ZTE replaces long-serving handset chief

In a New Year reorganisation, ZTE has sidelined He Shiyou, the long-serving head of its handset group, and replaced him with Zeng Xuezhong, currently China handset sales chief.

He, 47, has headed the devices business since 2004.

ZTE says the move is aimed at bringing new blood into senior management ranks, although Zeng is just seven years younger than He.

The move follows a decline in terminal sales over the last 18 months. Device revenue shrank 12.5% in the first half of 2013 and 4% during 2012.

ZTE also said it would spin the devices group off as a standalone unit. The division, which accounts for a third of total revenue, won't be a separate company, but will be responsible for its own procurement, R&D, sales and other functions.

ZTE, China’s second-largest telecom vendor, last year posted a 2.84 billion yuan ($470m) loss.  It has forecast a full-year profit for 2013.

A company source told Sina Tech that Zeng had replaced He because of the financial results, his age and greater grasp of the internet. Traditional handset vendors like ZTE are being challenged by new brands like Xiaomi, which skilfully use online channels, and e-commerce platforms like JD.com.

“Here the fast fish eats the slow fish,” CEO Shi Lirong is reported to have said.  "The highly efficient will destroy the inefficient... we must carry out strategic change, organisation change and cultural change."

As well as shifting He Shiyou, who keeps his role as executive director, ZTE said it would also step up its efforts in urban public IT, new energy tech and mobile internet.

In other appointments, it has tapped EVP Zhao Xianming as CTO and appointed senior VP Pang Shengqing as head of the enterprise group.