Emerging market firms turn giants in telecom sector

GENEVA: Take a careful look at a Vodafone handset in Britain and chances are, somewhere in small print it would say that the mobile telephone was made by China's homegrown phone manufacturer, ZTE Corporation.

Home-grown firms from emerging markets have quietly swooped in on global telecommunications giants, changing the perception that the developing world is just fertile ground for growth to the fact that it is now also home to the industry's biggest players.

ZTE underlined at the Telecom World 2009 fair here that it is aiming to rank among the four biggest telecommunications equipment makers in the next three years.

Within the next five to six years, the target is to get to at least number three, said Xiong Hui, a senior vice president at the group, which not only makes handsets but also builds network systems.

The group is eyeing growth not only in domestic or emerging markets, but also in the developed countries.

"In our early years, we moved very quickly into emerging markets. But in recent years, our growth was really driven by developed countries," Xiong told AFP.

He noted that purchasing power remains strong in Europe and North America, and that while growth is rapid in developing countries, demand there is leaning towards lower-end products.

"We will certainly continue to do what we can to satisfy needs in developing countries ... but most of our growth is coming from North America, Europe and of course, China," he said.

And if "made in China" was once a byword for inferior quality products, it may no longer be so in the world of telecommunications.

"At first when you sell a million products to (foreign companies), they may approach the goods with a test-and-see attitude. By the time you manage to sell 100 million products to them, it means they have already accepted your products," said Xiong.

Likewise, Egypt-based Orascom Telecom is not only providing services to its domestic market, but has also expanded to Italy, Greece and Canada, said Khaled Ismail, a business development officer at the group.

Like Orascom, China's biggest mobile phone operator, China Mobile, is looking beyond its domestic market for growth.

Having already established a presence in Pakistan, it is also aiming to reach into other parts of Asia.

"We would like to expand internationally in emerging markets," said the group's chief executive Wang Jianzhou.

Asia would be a priority market, Wang told AFP, due to its proximity and cultural similarities.

"We have accumulated experience in the developing world," said Wang, adding that China Mobile can rely on its economies of scale to offer more price competitive products.

But beyond telecommunications, the Chinese giant is already looking to the so-called "Internet of Things" -- a wireless network connecting objects ranging from luggage to household appliances -- for its next burst of growth.

Describing one of its applications, the group's chief executive Wang Jianzhou told AFP that the group has tagged sheep in China with barcode chips which allows any meat product made from a particular sheep to be traced back to its farm of origin.

"This will be a huge market. We have great expectations for this. We can't even estimate the size of the market, it is simply too huge," said Wang.

"Imagine, there are only six billion people in the world but there are hundreds of billions of machines and all these machines can potentially be linked up," he added.