Smartphone firm rockets into the US

A model displays a ZTE smartphone in Taipei on Saturday. ZTE has signed a partnership to become the official smartphone supplier of NBA team Houston Rockets, which are playing preseason games in Taipei. Zeng Peng / Xinhua

ZTE is launching a charm offensive in a tough market, in a major bid to promote its brand among American consumers

Few Chinese companies have managed so far to gain a footprint in the huge and profitable United States market. But more Chinese firms are trying to establish a presence there, especially smartphone makers such as ZTE Corp.

On Oct 5, in the Toyota Center, in downtown Houston, Texas, Cheng Lixin, the chairman and chief executive officer of ZTE USA Inc, looked a little bit nervous. A big fan of the NBA, Cheng was about to watch a preseason game featuring the Houston Rockets and the New Orleans Pelicans.

Cheng tried to keep calm by taking deep breaths. However, it was not only the game that was making him nervous. There was something much more important at stake. That night, he would make an important announcement to the thousands of people present at the venue and to many more outside the Toyota Center.

For the first time ever, ZTE was taking a bold move to market itself in the US market by using an NBA team's appeal. In the past several months, Cheng and his team had held frequent meetings with the management of the Houston Rockets to forge an alliance to boost ZTE's profile in the US smartphone market.

"This is the biggest overseas investment ZTE has made so far," Cheng told China Daily in an interview before that preseason game.

And the timing could not be better, since the Rockets' newly added Dwight Howard is playing this season together with James Harden, Jeremy Lin and others, making for a formidable team.

Many reasons made ZTE choose the Houston Rockets, Cheng said. Among them is the fact that Houston is one of the five biggest markets for ZTE in the US. The city can help ZTE conquer the country's smartphone market, which is now dominated by Samsung Electronics Co Ltd and Apple Inc.

"The Houston Rockets boast 350 million fans worldwide, and the team's popularity can also lift ZTE's branding in the United States," Cheng said.

That positive influence may even stretch to China, as well as to many markets in emerging countries, such as Indonesia and the Philippines, where a large percentage of young people are Rockets fans.

Branding

Under the terms of the deal, the ZTE is now the Houston Rockets' official smartphone supplier. The partnership will prominently feature ZTE's brand and products during Rockets games, as well as billboards and kiosks in Toyota Center — the team's main arena. In addition, Chandler Parsons, 24, a Rockets' rising star, will endorse ZTE's smartphones.

ZTE's partnership with the Houston Rockets has had an impact in Wone Brown's daily routine.

Brown, in his 30s, is a salesman at a Houston-based Aio Wireless store. Aio is a sub-brand under the telecom carrier AT&T and Brown's store sells several smartphone models, including ZTE handsets.

"People buy ZTE smartphones because they're quite cheap and of high quality," he said, on a sunny afternoon in the store, which is decorated with three glass walls. However, few mobile phone buyers know the ZTE brand and he needs to make an extra effort to promote the Chinese company's devices.

The most popular ZTE handset is a model priced at $49.99. That device is also the cheapest smartphone in the store.

"Maybe the Houston Rockets can help draw the customers' attention to ZTE smartphones, other than the pricing factor. The company is for sure making the right move," Brown said.

To many people's surprise, ZTE has already made inroads into the US smartphone market, quietly and steadily. ZTE is now the fourth-largest mobile phone vendor in the US, with a market share of about 4 percent, according to the company.

But the figure is still lagging far behind those of the top three players — Samsung, Apple and LG Corp. Samsung has an about 40 percent share, while Apple and LG have 25 percent and 13 percent, respectively.

Branding is the major obstacle for ZTE to overcome so that it is able to narrow the gap with the market leaders and to truly penetrate into the mid- and high-end smartphone sectors.

He Shiyou, executive vice-president of ZTE, recently said that there's only a three-year window for ZTE to survive and thrive in the global smartphone industry.

"In three years, either we go to heaven or we go to hell," He said in an interview in Beijing in September.

He admitted that ZTE is being urged to lift its branding amid the company's transformation from a low-end mobile phone maker to a vendor that is posing real challenges to Samsung and Apple in the mid- to high-end market.

He recalled that Samsung became an overnight sensation after its corporate sponsorship of the 1988 Seoul Olympics. After the event, the South Korean company successfully expanded to other parts of the world.

In He's opinion, similar things may happen to ZTE after the Houston Rockets deal.

"We hope that ZTE's alliance with the NBA can boost our brand awareness and reputation in the United States, China and even all over the world," He said.