Contract sales of USD$4,111 million, 169.5% increase in year-on-year international sales and handset sales of over ten million

ZTE Corporation and its subsidiaries recorded contract sales of RMB34 billion (approximately US$4,111 million) from 1 January 2004 to 31 December 2004. Of these contract sales, RMB13.6 billion (approximately US$1,644 million) was attributable to international sales, representing a year-on-year increase of 169.5%. Sales of handsets for the year 2004 exceeded 10 million sets, up 100% over the previous year. ZTE has achieved significant growth in both domestic and overseas markets. To date, ZTE has developed into one of China´s fastest growing telecommunications manufacturers with the most robust development in the past years.

In 2004, ZTE has continued to concentrate on overall corporate development with coordination of marketing, R&D, capital expenditure, staff development and management. Adhering to its customer-oriented principle, ZTE effectively carried out its marketing strategies and product differentiated strategy; and achieved its goals. In particular, ZTE´s robust and outstanding high-tech blue-chip stock performance enabled it to be successfully listed on the Hong Kong Stock Exchange and become the first "A-H" stock in China. This successful listing raised funds of HK$3.5 billion, with applications of more than 250 times what was available. This achievement is recognized as an important milestone in the China securities industry, as well as the remarkable event in the China economy in 2004.

In wireless field, ZTE, the largest and most successful homegrown wireless supplier of China, fully pushed forward its market development in respect of CDMA, GSM and PHS products. The wireless capacity of ZTE CDMA equipment has exceeded 20 million lines, and accordingly ZTE has become the biggest telecommunications equipment exporter in China. Currently, ZTE GSM equipment has successfully entered over 20 countries, and there are more than 35 million lines of ZTE´s diversified GSM products deployed in the world. ZTE is one of the leading GSM equipment vendors in the world. In the PHS market, ZTE continued to consolidate its position as China´s largest homegrown PHS system supplier.

With a good understanding of the 3G market in China and the world, 2004 saw the arrival of ZTE 3G technologies covering three modes, UMTS, CDMA2000 and TD-SCDMA. ZTE has become one of the few successful telecommunications equipment vendors in the world that are capable of delivering all these three kinds of 3G technologies.

In September 2004, ZTE put through the first UMTS call in Africa. ZTE´s construction of UMTS networks went smoothly in many overseas countries. In CDMA2000, ZTE first launched the complete set of "CDMA2000 1xEV-DO 1X Release A" integrated solution based on all-IP platform, which is currently the best CDMA2000 solution. ZTE CDMA2000 has achieved deployment in Mongolia, Turkey, Algeria and other countries. As the core member of TD-SCDMA industrial alliances, ZTE´s TD-SCDMA core network equipment has been endowed with the capabilities of commercial applications.

On the basis of its strong CDMA technology and brand, ZTE released the first global digital trunking architecture standard – GoTa, which is the first proposed by a Chinese enterprise. ZTE has become the first to achieve the patent authorization of Chinese telecommunications enterprises to other internationally renowned vendors. The products have entered dozens of countries, including Malaysia, Norway, and Russia. GoTa is expected to become one of the leading technologies that may change the pattern of the international digital trunking market in the future.

During the year, with strong technical accumulation and accurate perception of the market, ZTE made further strides with developing its own independent intellectual property rights. In the 3G handset area, ZTE rolled out the smallest, lightest foldable UMTS handset in the world. In addition, ZTE won a handset order of approximately US$100 million from the Brazilian telecommunications operator VIVO. To date, this is the biggest contract ever obtained by the Chinese handset maker in overseas markets.

In network products, ZTE successfully undertook the ADSL broadband access projects of 16 venues and press centers for the Olympic Games in Athens. In IPv6 overall technology and R&D, ZTE´s Softswitch products have been put into commercial applications in the networks of all operators in China and the markets of many countries and regions including Hong Kong SAR, Philippines, Romania, and Pakistan. ZTE has edged itself into the Tier 1 Softswitch equipment vendor in the world. ZTE´s optical network products scored several successes and consecutively won a large number of backbone projects, becoming the optical network equipment vendor with the fastest growth in the world.

Note: For your convenience, this announcement contains translation between Renminbi amounts and United States dollars at RMB8.27 = US$1.00  The translations are not representations that the Renminbi and United States dollars amounts could actually be converted at this rate, or at all.