ZTE’s 2012 R&D Spending Increased to RMB 9 Billion

SHENZHEN, China--(BUSINESS WIRE)--Mar 14, 2013--ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a publicly-listed global provider of telecommunications equipment, network solutions and mobile devices, is pleased to be the first Chinese company to be ranked inside the Top-10 for patent applications by the European Patent Office, as technology innovation generates new business opportunities for the company.

Based on data from the European Patent Office, ZTE filed applications for 1,184 patents in 2012, lifting the company to 10th position in the annual table, from 43rd place a year earlier. Amid challenges in the global economy in 2012, ZTE nevertheless increased spending on research and development to about RMB 9 billion last year, 3% more than in 2011. Over the past four years, ZTE has ploughed a combined total of more than RMB 30 billion on R&D, and the company is among the telecommunication equipment industry’s heaviest spenders on cross-licensing of intellectual property, when measured on a spending to revenue ratio.

“ZTE’s efforts on technology innovation will take the company to the next level, and we expect a large number of our patent applications in Europe will be granted in the next two to three years,” said Wang Haibo, ZTE’s Director of Legal Affairs. “Our rapidly growing patent portfolio will help strengthen the company’s position in the European market, and reduce risks of anti-competitive litigations.”

It generally takes between two to three years for patents in Europe to be granted, after applications are filed. The cost of each patent is over RMB100,000. Patents are among the most valuable intellectual property assets at a company, and it’s increasingly important to leverage them for competitive advantage.

ZTE expects a large number of the company’s patents, mainly on LTE technology and smart terminals, will be granted in Europe in 2014. The addition of these high-quality patents will generate very significant competitive and commercial advantages for ZTE against competitors in the European market.

In line with the company’s strong commitment to technology innovation, ZTE fully respects the intellectual property of others. Since 2005, ZTE had reached cross-licensing agreements with companies including Qualcomm, Siemens and Ericsson, greatly helping ZTE’s technology research and overseas operations. In the future, ZTE will leverage its rapidly-growing patent portfolio to seek new cross-licensing agreements with other companies, building partnerships of equals.

“The global technology industry has seen an escalation in disputes over patents – ZTE believes that behavior such as “patent harvesting” is detrimental to the healthy development of the industry, and against the interests of consumers,” Mr. Wang said. “ZTE advocates an open and win-win model based on sharing.”

ZTE is actively participating in pan-industry efforts to build patent pools, leveraging the advantages of the “one-stop” licensing model to lower the costs of licensing, which will in turn reduce R&D costs for innovators and promote the healthy development of the technology industry.