Learning from the pain, ZTE resumes journey

Learning from the pain, ZTE resumes journey

In an online announcement released by the US Commerce Department in mid-July, Secretary of Commerce Wilbur Ross said that Zhongxing Telecommunications Equipment Corporation (ZTE Corporation) of Shenzhen, China and ZTE Kangxun Telecommunications Ltd. (ZTE Kangxun) of Hi-New Shenzhen, China, collectively called ZTE, have placed $400 million in escrow at a US bank.

Shortly after the deposit, the department lifted the denial order on ZTE pursuant to a June settlement agreement that included the harshest penalties and strictest compliance measures ever imposed in such a case, Ross went on to say.

The escrow funds are in addition to the $1 billion penalty imposed by the department that ZTE paid to the US Treasury last month.

When the denial order was officially terminated, ZTE’s global business would fully recover, a ZTE source said.

With 89 days of persistence and effort, ZTE finally got the denial order terminated on April 15 by the US Commerce Department. On July 14, ZTE officially started to work to recover the global business as swiftly as possible, the source said.

Through the efforts of all employees, ZTE’s product lines have been recovered. Shipments of Chinese and overseas purchase orders have been recovered. ZTE’s IT system was also recovered and verified.

After the restoration of supply, ZTE’s global network maintenance and project delivery were restarted. Meanwhile, ZTE received lots of supporting letters from customers and partners.

Since the activation of the denial order, learning from the pain, ZTE has reflected profoundly on compliance as the strategy footstone in development.

The source stated that ZTE, in order to embed compliance into every link of daily work, will strengthen compliance culture, further intensify internal control, and continue improving its compliance system.

The source added that after terminating the denial order, all work is recovering rapidly, but it still needs time to return to normal. Going step by step, ZTE will try hard to make up for the damage as soon as possible to return to be the main supplier of telecommunications product and services.

Core competitiveness not affected

Talents are the most valuable treasures of ZTE. ZTE’s Research and Development was not affected.

ZTE keeps its core capability, especially the stable backbone R&D team. Under the compliance guide, most of the R&D programmes were not affected. 5G capability is still being promoted.

ZTE has confidence that its R&D will revert back to normal a short time after the termination.

There are only 100 employees less this year than at the same time last year, which means ZTE has not lost from its core capabilities. Next, ZTE will continue to stablisie its backbone talent team.

“Customers were steady and confident about ZTE. ZTE will try its best to recover the damage. Since the accident, the company’s normal manufacturing and operations barely ran, which affected new projects,” the source noted.

ZTE will take all actions to reduce the loss, including the trouble with equipment maintenance for customers, even though most customers were confident of ZTE and waited patiently for the termination. After the termination, ZTE is confident that manufacturing and operations can be recovered as soon as possible with hard work.

Meanwhile, suppliers were steady and supported ZTE a lot. In the passed two and a half months, the company united by upholding two basic principles. The first one is compliance. ZTE insisted on compliance no matter what difficulty it was facing.

The second is faith in compliance. Though manufacturing and operations were paused, the firm insisted on taking responsibility to its global partners, including banks and suppliers. During the accident, there were no default payments to suppliers.

Most suppliers were supporting ZTE as they were confident that the ban would be lifted soon.

Taking the lead in 5G development

Before the accident, ZTE had an obvious advantage in 5G technology and products in the industry, with confidence to increase its stature as the technology peaks in the future.

The accident had a grave impact on ZTE. However, in the past two and a half months, ZTE kept its core capabilities, especially the R&D and backbone team.

ZTE is confident that R&D will be back to normal in short time and recover the losses caused by the termination. ZTE is confident to lead the 5G commercial process.

ZTE leads 5G in three areas. The first is 5G commercial time: ZTE has deployed 5G core technology on its current 4G network. Thus, ZTE will have first-mover advantage when the 5G era comes.

The second is performance: ZTE has the advantage in core arithmetic. ZTE achieved arithmetic optimisation on its 4G network, which will keep the advantage in performance for 5G end-users. The third is worldwide scope: as China’s 5G market has the most investment all over the world, ZTE relies on the Chinese market to obtain a scope advantage in the global market.

Regarding objective demand, the telecommunications market is one of the most international industries, with the collaborative supply structure as the new norm of industry development, the source added.

Moreover, from the perspective of integrated capabilities in the telecommunications industry, ZTE is one of the two firms who can provide 5G end-to-end solutions. In the coming 5G era, ZTE will be indispensable for the whole industry.

In the coming time, with customer as the focus, technology innovations as the backbone, as well as human resources, compliance, and internal control as the foundation, ZTE will concentrate on its mainstream markets, customers, and products, aggressively expanding its global markets, persistently enhancing customer satisfaction and market share, and strictly keeping its commitments on customer service.

Insisting on the strategy of leading 5G innovation, ZTE will further enlarge R&D investment, intensify independent innovation of core technology, and improve product competitiveness.

In order to ensure rapid and sustainable development, ZTE continues strengthening the construction of human resources, compliance, and internal control system, living up to ardent expectations on ZTE from countries, societies, and the industries the firm is operating in, thus devoting itself to the development of the global telecommunication industry.