inflection points facing the IT industry. First of all, the industrial chain structure and the global competitive situation are reshaping; secondly, when THE application is further deepened in the industry, it creates a number of market segments that require software, hardware, and underlying chips (such as network computing and storage), and the integration of different application scenarios has created a new opportunity, and ZTE has basic core advantages in basic facilities, chips, software, operating systems and databases, which allows enterprises to have a corresponding comparative competitive advantage when generating at this inflection point.
ZTE has accumulated more than 15 years of technology in the server field and has established good cooperative relations with operators and head enterprises. The G4X series of servers released in April 2021 has been comprehensively upgraded compared with the previous generation of products in terms of performance, security, energy consumption, etc., and won Sullivan's "2021 Global Server Product Innovation Award", which can be said to lay a solid foundation for the new expansion of IT business in the "second curve".
Wang Xiang also further talked about the delicate relationship between emerging market segments and the core breakthrough points of enterprises, such as the integration of the traditional automobile industry and modern ICT to produce a new intelligent car segment, ZTE relies on automotive electronics as the core breakthrough point, last October, ZTE and SAIC Group's "Zero Beam Software Branch, Lianchuang Automotive Electronics Co., Ltd." signed a memorandum of strategic cooperation in Shanghai, jointly aiming at the new development trend of "electric intelligent networking" in the automotive industry. And the establishment of a joint innovation center. At present, ZTE has reached strategic cooperation with FAW Group, SAIC Group and other leading vehicle manufacturers. In addition, once the ICT pipeline is opened, new market opportunities will produce a new round of introduction, development and maturity period, Wang Xiang elaborated: "In the entire introduction period, we are casting a wide net, 5G technology in multiple industries to demonstrate and try, in order to verify several core elements: does the industry need such a program, and whether it has brought significant value to the industry? ”
In the verification process, ZTE found that it is necessary to integrate some industrial chain links through a new organizational form to form a complete set of solutions, that is, to define and realize the needs of a clear market segment through cross-organizational collaboration, which ZTE calls "special teams". These "special teams" have already had positive feedback in metallurgy, mining and other application scenarios. In the future, ZTE will continue to work with partners to explore and practice 5G smart mines in depth, escorting the improvement of high-quality production capacity and digital transformation and upgrading of the coal mining industry.
The digital energy field in the "second curve" is closely related to the national "double carbon" strategy, and ZTE's core capabilities in this field need to be completed around digitalization through organizational adjustment and resource investment. In 2021, ZTE increased joint innovation with domestic towers and operators, and international key big T, released ZTE's "zero carbon" energy network, to help customers build a green and low-carbon network, ZTE's full range of 5G power supply scale is applied to 450,000 5G sites around the world, and the intelligent data center management system has been widely used in Internet head customers.
In terms of organization, ZTE will divest the areas with weak energy correlation in the original business department through resource focus and integration, improve the operation positioning of energy in the company, integrate existing products and capabilities such as power supply, energy storage, IDC and energy management, fully penetrate into the energy industry, and complement the advantages of energy head enterprises, and jointly promote the digitalization process of the entire industry.
In 2021, ZTE's terminal business is trending well. Last year, ZTE terminal business shipped more than 100 million units in the whole year, of which 50% used self-developed chips, and the overall shipment volume increased by 60% year-on-year, of which the domestic market increased by 150% year-on-year, and the international market increased by 50%. CPE market share ranks first in the world, becoming the first brand in the CPE market field. Household terminal products achieved explosive growth last year, with shipments up 52% year-on-year and cumulative shipments of 580 million units.
ZTE's structural adjustment in the terminal has been mainly manifested in the transformation from the operator field to the consumer end field in the past two years, and from overseas to overseas and domestic. Under the guidance of the new "second curve" route, how will the terminal business be launched? Wang Xiang elaborated: "In the future, we will continue to take mobile phone products as the core, continue technological innovation in the fields of imaging and off-screen camera, and at the same time continue to expand peripheral products around the two types of terminals of individuals and families, build a '1+2+N' strategic ecology, promote the transformation and evolution of 'hardware-software-service-ecology', and form a full-scene intelligent ecology." ”
The deep logic behind the "second curve" layout
Through further questioning ZTE's "second curve" layout considerations, we can find that there are clever connection points in three seemingly unrelated businesses: the integration of IT and CT, the integration of energy and information, and the integration of terminals, pipes, and clouds.
"In terms of resource investment, we will continue to maintain the investment in the 'first curve' to achieve leading surpass in core technology and increase the share in the value market, and at the same time continue to increase investment in the 'second curve' in accordance with the established development rhythm to promote the rapid incubation and growth of new businesses."
Around the general direction of the "second curve", ZTE expects that in the next 2-3 years, ZTE can quickly enter the world's top 500, the "first curve" business is stable and progressive, maintaining an annual growth rate of more than 10%, while accelerating the expansion of the "second curve", and expecting the compound growth rate to reach more than 40%. The revenue structure of the new business, ZTE's overall vision is to increase from a little more than 10% to more than 30%. Under the guidance of the "second curve" route, ZTE is expected to accelerate the pace of development in the positioning of "road builder of the digital economy", which also supports the company to move towards the next development milestone. (Proofreading/Jenny)