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Why ZTE Is Now Sponsoring Five NBA Teams

By Cate Cadell

ZTE Basketball

On New Year’s Eve 2014, Chinese telecoms equipment and smartphone supplier ZTE began a new phase in their growth.

The company launched their new brand identity at the first game of the Golden State Warrior’s season, effectively ending their time in the U.S. market as purely a white label manufacturer for U.S. carriers and setting out to sell devices under the ZTE brand.

Ten months later, the ZTE-backed Warriors were NBA champions and the Chinese company would have almost doubled their US market share in the preceding 18 months to 8.2%.

While the company couldn’t have guessed who would be NBA champions, they did know that they were tapping into a marketing goldmine. The NBA final broke viewer records in America this year with a peak of just under 29 million viewers during the game, but it’s a fraction of those watching the same games in China.

“There are more people watching that game [in China] than there are people in the US, period. 100 million Chinese people are putting their eyeballs on the Houston Rockets games,” says Andrew Elliot, Senior Director of Strategic Marketing at ZTE. Currently the Chinese Basketball Association (CBA) estimates that more than 300 million young Chinese people play basketball.

Following this year’s championships, ZTE signed two further teams to their roster: this year’s runners up, the Cleveland Cavaliers, and the Chicago Bulls, which brings the total number of ZTE-sponsored teams to five.

The Chinese company partnered with the Houston Rockets in 2013 before adding the New York Knicks and Cleveland State Warriors to their roster in October 2014.

According to Mr. Elliot, the success of the brand awareness campaign in the U.S. has been the biggest driver for signing more teams. “We measured the brand awareness and it went up pretty significantly form less than 1% [in 2013] to more than 16% [in 2014],” he said. That number has now risen to 34%, according to ZTE’s own research.

Rebooting the ZTE Brand

Despite now being the U.S.’s fourth largest smartphone supplier, many consumers wouldn’t have known the company’s brand before the start of the year. previously ZTE was a white label carrier, meaning they would manufacture devices under other brands primarily carriers.

“We’ve gone from having no products with our logo on them to all of our products with our logo on them,” said Mr. Elliot.

Now the company is trying to take back some of that low-cost device market with their own branded devices, while simultaneously releasing a high-end offering, the Axon, for $450 USD. They later released the Axon to China as a second-wave market, as well as the subsequent Axon mini which features an ‘NBA edition’ for Chinese consumers.

While the company may be making significant gains in brand awareness, their quarterly revenue, as of September 2015, only rose from $354 million to $369 million. Despite nearly doubling their sales in the 14 months preceding Q2 2015, the company itself had seen only a four percent rise in total revenue, meaning they are yet to capitalize on their growing share in the U.S..

One aspect of the company’s business that continues to rise is their marketing budget. “When I first got here from year one to year two our budgets doubled,” said Mr. Elliot. “Year two to year three for support of the Axon it doubled on top of that too.”

Chinese Smartphones Aim For The Top-End

ZTE isn’t the only Chinese smartphone manufacturer looking to increase brand awareness in the U.S. market. Huawei, who recently dethroned Xiaomi as the top Chinese smartphone vendor on the mainland, has partnered with Google to release the Nexus 6 in July, which was followed by the Nexus 6P at the end of October. It’s the first partnership between Google and a Chinese smartphone vendor, and marks the Chinese company’s changing brand direction.

They followed up the launch of the Nexus 6 with their own Mate S, a high end offering priced to compete in the same range as Samsung and iPhone flagships. It launched with several high-end features including Force Touch, which Apple would launch in the same week.

Huawei’s relationship with the US market has been a tumultuous one. They were banned from bidding on US government contracts contracts over espionage concerns, though Chief Executive Guo Ping has said multiple times in 2015 that the ban is “not important’ for the company’s growth.” Huawei has still been permitted to sell its consumer devices, but like ZTE has been largely relegated to white label manufacturing until recently.

While Hong Kong-listed ZTE may currently hold a much larger stake of the U.S. market than Huawei, they’ve had less luck at home in China. Currently they are the 8th most popular brand locally by market share. Their stock has also dipped this year amidst a slowing local economy, falling from a high in May of $28.80US down to $14.97 US in July, recovering slightly to $19.13US today.

Following the latest additions to their NBA roster, ZTE will be hoping to carry some of the magic over from the Golden State Warrior’s win to boost brand awareness both in the U.S. and at home. The NBA will host several pre-season promotional trips to China for the franchise’s teams.

As CEO of ZTE Mobile Devices Adam Zeng said in an investor conference earlier this year, “Lebron maintains his leader position among his competitors. This shows us that despite the ups and downs of the industry we can maintain a sustainable development, just like Lebron.”

Source:: Why ZTE Is Now Sponsoring Five NBA Teams

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