More than a third of the revenues for ZTE's handset business comes from China. The company must innovate in its products, sales channels, and even the way it brands itself, otherwise ZTE risks stagnating, He said.
To set itself apart from the competition, ZTE will launch a new phone running Mozilla's upcoming Firefox OS. Called the ZTE Open, the handset is slated to arrive in Spain, Venezuela and Colombia in mid-2013.
While the Firefox OS is still in its early stages, vendors are hoping a rival mobile operating system will emerge to challenge Android and Apple's iOS, He said. Open source HTML5 operating systems such as Firefox, or the Samsung-backed Tizen, could one day become a third alternative. But so far, Microsoft's Windows Phone OS has yet to succeed in the market, he added.
"Microsoft could succeed to become the third major operating system, but it won't be just them competing for it," He said. ZTE plans to continue releasing Windows Phone handsets. But in the end, consumers and the industry will decide which operating systems come out on top, he added.