ZTE Corporation CSR Report 2009

Bringingyou Closer2009 Corporate Social Responsibility Report

Corporate Social Responsibility StrategyFor ZTE, corporate social responsibility is not an accessory,it is incorporated into all strategies of ZTE, comprising animportant component of the corporate enterprise culture.Corporate Vision & Core ValuesZTE’s Mission & VisionZTE aims to be a global communications leader, whichprovides the clients worldwide with satisfying andcustomized products and services.Employee's career development and their benefits arehighly concerned and guaranteed to be growing along withthe company's development at the same pace.ZTE strives for the best return on its shareholders'investments and assumes social responsibilities proactively.To become a world-class excellent enterprise in 2015.ZTE’s Core ValueRespecting each other and being faithful to the ZTE CauseServing with dedication and being committed to ourcustomersEndeavoring with creativity to establish a famous ZTEbrandOperating with scientific management to increase corporateperformanceCSR Mission & StrategyZTE had released the new CSR mission and strategy at theend of December, 2009.ZTE’s CSR vision is toConduct all business in an ethical and sustainable way thatprotects and advances the human rights, health, safety,

2009Corporate Social Responsibility Reportwell-being and personal development of all people workingdirectly or indirectly for ZTE,Operate always in an environmentally responsible mannerand actively contribute to solving the world’s current andfuture challengesHelp all its customers – internal and external – takeadvantage of the opportunities of a changing world and topositively impact societies on a local level around the world.ZTE’S CSR strategyZTE’s CSR strategy is to pro-actively develop, implementand improve CSR compliance throughout ZTE and itssupply chain based on industry best practices, continuouslearning and improvement efforts. Its objective is to developinto a global CSR leader long-termStructure of CorporateSocial ResponsibilityBy drawing on the experiences of Global Report Initiative,SA8000, EICC and other international standards, ZTE hasbasically established the corporate social responsibilitymanagement system covering 6 large areas: environmentalresponsibility, product responsibility, economic responsibility,social welfare, supply chain CSR, human rights and laborrights.Future Action Orientation of ZTE CSRIn recent years, ZTE has been vigorously promotingthe corporate social responsibility, during the promotingprocess, we have gradually realized that though ZTE hasmade certain achievements in its own CSR, there is still agap compared with the CSR level of international renownedcompanies. And it needs to make further improvement ofthe whole corporate CSR awareness and even the CSRawareness of the whole supply chain in China. In future,ZTE shall continue our efforts in the following aspectsto improve the corporate capability of undertaking andexecuting the corporate CSR, and strive to become theCSR leader in the communication industry.Firstly, it shall be the future focus of ZTE to improve thesupply chain’s CSR. ZTE intends to take the supplier’smanagement as the first step, to increase the management’sCSR sense, and help the supplier to establish a mechanismto manage CSR, so as to improve the whole society’s CSRwith the help of ZTE and other corporations finally.Secondly, ZTE will increase more investment in the R&Dof environmental protection, to reduce the environmentalpollution and build a good environment for greencommunication. Integrate environmental protection intoevery operating link of ZTE and the product’s life cycle.Meanwhile, give influence on other suppliers to realize thesustainable development of the whole industry.Corporate Governanceand Ethics StandardStructure of ZTE CSRIn 2005, ZTE has gradually established environmentand occupation health and safety management system,passed the ISO14001 and OHSAS18001 certification,and introduced EU WEEE/RoHS Directives. In 2006, ZTEfurther set to research the international CSR standards suchas SA8000. In 2007, ZTE officially carried out CSR system,appointed the executive vice president of the corporation asthe executive representative of CSR, and also establishedthe corporation-level CSR promotion team.In the corporate governance structure, ZTE selects directorsstrictly according to the Company Law and Articles ofAssociations, which ensures the selection of directs to beopen, fair, impartial and independent. In order to fully reflectthe views of minority shareholders, ZTE has, according tothe law, appointed an independent director who can fullyexpress independent ideas. The Board of Directors has areasonable professional structure, it is driven by the bestbenefits of the company to act honestly. ZTE has formulatedthe rules of procedure for the board of directors, the boardmeeting shall be convened and held in strict accordancewith the Articles of Association and Rules of Proceduresfor the Board of Directors. To improve the governancestructure, the board of directors has set up the nomination

committee, audit committee and remuneration & evaluationcommittee according to the Corporate GovernanceGuidelines. The independent directors occupy the majorityof each professional committee, and act as the convener,who shall provide scientific and professional suggestionsand references for the decisions of the board of directors.The Board of Directors is composed of 14 directors,including one chairman, two vice chairmen and 11non-executive directors who are independent in themanagement. 5 of the 11 independent non-executivedirectors are influential and proactive, having richexperiences in the fields of telecommunications, finance,law and banking, with an academic and professionalqualification, while the other 6 have rich experiences inservices and management. It helps to strictly review andmonitor the management program, ensuring the interestsof all shareholders including the small and mediumshareholders.ZTE attaches great importance to the construction ofcredibility, and the internal oversight of anti-bribery. Onthe one hand, based on national laws and regulations,ZTE has established the High Voltage Line for ZTEEmployee Behavior Standards. The ZTE High VoltageLine includes: intentional false reimbursement, receivingkickbacks, revealing the company trade secrets, engagingin the activities which are commercially competitive withthe company, and covering up violations of the law andbreaches of discipline. Meanwhile, we have conductedthe anti-bribery education, and invited the officers from thejudicial system to conduct legal training for the corporatemanagement. ZTE Corporation Newspaper has opened acolumn of Law Story, which reports typical cases, to forma good atmosphere of anti-commercial corruption. On theother hand, ZTE reinforces the momentum to crack downcommercial bribery behavior. ZTE auditing departmentprovides reasonable auditing assurance against commercialbribery by the means of auditing retired cadres, regularauditing and auditing on special topics, and seriouslydeals with any behavior against the law, disciplines andregulations.Stakeholders EngagementTo better carry out the corporate social responsibility,listen to the voices from all stakeholders, understand theirexpectations upon ZTE, and learn from their advantages,ZTE has established various communication channels withstakeholders.Stakeholders EngagementStakeholders Communication Communication ResultCustomerInvestigation of customer satisfaction: Carry out the satisfaction researchaccording to the specified research method. Each year, entrust the third-partyresearch organization to carry out the research on satisfaction.Technical communication and symposium: Organize the technical and R&Dpersonnel from the customer and ZTE to conduct communication and discussionabout the scheme, technology and product requirement.Visit: Take the opportunity such as client visits, product launch, tender,demonstration testing, etc., make face-to-face communication with the customer,to understand the customer’s ideas and requirements.Survey: List the questions which need to be got clear answers from thecustomers, and then send them to the customer for research and analysis.Cooperation with third-party professional consulting organization: Through thethird-party consulting corporation to investigate, analyze and determine therequirements of customers.To understand the customerexpectations and requirementsby continuous communicationwith the client. Continuouslyevaluate the customersatisfaction and loyaltyto ZTE, find out the keyfactors for improving thecustomer satisfaction, makethe improvement plan, andcontinuously improve thecustomer satisfaction andloyalty by continuous monitoringand improvement.

2009Corporate Social Responsibility ReportInternal newspaper/website: ZTE Communications, ZTE Corporation Newspaper,Intranet, etc.EmployeeShareholdersand InvestorsStaff survey: reasonable suggestion, Q12 employee loyalty survey, logisticssatisfaction survey and training satisfaction survey, etc.Labor union: ZTE has established the labor unions both in China and in overseasbranch offices, which has organized and provided various activities for theemployees.Employee complaint channel: CEO mailbox, department director mailbox andinternal BBSVarious associations: Photographing association, dancing association andmountaineering association.In strict accordance with the laws, regulations, Listing Rules and Articles ofAssociation, reveal the related information in a true, accurate, complete andtimely manner, and ensure that all shareholders have equal chance of acquiringinformation.Keep good communication with the investors by hotline, email box and investorsreception.Provide various communicationchannels for the employee.Improve the employees’ workingenvironment, and increasethe employees’ satisfactionand loyalty according to thecommunication result.Make sure that all shareholdershave an equal chance toacquire information. Keepgood communication with theinvestors, so that make theinvestors can better understandthe corporation.SuppliersZTE supply chain management websiteAnnual suppliers conference and supplier’s CSR trainingMake regular communication, mutual visits and learning with the high level of keysuppliers, to improve CSR level together.Supplier evaluation and reviewBy the different communicationchannels with the suppliersto know about the supplier’s demands and help thesuppliers to make continuousimprovement and reduce theCSR risk on supply chain.CommunityRespect the local culture and habitsMake contribution to the local economy and sustainable developmentTake part in the public service activities of the local community. Provide help andassistance in first time when the surrounding areas are in disaster.Keep good relations with thelocal community by opencommunication with thecommunity. Make contributionsto the sustainable developmentof the local community.WelfareOrganizationZTE has made full cooperation with the welfare organizations. Up to now, thereare three funds in ZTE that ZTE Special Fund for Children Care, relief fund forYunnan Veteran and ZTE Love Fund for Education Donation.To understand the difficultiesin the public interest causewithin China and around theworld via full communicationwith the public interestorganizations,. ZTE shall makefurther contributions for thepublic interest cause by takingadvantage of its own industrysuperiority.

Protecting the Interests ofShareholders and CreditorsProtecting the Interestsof Shareholders1.Mechanism of Protecting Shareholder’sInterestsAs the company listed in Shenzhen and Hong KongStock Exchanges, ZTE has been strictly complying withthe provisions in laws and regulations such as CompanyLaw, Securities Law, Corporate Governance Guidelines,Shenzhen Stock Exchange Listing Rules, Hong KongStock Exchange Listing Rules, Administration of InformationDisclosure of Listed Companies, to improve the level ofcorporate governance, perfect the internal control system,and standardize the corporation operation. ZTE hasgradually formed the corporate governance rule systembased on the Articles of Association, with the majorstructure of corporate Rules of Procedure for ShareholdersAssembly, Rules of Procedure for Board of Directors, andRules of Procedure for Board of Supervisors. ZTE has alsoestablished the corporate governance with the shareholderassembly, board of directors and board of supervisors asthe power, decision-making and oversight organizations,which have distinct rights and responsibilities with themanagement, carry out their own duties, effectively balancewith each other, make scientific decisions and operate in acoordinate manner. It effectively helps to guarantee equity,openness and justness for all shareholders and ensure allshareholders can enjoy the legitimate rights and interestswhich are stipulated in law, regulations and rules.2.Legal and Compliant General Meeting ofShareholdersThe general meeting of shareholders is the supreme bodyin ZTE. The Articles of Association and Rules of Procedurefor Shareholders have explicitly specified the functions andrights executed by the general meeting of shareholders. Ifthe general meeting of shareholders can be convened andheld under the premise of being legitimate and effective,it can grant sufficient discussion time for each decision,and therefore serve as a good bridge of communicationbetween the board of directors and the stockholders. Instrictly accordance with the related regulations on Internetvoting for shareholder’s assembly of Shenzhen StockExchange and Hong Kong Stock Exchange, the Internetvoting is provided when examine and approve major issues.During the reporting period, ZTE has convened altogether 3shareholder’s assemblies: Annual Shareholder’s Assembly

Serving with Dedication and BeingCommitted to Our Customers‘Serving with dedication and being committed to ourcustomers’ was summarized by Chairman Hou Weiguiof ZTE, it is not only the essence of years of successfulcustomer service experiences, but also the valuesguiding customer services of ZTE. ZTE has always beenpursuing the service principle of providing customers withprofessional, cordial, highly-efficient and perfect productsand services.In 2009, ZTE has continuously kept carrying out qualityassurance and quality improvement. To improve thecustomer’s feeling about telecom network, the qualityassurance project is made to guarantee the stable runningof network, ensuring that each wireless 3G networkand wired network are running stably in domestic andinternational market. Continuously improvement has beenmade in the aspect of product quality, pertinently producthardware quality and software quality, to realize thecontinuous improvement of product quality. Each serviceflow inside ZTE is perfected, monitored and improved, soas to increase the capability of ZTE in product quality andservice level by the improvement of internal procedures.After implementing the above three measures in 2009, theproduct quality and service level of ZTE has continued to bestable according to the satisfaction survey conducted by athird party, and no major quality or security accidents occurthroughout the whole year.Global Customer ServiceZTE Global Customer Service Center provides after-salestechnical support service for the communication equipmentof customers twenty-four hours a day and seven daysa week, backed up by 9 sub-centers, several advancedlabs in the R&D base and a team of well-trained technicalsupport engineers. With complete technical solutions andadvanced lab simulation environments, it is able to quicklyand effectively dispatch and utilize technical resourcesworldwide.ZTE is committed to continuously improving the capabilityof global customer support services. It has set up 8 regionalcustomer service centers (RCSC) and 37 local customerservice centers (LCSC) around the world, established a3-layer technical support service system comprising thelocal, the regional and the headquarter, as well as a stable11

2009Corporate Social Responsibility ReportZTE Global Customer Service Centerlocalized onsite support service team, to fully implement thestandardized management of customer support service.Through various service modes such as online support,remote diagnosis and onsite troubleshooting, they can makerapid response, and process customer service requestsand technical counseling efficiently with high quality, whicheffectively guarantees the safe and stable running of thecustomer’s existing equipment.1.Multi-channel customer request handling andcommunication feedback platformZTE provides global customers with the channelshandling customer requests and customer complaintssuch as hotline, fax, email, mail and website. Assistingthe customer to access services conveniently, ZTEhas also constructed the technical support website andInternet Customer Service Center (ICSC). ZTE technicalsupport website is the Internet-based window providingthe customers with technical support service, whichcan support around-the-hour online technical supportservices for the customers. The website provides theservice functions such as knowledge database, servicecenter, technical forum and technical documents.Internet Customer Service Center (ICSC) is the Internetbasedtechnical support service platform, which canprovide the customer with real-time interactive onlinetechnical support service. Compared with the traditionalonline technical support via call center, it’s faster and moreconvenient in responding to and solving the customer’sproblems.2.Sound management flow for customer supportserviceA standardized service flow management is the foundationof stabilizing the customer support service specificationsand capability. Based on ITIL model, ZTE has set up a setof complete customer support service management flowsystem and IT system platform. A complete and stableflow system and a globally-deployed IT system have beenestablished for the customer support services such as ‘faultmanagement, problem management, technical counseling,service modification, version management, service levelmanagement’.By customer support service operation and management,ZTE monitors the implementation of global customersupport service flow, making timely statistics andanalysis of the customer service KPI for global customerservice organizations, acquiring the situation of customer12

service flow implementation and customer evaluationin time, adopting corrective and preventive actions forexisting problems, and guaranteeing the highly-efficientand standardized running of global customer supportservices.3.Continuous improvement of customer supportservice capabilityZTE customer service is committed to focusing on ‘customersatisfaction’, strictly complying with TL9000 qualitymanagement standards, adopting 6SIGMA to improve itsflow capability, and realizing continuous improvement byadopting the continuous quality improvement managementmethod.Customer Satisfaction SurveyZTE has hired the internationally-renowned counselingNielsen to carry out a customer satisfaction survey annually,KPI 2009 2008Fix Response Time(FRT) for ReportedCustomer ProblemRestoration Response Time(RRT) for CustomerCritical IncidentZTE Customer Service KPI99.00% 97.75%94.88% 92.51%Customer feedback Satisfaction 96.28% 95.38%Online Support Callback Satisfaction 99.47% 98.13%and make comparison and analysis with the previous data,serving as the most important basis for improving the brand,quality and services in the next year.In 2009, while continuously exploring into the highendoperator’s market in Europe and America, ZTEalso encountered the challenges of customer servicerequirements from European and American high-endoperators. Through innovating and improving the customerservice flow, ZTE has won the trusts from European andAmerican high-end operators, and the customer servicecapability has also been greatly improved.Customer TrainingEstablished in July, 2003, ZTE University is the corporateuniversity founded by ZTE. It was founded to provide ZTEcustomers with professional training, counseling servicesand professional publications with significant value, and toprovide the knowledge solution plans.Relying on the strong technical force, with 14 years ofprofessional training experiences, taking advantagesof advanced training facilities, standardized trainingmanagement and excellent tutor team, for the past 6years, ZTE University has completed domestic andoverseas customer trainings for more than 19,000trainees, covering system trainings, trainings onmaintenance topics and management quality trainings,among them 30,000 are foreign customers from morethan 120 countries. Particularly in 2009, ZTE Universityimplemented technical and management trainings fordomestic and overseas customers, covering 50000trainees.Up to now, the training network of ZTE University hascovered more than 120 countries around the world,which provides customized, personalized and in-depthmanagement and technical trainings for more than 2000domestic and overseas operators.To further take localized advantage of the regional trainingcenters around the world, train and reserve telecom talentsfor the local society, ZTE established the overseas trainingcenter construction and social training development projectsin 2009, which are orientated to develop social trainingsfor college students in 12 regions including Asia-Pacific,South Asia, India, Southeast Asia, the CIS, South America,Eastern and Western Europe, North America, South Africa,North Africa and the Middle East. In 2009, altogether 4642persons were trained, 438 of whom are employed by thebranch company and the cooperators, fully representingZTE’s commitment of social responsibility to the internationalcommunity.13

2009Corporate Social Responsibility ReportPeopleAs the fastest-growing global telecom solution providerin recent years, ZTE knows that talents are the key toguarantee the company cause to be everlasting. It’s themain strategic target of ZTE to become the model enterprisein global market, and be the model employee trustedcompany by different nations and different nationalities.Respecting Employee DiversityFor recruitment, ZTE sticks to the principle of equalemployment, and provide equal employment chances forapplicants (no matter what nationality, age, gender, religion,belief, etc). By the end of 2009, ZTE has offered morethan 70000 postions around the world, in which femaleemployees account for nearly 30%, and there are more than100 disabled persons and more than 1700 minorities. ZTEhas also provided posts for local residents in more than 100countries besides China. The localizing rate in overseasregions has reached 65%.Salary & BenefitZTE offers its employees complete and featured salariesand benefits, where the salary is closely related with theFemale25.9%30~4031.6%40~504.1%above 500.5%18~201.9%Male74.1%20~3060.9%Employee Gender RatioEmployee Age Ratio14

employee’s development, personal performance andorganizational performance. To establish a long-termincentive mechanism that closely links the companyperformance with a long-term strategy, improve the overallsalary structure and achieve a win-win situation betweenthe company and employees, ZTE First Equity IncentivePlan was implemented for the first time in 2007, after beingapproved by the first provisional shareholder’s assembly,held on 13 March, 2007. Besides the full payment for theemployee’s various statutory social insurance (includingretirement insurance, medical insurance, work injuryinsurance, maternity insurance and unemploymentinsurance), as well as the statutory holidays and paid annualleave according to the labor contract, ZTE also offers thecommercial accident insurance, female workers’ prenatalleave, annual leave for overseas employees and theirspouses’ overseas home leave, international emergencyassistance for permanent or traveling overseas employeesand accompanying policy for overseas excellent backbonestaff, so as to make the employee to work without worriesand improve their life qualities.Employee’s CareerDevelopment & GrowthEmployee’s career developmentZTE is actively expanding the employee’s personaldevelopment scope, providing them with a “3-channel”List of Main Benefits in ZTE5 Main Social Insurances Commercial accident insuranceLabor Insurance SuppliesLegitimate national holidays such as annual paid leave,maternity leave, etc.Labor Union Activity ChargesFemale worker’s prenatal leaveMeal allowanceEmployee dining hallFree-of-charge shuttle vehicleRegular physical examinationcareer path including the promotion on technical channel,the promotion on service channel and the promotion onmanagement channel, so that the employee can bettercombine his own value with the company value, based onhis/her personal interests and expertise, and thus achievethe common growth of themselves and the company.Employee learning and growthZTE has always been attaching importance to theemployee’s training and education, and it’s an importantcomponent of the company’s long-term strategy to createa learning organization. By comprehensively balancingthe requirements of long-term strategic goals, an annualdevelopment plan, job responsibilities and performanceimprovement, as well as the employee’s capability differenceand vocational development requirements, the employee’slearning and development plan will not only help realize thecompany’s overall goal, but also meet the requirements ofthe employee’s personal capability and career development,thus achieving a win-win situation between ZTE and theemployee.By offering various training resources and channels, ZTEhas built a comprehensive training system, includingthe employee’s orientation training, on-the-job training,continuous education and the upgrading training formanagers, etc. In consideration of the characteristics ofadult learning, it adopts various training methods andapproaches for employee training. The employee trainingmethods include systematic training, training by hired tutors,external training, internal lectures, concentrated self-learningand self learning. The training approaches include lectures,onsite demonstrations, role playing, case analysis, learningfrom games, project authentication and self-learning. Toadapt to the development of internationalization, ZTE alsodelivers its training programs to staff all over the world viaE-learning platform (ZTE E-University) and multimediacourseware.Considering employee’s increasing desire of promotingacademic qualifications, ZTE has attempted the cooperationmode between enterprise and colleges in 2009 which canhelp the employee to achieve a promotion during their15

the overseas employee training coverage has increased bymore than 80% and 100% coverage for new employees.Meanwhile, ZTE has set up 12 training centers in 12 globalregions, the training services covering in North and SouthAmerica and Western Europe, Eastern Europe, the MiddleEast, Asia Pacific, Southeast Asia, South Asia, North Africa,South Africa, the CIS, and India. Ten of them have been builtcompletely and have been put into operation.Employee PraisesIn recognition of the achievements made by employee andteam, ZTE has established various praises for them.For the team there are performance awards, marketingawards, project awards, competition excellence/teamawards and special contribution awards.In 2009, ZTE firstly set the highest personal honor “ZTEGold/Silver Award in 2009”. This was the first time that ZTEset an individual honor award for the first-line staff, includingnormal R&D engineers, service engineers, bottom-layerengineers and other staff working consciously in the frontline. It was selected out from the candidates by direct vote,and finally 10 employees achieved the golden award, and20 employees achieved the silver award. This award playeda great incentive upon the employees.Equal and HarmoniousInternal CommunicationZTE has created various internal communication channelsfor the staff. Every employee can keep timely and smoothcommunication with the leaders, colleagues and cooperativepartners through ZTE Corporation Newspaper, ZTE Elitewebsite, internal forum and IM (instant message), etc.Colorful Cohesion ActivitiesBased on the great importance to corporate cultureand cohesion of staff members, ZTE has earmarked aconsiderable amount of money for building cohesion andholding large-scale theme activities, such as ‘Spring FestivalShow’, ‘Sports Game’, ‘Employee Family Day’, ‘DIV4Photography Contest, and ‘I Speak for My Cell Phone’. MoreZTE Corporation Newspaper, Intranet17

2009Corporate Social Responsibility ReportEnvironmentNowadays people are facing two pressing challenges:environmental protection and climate change. AlthoughZTE, as a telecom equipment manufacturer, is not in asector of high pollution and consumption, we know clearlyabout our social responsibilities and the significance ofenvironmental protection and creating sustainable society.Bearing this in mind, we shall incorporate environmentalprotection into every section of our operation as well as thewhole product lifecycle. By adopting the product lifecycleappraisal (LCA) model, we hope to launch more and morenew products and services with higher commercial as wellas environmentally-friendly values. Now, the Green strategyhas been penetrated into all business activities of thecompany from product development, production to supplychain, logistics and engineering, etc. We are searching fora green and environmental protection road integrated withenterprise development.ZTE's Green StrategyAs a global leading telecom equipment manufacturer,ZTE keep stressing the corporate social responsibilityand carrying out the green campaign in our company.Aimed at sustainable growth, continuous innovation andgreen environment, ZTE is willing to overcome all sorts ofchallenges and cooperate with operators to build sustainableand green networks and create a friendly environmentalinformation society. Therefore, ZTE actively promotes astrategy of four ‘Greens’, namely, Green Production, GreenCulture, Green Management and Green Value Chain.ZTE takes ‘Innovation, Convergence and Green’ as itsthree development strategies, and the Green strategy, isthe ultimate objective of the other two strategies. Now, theGreen strategy has penetrated into all business activitiesof the company from product development, production tosupply chain, logistics, engineering, etc. For example, theconcept of energy conservation and emission reductionhas become one of the driving forces of our productionand technology innovation, and is being implementedin planning, design, R&D and manufacture. In addition,ZTE actively promotes green technology standards in theindustry and together with our partners, from upstreamto downstream, to build green networks. In the company,ZTE implements highly effective and green production20

processes, and applies green management mechanisms,such as E-office and 5S policies. Besides, ZTE alsovigorously promotes the use of green energy products, suchas solar energy and wind energy, etc., and cooperates withpartners in developing new types of energy.Green Concept throughoutProduct LifecycleTo be a responsible ‘green’ enterprise is one of thecore development concepts being adhered by ZTE.Thus, ZTE has introduced state-of-the-art managementflows and quality standards regarding product lifecyclecontrol. By combining these external standards withinternal enterprise specifications, ZTE has achievedhighly effective monitoring and management throughthe product lifecycle, from raw material selecting,product design, manufacture to marketing and recycling.ZTE had already complied environmental protectionstandards such as EU RoHS and WEEE. Apart from this,ZTE has actively participated in green organizations fordeveloping green standards.RMD:Raw Material DepletionED:Energy DepletionWD:Water DepletionGW:Global WarmingOD:Ozone DepletionAT:Air ToxicityPOC:Photochemical Ozone CreationAA:Air AcidificationWT:Water ToxicityWE:Water EvtrophicationHWP:Hazardous Waste Productionproduct LCA analysisZTE has built company-level EUP energy efficiency andLCA analysis teams to promote low-energy consumptionproducts at the corporate level. For the product design, ZTEcarries out the concepts of low consumption, power saving,and recycling throughout the product lifecycle accordingto EU's design standards. Moreover, 11 major indexes areused to evaluate the environmental condition in the wholelifecycle, including raw material depletion (RMD), energydepletion (ED), water depletion (WD), Global Warming (GW)and ozone depletion (OD), etc.According to ZTE’s statistics on the existing network energyconsumption, most network energy is consumed by theaccess network. Wireless networks energy consumptionsof mobile operators account for over 70% of the totalconsumption, and the energy consumptions of accessnetworks of fixed operators is reaching almost 50%. Fromthis, we can see that wireless base station, cable accessnetwork, power supply and new energy will be the focusesof green product innovation.• Green Wireless Base Station—IntelligentReduction of Consumption and SmoothEvolutionHighly Efficient Power AmplifierAmong all base station components, power amplifier'spower consumption is the highest. Thus, improving theefficiency of power amplifier is the key to reduce theBS's power consumption. To achieve this goal, ZTE hasadopted a variety of technologies, and consequently thepower consumption of ZTE’s products is much lowerthan the average industry level. The most common one isDPD+Doherty, which can greatly improve power amplifier'sefficiency. New technologies, such as ET, are also beingexplored to further improve it. Dynamic power matching(D-PT), another key technology of ZTE, can realize ‘breathlike’power management. It can manage the power suppliersin an intelligent way by tracking load changes and supplyinghierarchical variable voltages. That means, if the poweramplifier's output power is rather large, then higher voltage21

2009Corporate Social Responsibility ReportIntelligent Cooling Systemwill be supplied. If the output power is below a certain level,then the supply voltage will be adjusted to a lower level. Inthis way, the power amplifier can always work with the bestefficiency no matter how much the power load is .Intelligent CoolingWith respect to cooling equipment, ZTE adopts theadvanced natural cooling technology, which applies theprinciple that hot air ascends while cold air descends.Therefore, boards and other equipment can be operatedwithout fans. It not only dramatically cuts down extra powerconsumption, but also minimizes noises during equipmentoperation. In addition, ZTE adopts various approachesincluding heat-transfer blind hole, new heat pipe technologyand new PCB designs to prolong battery life and create aquieter working environment,Our intelligent room temperature control system, which canbe used without air-conditioner, realizes substantial powersaving and base station environment regulation in all–climates condition. On the average, natural ventilation canbe used to replace air-conditioning during nearly 80% oftime of a year.Smooth Evolution—One-time Input in SDR Will Gain inYearsIn case of mixed networking of multiple frequencies (suchas 900 and 1800) and multiple modes (such as GMS andUMTS), the SDR products can be used to realize simplerimplementation. Depending on this product, it not only canrealize racks and even board modules sharing, but also canachieve single module sharing, showing the real meaningof ‘software definition’. In addition, as the evolution fromGSM to UMTS, HSPA and LTE will be entirely smooth, allthe existing hardware can still be used. In the evolution to4G, hardware reusability will reach 100% with no wastedequipment is produced., which will save much material anddo no harm to the environment• Green Fixed Network Broadband Access—Replacing Copper with FiberIn fixed networks, access equipment also hold 50% of thetotal network power consumption. Some is the traditionalnarrowband access equipment which is existed for manyyears, the other is broadband access equipment which isbecoming more and more popular. NGN reconstructionand replacing copper with fiber are the effective method forgreen fixed network access.As for broadband access networks, we devote ourselvesto building xPON networks. As a mainstream accessapproach, the proportion of PON (passive optical network) inthe access market is increasing, owing to its advantages inbandwidth, cost as well as passive feature. Compared withlegacy access equipment which consumes much energyin switching and convergence, PON saves the excessiveenergy, and moreover reduces power consumption of airconditioningfor maintaining normal operation of equipment.In addition, due to its passive feature, plenty of costs can be22

Sharing and Mixed insertion of EPON and 10G EPONsaved regarding the investment in equipment, space, andmaintenance.In October 2008 and June 2009, ZTE launched 10G-EPONnon-parallel and parallel equipment respectively. As the10G EPON technology has grown more mature, EPONequipment, the natural-born energy saving star, outperformsany other optical access technologies. If this technology isdeployed in large scale, we'll surely witness a significantdecrease in the average energy consumption of per user.For the new technologies, ZTE also releases its newproducts and solutions, such as dynamic dormancyenergy saving technology and fan speed temperaturecontrol technology, which meet EU's Coc standards in allaspects, are widely used in all series of access products tofundamentally reduce overall energy consumption,As for stations, we use proprietary integrated outdoorcabinets, which help further increase equipment densityand save over 50% of equipment room. In addition, for newproducts the adaptable voltage scope has been widened,which can cut down about 40% costs of power equipment.Last but not least, our platform designs realize single sharingand mixed insertion of boards in most fixed networks, thushelp operators to construct their networks flexibly.• Green Core Network—High Integrity andOverall Energy ConservationCore network becomes the greatest concern and the mostimportant part of operators due to the functions of storingsubscriber data of the whole network, performing serviceconnection and scheduling. ZTE's CN products had manyadvantages in the past. Now, the latest V4-series productsextremely fulfill the green and convergence ideas. The newgeneration CN products, which are on the basis of real all IPplatforms, can realize resource convergence and sharing.All CN functions can be provided by only a dozen boardmodules. Moreover, green technologies are adopted at alllevels of hardware and software, making CN products greenfrom all aspects. For example, green hardware designs canrealize extremely high capacity with low power consumption.Heat consumption in central equipment rooms is optimizedby elaborate layout, heat conduction planning, intelligenttemperature control, etc. Series of innovative green softwarefunctions are provided, such as dynamic power regulationand shared pool technology, and production material inputcan be quantified.• Green Bearer Network—Energy-savingArchitectureAs one of the fundamental telecom networks, bearernetwork has the most complicated structure and bulkequipment, which mainly consist of core routers andbackbone optical network equipment. With years ofexperience in bearer network, ZTE has developed manyenergy saving technologies and manufacture techniquesin the aspects of network, equipment and component. Ithelps to reduce the power consumption in operating andmaintaining bearer networks by the roots for customers, andeffectively lower the whole network TCO.Converged IP transmission platform also integrates greenideas. Based on the all-IP platform, ZTE’s simple and23

Green Packageproduct development. Cloud computing, which usesvirtualization technologies to shield software's dependencyon hardware, can distribute computing tasks in a resourcepool, and can make various application systems acquirecomputing capabilities, storage space and all kindsof software services according to their demands. Byenhancing system maintainability and providing rapiddeployment ability, it somewhat achieves the purposeof green telecommunication and solves the existingproblem of low utilization of resources and high powerconsumption due to inability to share system resourcesand the inflexible peak-based configuration.Now, we are actively cooperating with partners in promotingthe application of cloud computing in the industry to pushingthe development of green telecom.• Green Communication Power SupplyIn communication, the best efficiency of a power systemranges from 50% to 85%. ZTE’s breath-like powermanagement technology can open and close the powerrectifier module automatically according to the outputcurrent, so that the excessive rectifiers can alternatelyremain in power-off status and the system's load ratio canstay in the range of 50% to 85% in most cases, in this wayto improve the working efficiency of the system.• Green EngineeringGreen engineering is an important mean to achieve humanorientedharmony among ‘human, communication andnature’. Thus, it's required that communication networkengineering should conform to the principles of health,comfort, safety and environmental protection, and useresources in an efficient way (by saving energy, land, waterand material, reducing radiation, and being in harmony withthe surrounding environment) to minimize the bad effects ofengineering on environment as much as possible.Solar System of Ethiopia25

2009Corporate Social Responsibility ReportThe scope of green engineering covers green planning,green material and green construction. ZTE’s SDRdistributed base station requires less space in siteconstruction, which reduces the difficulty in addressing.It also can improve unit capacity. The network planningoptimization tool, which is independently developed by ZTE,is targeted at conserving energy and reducing consumptionat early planning stages, and provides the best networkperformance with perfect coverage schemes and siteselection policies. With respect to construction material,ZTE uses new types of environmental-friendly materials,electronic materials and paperless design. Reusing existingmaterial is another approach for environmental protection.In respect of the new site build, ZTE is trying to make use ofthe existing equipment rooms and rebuild the old equipment.The network disposals are also recycled and reusedaccording to standards. In network construction, ZTE adoptssystematic and effective processes and use helpful softwaretools to realize rapid, quality and highly efficient engineeringinstallation.• Green Logistics and SupplyThe concept of green logistics ZTE proposed covers theseaspects: replacing woods and plastics with paper, usinguniform packaging to simplify variety of packaging forms,providing convenient equipment storage, and choosinggreen logistics-intensive transport to avoid second move.Green packaging complies with the requirements ofsustainable development in that it does no harm to eitherecological environment or human body, and can be recycledand recovered. Regarding this, ZTE always adhere to theevaluation principle of ‘4R+1D’.• Wide Usage of Green EnergyApart from energy conservation and emission reduction,ZTE is also committed itself to the development and usageof new types of energy.Solar energy is a green energy which is the most easyto find on the earth. Due to its pollution-free feature andtechnological maturity, the photovoltaic industry is rapidlydeveloping at an annual increase rate of 40%. Thethickness of a solar cell has been reduced from 0.50mmto 0.15mm. The decreasing costs make solar energyincreasingly popular. Wind energy, another green energy,is also abundant on the planet. In recent years, the annualgrowth rate of wind energy has reached 27.6%. Wind-drivengenerators used in base stations are the mini generators of1 to 10 KW, the technology of which have been developedgradually. A solar-wind complementary solution is anothergreen energy solution that combines the advantages ofboth.ZTE provides all kinds of competitive power supply solutionsfor different local climate conditions, including independentsolar power, solar+oil, solar +wind, and solar+wind+oil. Fromthe perspective of overall cost, we provide an integratedgreen power supply system of lower costs, higher reliabilityand easier maintainability.Till now, ZTE has provided solar power solutions for morethan 40 operators in over 20 countries, and the total capacityhas reached 6 MW.• Green OperationTo realize green operation, ZTE has set up companylevelenvironmental management programs, whichprovide a theoretical basis for the control of water, airand noise pollution and waste management. Among allenvironmental management activities, ZTE focuses onenergy conservation and resource recycling. Adhering to thepolicy of ‘energy conservation, consumption reduction andpollution abatement’, ZTE lay stress on internal scientificmanagement in order to reduce material and energyconsumption from all perspectives including raw material,production, consumption, waste disposal, etc.ZTE believes that energy conservation and consumptionreduction does not simply mean saving water or electricityas people might think. It's more important to implementprocess control on all environmental factors in thecompany's operation. Based on the EHS (Environmentaland Health and Safety) system, ZTE has formulatedenvironmental management requirements, objectives,targets and management programs. Evaluation on energyconservation effects is conducted twice a year, and theresult will form the basis for raising higher objectives in thefollowing year. To further implement nationwide the policy of‘energy conservation, consumption reduction and pollutionabatement’, ZTE has began to promote environmentalmanagement since September 2008 in all the other ZTER&D centers in China. In 2009, ZTE participated in andpassed the clean production inspection conducted jointlyby the Economic and Trade Commission of GuangdongProvince and Shenzhen Trade and Industry Bureau.Meanwhile, ZTE strengthens its waste managementfrom two aspects: recycling of general waste and 100%26

Major environmental-friendly and energy conservation projectsSN Project Name Advantages ResultEnergy conservation – Using high-performance electronicballasts can save 20% ~ 30% electricity every year, and thuslight costs can be recovered gradually and reduce propertyOn the average,Replacing T8-36w operation costs.at least 25%1 lights with T5-28w Comfort – By avoiding frequent flashing of lights, we offerelectricity can belightsemployees a healthier and safer work environment.saved.Environmental protection – Light life is prolonged, andmercury leakage due to improper recycling of discarded lightscan be avoided.On the average,Increasing the utilization of resource and energy.electricity, paper,Integrated printing Improving customer satisfaction.2toner, and otherand copyingRaising management efficiency.resources canReducing costs in printing output.saved by 40%.Reconstructionof intelligentAccordingfrequencySaving public electricity.to actualconversion3Reducing aging rate of equipment.measurement,of central airconditioningwaterCutting down the company's energy costs.25% electricity issaved.system and windsystemCurrentSituationOver 80% inthe scienceand tech parkin Shenzhenhave beenreplaced withnew lights asexpected.Over 80%throughoutthe companyis covered bythe project.This projectwill be pilotedin over 50%area ofShenzhenoffice.4Clean productioninspectionDetermining the waste reduction targets and developingeffective measures to reduce waste generation.Finding out the bottlenecks and imperfections in theorganization management.Improving economic profits as well as the quality of productsand services,The overalleconomic benefitreached 120million RMB.This projectis beingimplementedin Shenzhenoffice.recycling of hazardous waste. Now, recycling of hazardouswaste has reached 100% which were transferred toqualified organizations in Shenzhen for further treatment,and effectively reduced the rate of pollution. In 2009, ZTEtotally recycled 3006 tons of general waste and 279 tons ofhazardous waste.With respect to the inspection and continuous improvementof the environmental management system, ZTE conductsa yearly evaluation on environmental and occupationalhealth and safety, ensuring it complies with all relatedlaws, regulations and requirements (both within Chinaand in countries to which our products are exported). Inaddition, items that have clear specifications are inspectedby qualified testing organizations. For example, processemissions and noise emissions from industrial plants areinspected by the Nanshan District Environmental ProtectionMonitoring Station in Shenzhen. In three straight years,all of our inspection indexes have met with the requiredstandards, and no excessive discharge of pollutants werefound. We will continue to take corrective and preventivemeasures, and improve our environmental managementaccording to higher standards.Meanwhile, as our markets are growing bigger and stronger,an increasing number of branches have been established inother parts of China. ZTE always pays close attention to theapplication of green technologies in constructing new officebuildings, and strictly follow the principle of sustainability inevery detail from design to construction. ZTE is aimed tobuild the safest, healthiest and most comfortable workingand living environment by optimizing the use of energy andresources, achieving the situation that human, architectureand environment can coexist and prosper for ever.27

2009Corporate Social Responsibility ReportAgile, Efficient and ResponsibleGlobal Supply ChainZTE is keeping close cooperation with global suppliers tocontinuously evaluate, measure and improve our socialresponsibilities, so that all parties in the supply chain willbenefit and grow together.Social Responsibilitiesof Supply ChainTo establish a more harmonious relationship with suppliers,ZTE is always targeted to become the best customer ofthem. ZTE encourages the suppliers to be the enteripreswith the sense of social responsibilities, and help themgrowing by sharing our technologies, marketing andmanagement experience with them.In 2008, ZTE conducted the on-site social responsibilityauditing on major terminal suppliers. From August in thesame year, ZTE developed a company-wide program forpromoting and fulfilling overall social responsibilities ofthe supply chain. This program involved on-site auditing,problem tracking, experience exchange with suppliers, andother issues.To build a green supply chain, ZTE has we have a deepcooperation with suppliers in the field of social responsibilityand environm ental management, etc. To be specific, thecooperation covers:Active and Effective SupplyChain CSR TrainingIn 2009, ZTE’s supply chain departments organized a largescaleall-staff training program as planned, which not onlycovered the fundamental knowledge and related standards,such as ROHS, ISO14001, OHSAS18001, SA8000 andQC080000, but also emphasized the requirements andhow to effectively implement CSR. Till now, 51 people havepassed internal training tests, and 20 have acquired externalcertifications.Strict and Impartial Procedurefor Suppliers IntroductionIn order to help suppliers better understanding ourrequirements of social responsibilities of the supply chain,ZTE offers a survey for new suppliers when they register onE-business website. ZTE hopes that potential suppliers canconform to our basic principles of supplier behaviors as well28

as local laws and regulations. In addition, as TE advocatesupply diversification in the whole process of invitingsuppliers, ZTE welcomes suppliers with different cultures,different nationalities and different developing characteristicsto cooperate with us on a fair and square basis, and ZTEis willing to assist them in developing their own diversifiedsupply chains.In 2009, ZTE introduced 638 new suppliers, and conductedon-site auditing on 406 of them. Through auditing, 105 CSRnon-compliances were found, and accordingly developedplans to help these suppliers solve the most urgent andcritical issues.Continuously Improve ExistingSuppliers' CSR LevelSince 2005, ZTE has provided supplier managementtraining at regular intervals. Through the training, ZTEhopes that suppliers can understand ZTE’s expectationsand requirements, and their employees can respect thoserequirements and be willing to follow the related laws andregulations. This in turn can help suppliers finding andimproving their defects. Up to now, more than one hundredcommercial QC managers from suppliers have received thetraining.In 2008, ZTE performed CSR evaluation mainly on over100 mobile product suppliers. 34 suppliers were identifiedas highly risky in CSR, among which 28 received on-sitespecial CSR auditing. 92 CSR non-compliances were found,among which 96% have been closed till now.In 2009, our supply chain completed more than 500inspections on system product suppliers, and identified 53suppliers as highly risky in CSR. For each of them, ZTE hadset up customized continuous improvement plans.3 0 02 5 02 0 01 5 01 0 05 0N e wS u p p l i e r sO n - s i t eA u d i t02 0 0 7 2 0 0 8 2 0 0 9105 CSR Non-compliances BreakdownChallenges and Plans in the FutureChallenges and Plans of Supply Chain's CSR ImplementationChallengeCSR evaluation system is imperfect.On-site CSR auditing does not coveroverseas suppliers.The frequency and coverage of inspection onhighly risky CSR suppliers are not enough.CSR auditors and trainers are insufficient.PlanLearn from CSR benchmark enterprises.Increase input of overseas manpower.Strengthen overseas auditor training.Conduct pilot on-site CSR auditing on overseas suppliers.Reevaluate more existing suppliers.Supervise and assist existing suppliers in CSR management.Strengthen training and recruitment.Collect successful CSR cases.29

List of Donated ZTE Spring Bud Schools in Earthquake-stricken Areas1. ZTE Longtai Secondary School in Zhongjiang County Number of people: 24002. ZTE Liyuan Primary School in Huanglu Township ofZhongjiang County3. ZTE Nandu Primary School in Nanhua Township ofZhongjiang County4. ZTE Central Primary School in Jiexing Township ofZhongjiang CountyNumber of people: 650Number of people: 1300Number of people: 9005. ZTE Jiangyou Industrial School in Mianyang City Number of people: 4000 or so6. ZTE Huilong Primary School in Lizhou District ofGuangyuan CityNumber of people: 7007. ZTE Shuigui Primary School in Guangyuan City Number of people: 3508. ZTE Panlong No.2 Primary School in Guangyuan City Number of people: 7009. Central Primary School of Guangping Township inNingqiang County of Shaanxi Province10. Central Primary School of Wuguanyi Township inLiuba County of Shaanxi ProvinceNumber of people: 2600Number of people: 4007.6-magnitude earthquake hit the western waters of theIndonesian island of Sumatra, devastating the buildings inPadang city and causing heavy casualties.On 1 October 2009, Indonesian representative office ofZTE immediately contacted Indonesian Bureau of CivilAffairs and assisted the Indonesian government in therescue operation by providing tents, small fuel generators,emergency rescue center facilities, first aid kits, rescueclothing, life-saving equipment and other relief supplies.EthiopiaWhen attending an orphanage charity donation ceremonyon July 26, 2009, Girma Wolde Giorgis, president ofEthiopia, highly appraised ZTE as a company which hadnot only played an active role in building the nationaltelecommunication network in Ethiopia, but also done alot of charities to benefit local people. Now, ZTE is one of31

2009Corporate Social Responsibility ReportEthiopians' favorite foreign companies.Ever since we set foot in the Ethiopian market, ZTE hasremained committed to honest business and reliabletechnology. Apart from helping Ethiopians build a nationwidetelecommunication network, ZTE also participate activelyin local social welfare activities, such as donating moneyto Children's Welfare Institute, providing free equipment forconstructing training centers, and voluntarily teaching localpeople to learn Chinese language. All these activities havecontributed a lot in promoting the Sino-Ethiopia friendship.32

Select 2009 RecognitionOur efforts in fulfilling social responsibilities have been widely recognized by the government, international organizations andthe media. The following are major honors and awards we received in 2009:1. In February 2009, ZTE joined the United Nations Global Compact.2. In April 2009, the State Administration for Industry & Commerce of the PRC formally granted ‘ZTE 中 兴 ’ the title of well-knowntrademark.3. In May 2009, ZTE was awarded ‘Chinese Children's Charity Awards’ by the All-China Women's Federation.4. In May 2009, ZTE was selected ‘China Communication Industry Leaders in 2009’.5. In May 2009, president Hou of ZTE was granted the fifth Yuan Baohua Management Award.6. In June 2009, ZTE entered ‘the InfoTech 100 of 2008’ selected by ‘Business Week’.7. In July 2009, ZTE was awarded by China Mobile ‘Sincere Cooperation Award in G3 Terminal Marketing’.8. In July 2009, ZTE won Global Telecoms Business Innovation Awards in the national mobile service category.9. In August 2009, ZTE was awarded ‘TOP 50 Best Employers for Chinese College Students’.10. In August 2009, ZTE defended its title of ‘Top 100 Chinese Sci-Tech Companies’ for the eighth year.11. On November 2009, ZTE received clean production certification issued by Guangdong Provincial Economic and TradeCommission and Shenzhen Municipal Trade and Industry Bureau.12. In December 2009, Environmental Labeling Products' certification was issued to ZXDSL 9806H product due to its design inenergy saving, limiting the use of hazardous substances, product recycling and dismantlability.Board of Directors of ZTE CorporationApril 9, 201033