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ANNUAL REPORT 2021Glossary5G NSAThe Non-Standalone network architecture model as defined under 3GPP, where the 4Gbase station is used in conjunction with the 5G base station on the wireless side, whilethe core network could be a 4G core network or 5G core network. As a transitionalnetwork architecture model, NSA allows full utilisation of existing 4G network resources.5G SAThe Standalone network architecture model as defined under 3GPP, where the 5G basestation is used on the wireless side and 5G core network is used. SA is the targetinfrastructure of 5G network evolution.Integrated cloud-netcabinetIntegrated deployment of equipment such as edge cloud, wireline access and privatewireless net through a centralised cabinet with default typical applications, supportingfeature functions such as integrated wireline and wireless access, private net voice andnews and capable of flexibly submerged to the access server rooms of corporatebusiness zones or carriers.WANWide area network.Single carrierIn a dense wavelength-division multiplexing (DWDM) system that facilitates the use ofmultiple wavelengths on one optical fibre, each wavelength is known as a single-carrier,the speed of which has been increasing with the evolution of optical technology such assingle carrier 2.5G, 10G, 100G, 200G, 400G, 800G and 1.2T.C L bandsConventional band and long-wavelength band, the two commonly used wavelengthdivision frequency bands in the usable wavelengths of optical fibre. In the DWDMsystem, the C band has already been put to wide applications, while with the increasingdemand for bandwidth, the L band has now also been put to trial runs for commercialapplications.Data centre or DCAn Internet-based infrastructure centre that operates and maintains equipment forcentralised collection, storage, processing and dispatch of data, and provides relatedservices.SRv6SRv6 (Segment Routing IPv6), a protocol for forwarding IPv6 data packs on the networkdesigned on the basis of the source router concept. SRv6 adopts the existing IPv6forwarding technology and facilitates processing similar to label forwarding byexpanding the header fields of the IPv6 text. SRv6 is capable of further simplifying thenetwork protocol to allow more flexible service route planning.CN2ChinaNet Next Carrying Network.SDNSoftware Defined Network, a new type of innovative network architecture.FlexEFlex Ethernet, which facilitates flexible speed, greater bandwidth and passageseparation. FlexE is one of the recognised key technologies for 5G bearer networks andthe core of third-generation ethernet technologies.OXCOptical cross-connect, which offers the advantages of greater scalability compared toROADM, “0” fibre jump, a high level of systems integration, easy maintenance,occupation of less server room space and lower equipment cost.5

ZTE CORPORATIONGlossaryCLOS architectureAn architecture for multi-level circuit exchange network representing an improvement tothe Crossbar structure, through which unobstructed network could be provided. CLOShas the merits of cost savings and efficiency enhancement.PONPassive Optical Network, a network that provides optical access services to usersthrough the use of passive optical network technology and facilitates conservation ofoptical fibre resources on the main line through the adoption of a point-to-multipointtopological structure. It also offers flow management and security control functions.FTTRFTTR (Fiber to The Room) is a networking mode connecting different indoor AP with theindoor all-optical node through optical fibre to achieve a 1,000M coverage throughoutthe house.MECMobile Edge Computing, through which services and cloud computing functionsrequired by telecom users IT can be provided from a nearby point using wirelessaccess networks to create a telecom service environment featuring high performance,low latency and high bandwidth, accelerating the fast download of contents, servicesand applications in the network to allow uninterrupted premium network experience onthe part of consumers.ONTOptical Network Terminal.Low bitrate HDReducing bandwidth and storage space for videos while providing the same quality inuser experience, mainly through the application of: intelligent image segmentation, morerefined and intelligent compression code technology and AI-based SR technology.Video SRSR (Super Resolution) involves the conversion of low resolution videos to high resolutionvideos with the application of AI intelligent technologies to reduce bandwidth andenhance image details. It can be applied in video communication, monitor and industrialapplications.User experience inReal-time detection of network status and dynamic adjustment of parameters such ascountering weakvideo bandwidth, resolution and latency according to service preference during weaknetwork connection network connection to compensate for network packet loss, so as to enhance userexperience.Free viewpointFree viewpoint is a technology that allows uninterrupted capturing with precisesynchronic control through multiple cameras to ensure synchronic delivery andpreservation of spectacular live shots, such that users are able to watch matches with a360º free viewpoint by clicking the live video under the interactive mode.Machine visionSimulation of human visual functions using computers to extract, process andunderstand information from images of physical objects, to be applied in four majorscenarios: identification, detection, surveying and positioning, for various industries.SLAMSimultaneous localisation and mapping, which involves the creation of scenario modelswith survey data acquired through sensors, is applied mainly to solve the problem ofvoluntary motion of robots in an unknown environment.Point cloudData on 3D coordinate points of the external surface of a target object acquired throughsurvey instruments are collectively known as point cloud.6

ANNUAL REPORT 2021GlossarySpace arrangementAlso known as content space arrangement or virtual content arrangement, a process ofplacing the virtual object (model) into the space of the point cloud model to facilitatethe design of augmented reality effect.Spatial positioningThe process of acquiring the posing information of equipment in the current scenariothrough the survey data of sensors. Generally this means the repositioning process inSLAM or 3D reconstruction.Cloud identificationThe process of uploading the sensor’s survey data to the cloud for target identificationusing identification alogrithms and returning identification results.Cloud renderThe operation of 3D applications on a remote cloud server for 3D effect rendering andthe transmission of the rendered image back to the user’s terminal for display. Themajor merit of cloud render is that it could provide quality 3D rendering on any terminal(light-weight or heavy-weight).CDNContent Delivery Network, a network structure capable of redirecting on a real-timebasis a user’s request to the closest service node available to such user based onnetwork flow and information of various service nodes such as connection, load,distance from the user and response time.Big VideoUltra-high-definition videos such as 4K/8K/VR/AR, as opposed to standard-definition andhigh-definition videos, which feature richer contents and more exacting requirements forchannels, signifying the big video era for the video business. In particular, 4K is a rangeof resolution, namely, a display quality approximating 4,096 pixels in horizontalresolution.Cloud baseProvision of basic virtual singular or hybrid resource services for virtual machine, baremachine and container based on the cloud infrastructure, operating on standardisedhardware facilities or enhanced and customised hardware equipment. It providestechnical components and network and business services on an integrated basis and isexpandable as required to provide cloud-native technology stack for a range ofproducts.HeterogeneousaccelerationThe technology of allocating processing tasks to accelerated hardware to reduce theworkload of the CPU with the application of hardware modules in place of softwarealgorithm to achieve performance enhancement and cost optimisation. A computingstructure applying hardware structure is also known as heterogenous computing.XRExtended Reality, a collective reference to AR (Augmented Reality), VR (Virtual Reality)and MR (Mixed Reality), which is an environment featuring the combination of reality andsimulation and human-machine interaction enabled by computer technology andwearable device.5G natural navigation Robotic technology leveraging the characteristics of 5G network communication thatfacilitates the sensing of a physical environment through multi-modal sensors with theaid of intelligent algorithm analysis to allow voluntary selection of effective approachesand pathways and voluntary movement.7

ZTE CORPORATIONGlossaryDigital twinA multi-disciplinary, multi-physical dynamic, multi-dimensional and multi-probablesimulation process utilising fully data such as physical models, sensor updates andoperating history that completes projection in a virtual space to reflect the full life cycleof the corresponding physical entity.5G cloud-based PLCA 5G-based structure that performs software-enabled PLC functions by upshifting theCPU of traditional (PLC) programmable logic controller to the cloud for deployment,utilising fully 5G MEC (mobile edge computing) to solve the issues with traditional PLC,such as relatively small algorithmic capacity, lack of scalability and difficulties incentralised management.Intrinsic safety basestationMine intrinsic safety base station is an Internet access device that facilitatescommunication at critical locations in a coal mine well. It is suitable for use at acorrosive gas scene in coal mine wells where explosive mixtures such as methane andcoal dust are present but where insulation is uncompromised. It does not require theaddition of metal cases or fillings to avoid explosion, and the level of energy generatedfrom sparks or thermal effect occurring during normal use or breakdown complies withnational standards applicable to mines. The device is characterised by its small size,light weight and high safety level.8

ANNUAL REPORT 2021Company Profile9

ZTE CORPORATIONCompany ProfileThe Company is a world-leading listed integrated telecommunications equipment manufacturer in the worldmarket and a provider of integrated global telecommunications solutions, with dual listing on the main board ofthe Shenzhen Stock Exchange and the main board of the Hong Kong Stock Exchange.In November 1997, the Company launched its initial public offering of A shares for listing on the main board ofthe Shenzhen Stock Exchange. In December 2004, the Company launched its public offering of H shares forlisting on the main board of the Hong Kong Stock Exchange, becoming the first A-share company to be listedon the main board of the Hong Kong Stock Exchange.The Group is dedicated to the provision of ICT products and solutions that satisfy the needs of customers,integrating design, development, production, sales and services with a special focus on carriers’ networks,government and corporate business and consumer business.The Group is one of the major telecommunications equipment suppliers in the global telecommunicationsmarket with business presence in more than 160 countries and regions serving more than one quarter of theworld’s population. Guided by the corporate vision of “to enable connectivity and trust everywhere”, the Groupis taking solid steps to fulfil its role as a path-builder for the digital economy. In China, the Group hasachieved a leading market position for its various telecommunications products with longstanding business tieswith China’s major telecommunications service providers, such as China Mobile, China Telecom and ChinaUnicom. With respect to the international telecommunications market, the Group has provided innovativetechnology and product solutions to telecommunications service providers and government and corporatenetwork clients in numerous countries and regions, facilitating comprehensive communication services viamultiple means, such as voice, data, multi-media, wireless broadband and cable broadband for users all overthe world.10

ANNUAL REPORT 2021Corporate Information1Legal name (in Chinese)Chinese abbreviationLegal name (in English)English �訊ZTE CorporationZTE2Legal representativeLi Zixue3Secretary to the Board of Directors/CompanySecretarySecurities affairs representativesCorrespondence addressDing JianzhongTelephoneFacsimileE-mail4Registered and office addressPostal codeWebsiteE-mailPrincipal place of business in Hong KongQian YuNo. 55, Keji Road South,Shenzhen, Guangdong Province,The People’s Republic of China 86 755 26770282 86 755 26770286IR@zte.com.cnZTE Plaza, Keji Road South, Hi-Tech Industrial Park,Nanshan District,Shenzhen, Guangdong Province,The People’s Republic of China518057http://www.zte.com.cnIR@zte.com.cn31/F, Tower Two, Times Square, 1 Matheson Street,Causeway Bay, Hong Kong5Authorised representativesGu JunyingDing Jianzhong6Media designated for information disclosureby the CompanyAuthorised websites on which this report ismade availablePlace where this report is available forinspectionChina Securities Journal, Securities Times,Shanghai Securities Newshttp://www.cninfo.com.cnhttp://www.hkexnews. hkNo. 55, Keji Road South, Shenzhen, Guangdong Province,The People’s Republic of China7Listing informationA sharesShenzhen Stock ExchangeAbbreviated name of stock: 中 興 通 訊Stock code: 000063H sharesHong Kong Stock ExchangeAbbreviated name of stock: ZTEStock code: 7638Hong Kong share registrar and transfer officeComputershare Hong Kong Investor Services LimitedShops 1712–16, 17th Floor, Hopewell Centre,183 Queen’s Road East, Wanchai, Hong Kong11

ZTE CORPORATIONCorporate Information9Legal advisersAs to Chinese lawAs to Hong Kong law10Beijing Jun He Law Offices20th Floor, China Resources Building, Beijing,The People’s Republic of ChinaPaul Hastings21–22/F, Bank of China Tower, 1 Garden Road,Hong KongAuditorErnst & Young Hua Ming LLPLevel 16, Ernst & Young Tower, Oriental Plaza,No. 1 East Chang An Avenue, Dongcheng District,Beijing, The People’s Republic of ChinaSigning Accountants: Li Jianguang, Zeng Cihua11Sponsor/financial advisor with ongoingsupervisory dutiesOfficeNon-public issuance of A sharesShare issuance for asset acquisition12Information on change in registrationUniform social credit codeChina Securities Co., Ltd.Level 22, Block B, Rongchao Business Centre, 6003Yitian Road, Futian District, Shenzhen, GuangdongProvinceRepresentatives of the sponsor: Wu Chunlei, Qiu RonghuiPeriod of ongoing supervision: 4 February 2020 to31 December 2021Principals of the financial advisor: Wu Chunlei, Bao Antai,Lin JianshanPeriod of ongoing supervision: 10 November 2021 to31 December 2022 Applicable N/A9144030027939873X7There has been no material change to the principal business and controlling shareholder of the Company sinceits initial public offering of A shares and listing on the main board of the Shenzhen Stock Exchange.12

ZTE CORPORATIONChairman’s StatementOPERATING RESULTSFor 2021, the Company reported operating revenue ofRMB114.52 billion, representing a 12.9% growth ascompared with the previous year, comprisingoperating revenue from the domestic market and theinternational market of RMB78.07 billion andRMB36.45 billion, respectively.The Group’s net profit attributable to holders ofordinary shares of the listed company for 2021amounted to RMB6.81 billion, representingyear-on-year growth of 59.9%. Basic earnings pershare was RMB1.47.BUSINESS DEVELOPMENTYear 2021 was the closing year of the Group’sstrategic development period. During the year, wewere deeply involved in the large-scale 5Gdevelopment in China, as we reported steadyenhancement of the pattern of our carriers’ market,sustained stable operations in the overseas market,rapid growth in the government and corporatebusiness, ongoing recovery of the terminal businessand expedited deployment of new businesses.Meanwhile, we persisted in maintaining our leadershipin technology, as we continued to increase ourinvestment in chip, algorithm, base software andarchitecture to enhance our core competitiveness. TheGroup continued to advance internal digitaltransformation of the enterprise to achieve thevisualisation of operating processes and facilitatebetter operating efficiency. We persisted in reinforcingour principal businesses and diversifying into newones, as we attained qualitative growth andsuccessfully accomplished all business goals for thestrategic development period.DEAR SHAREHOLDERS,I hereby present the annual report of theGroup for the year ended 31 December2021, and would like to express, on behalfof the Board of Directors, our sinceregratitude to all shareholders for theirconcern and support for ZTE.OUTLOOKIn 2022, we welcome the commencement of ouroutperforming period amidst increasing uncertainty inthe volatile global landscape. Meanwhile, 5Gdevelopment in China will advance in depth andexpanse with growing sophistication in industryapplication. The “double carbon” economy isemerging, coupled with robust development of NewInfrastructure and an irreversible trend ofdigitalisation.14

ANNUAL REPORT 2021Chairman’s StatementAs a path-builder of the digital economy, we aredriven and well-equipped to seize such newopportunities, as we fortify our principal businessesand explore new ventures to achieve leapingdevelopment towards the goal of “Globall 500”. Inconnection with the carrier business, we will persist inmaintaining technological leadership in key segmentsand strive to become leaders in technicalcompetitiveness for our principal products. ProprietaryR&D on core chips will be enhanced to assure thebusiness sustainability of our products. In thedomestic market, we will embrace competition andstrive for breakthroughs to challenge higher grounds inmarket share and procure greater profit contributions.In the overseas market, we focus on “major nations,major T and major networks” and make stronger effortin strategic breakthrough and operational stability. Inthe government and corporate business, we will focuson the energy, transport, government, finance, Internetand major corporation sectors and achieve leapinggrowth by enhancing our general competitiveness inchannels and facilitating rapid replication of traditionaldominant products and new products such as serversand IDC data centre. In the consumer business, wewill seize opportunities presented by the developmentand evolution of handset and mobile Internet productsto swiftly expand our scale. For new businesses, wewill enhance development in the digital transformationbusiness and digital energy business such as 5Gindustrial solutions and car electronics, whileexpanding in smart home to negotiate breakthroughsmore speedily and provide new engines for growth inresults.We stand united as we set sail to travel far and wideagainst all odds. As the Group takes off on anoutreaching journey of conquest through theCompany’s strategic outperforming period, it willpersist in its strategic direction and negotiatebreakthroughs with boldness to generate the kind ofpowers and strengths needed for unfolding newhorizons and ever better, brighter prospe

19 Summary of the Company's Business 25 Report of the Board of Directors 56 Corporate Governance Report 87 Environmental and Social Responsibility 90 Material Matters 110 Changes in Shareholdings and Information of Shareholders 118 Directors, Supervisors, Senior Management and Employees 128 Information on Bonds 134 Audit Report