China's ZTE hopes Rockets can boost brand after cyber suspicion

Reuters
A ZTE smartphone Grand S is displayed during a news conference in Taipei October 12, 2013. REUTERS/Pichi Chuang
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A ZTE smartphone Grand S is displayed during a news conference in Taipei October 12, 2013. REUTERS/Pichi Chuang

By Clare Jim and Lee Chyen Yee

TAIPEI/SINGAPORE (Reuters) - China's ZTE Corp , the world's fifth-biggest smartphone maker, hopes a deal to sponsor the NBA's Houston Rockets can boost its brand in the United States where lawmakers have suggested it could be a security threat.

A U.S. Congressional committee last year said it was concerned the company, which is also the world's fifth-ranked telecommunications equipment manufacturer, together with a Chinese rival company, Huawei Technologies Co Ltd (HWT.UL), was a potential cyber security threat.

Both ZTE and Huawei denied the committee's allegations.

ZTE Corp's U.S. chairman and chief executive Lixin Cheng told Reuters in an interview on Saturday the company had long been looking to build a connection with the U.S. public.

"We believe Rockets is the right partnership for that," Cheng said in Taipei, where the company is sponsoring a game between the Rockets and Indiana Pacers.

Chinese basketball sensation Yao Ming used to play for the Rockets and American born Taiwanese player Jeremy "Linsanity" Lin plays for the team.

"Some people still don't know about ZTE in the U.S. and there is some misunderstanding among the U.S. congressmen," a company source, who declined to be identified as he is not authorised to speak to the media, told Reuters this month.

"If we sponsor an NBA team, we hope people who are not familiar with our company will get to know us better."

Cheng said ZTE planned to build on its relationship with the National Basketball Association team to introduce mobile applications that would enable fans to catch the Rocket's games. It also plans to organise charity events in Houston with the Rockets.

Huang Leping, a Hong Kong-based analyst at Nomura, said the collaboration with the NBA would help ZTE's sales in both China and the United States because the NBA had many more fans in those two places compared with soccer or American football.

"I think the main reason is probably similar to Lenovo, that they are trying to sell higher-end smartphones," Huang said.

China's No.2 smartphone vendor Lenovo Group Ltd is sponsoring basketball star Kobe Bryant of the Los Angeles Lakers to endorse its K900 handsets.

ZTE is the fourth biggest smartphone brand in the United States and about 20 percent of its handset revenue comes from that market.

ZTE Executive Director He Shiyou told Reuters in a separate interview in Taipei that the company aimed to become one of the top three smartphone vendors in the United States, Europe, Japan and China.

(Editing by Robert Birsel)

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