China's ZTE removed chief compliance officer before United States sanction

21 April, 2018, 13:16 | Author: Edward Snyder
  • ZTE Might Face Much Bigger Trouble Than Huawei's After the US's Seven-Year Ban

On Friday, ZTE, based in China, said that the ban by the usa on exports to the technology company could threaten its survival as well as adversely affect companies in the U.S.

In a separate case, American authorities this week barred state-owned ZTE Corp., one of China's biggest technology companies, from exporting USA components.

"Until the relevant investigation is concluded, the US Department of Commerce's Bureau of Industry and Security (BIS) insists on imposing the most stringent sanctions on the company". Washington later found ZTE guilty of such sales, but the two sides reached an agreement last year that let the Chinese firm avoid a threatened seven-year ban on buying USA components.

ZTE has described a United States sales ban on its products as "unacceptable" and pledges to take legal steps, if necessary, to protect the company's interests as well as that of its stakeholders and customers.

If no settlement is reached, the seven-year export ban would not only hurt ZTE, China's largest listed telecommunications equipment manufacturer, but deal a blow to the country's goal of recasting itself as a leading innovator.

The sanctions could handicap ZTE's global business selling smartphones that use Google Inc.'s Android system and network gear for phone and internet companies that incorporates USA chips and other technology.




The trouble for ZTE's supply chain began on Monday when the US Commerce Department imposed a ban on sales by American companies to ZTE for seven years.

"We're going to have to see how this unfolds".

The company does not give any details about the legal avenues that may be open to it, but the threat comes at the end of the first response from the company to this week's action by the US Department of Commerce (DoC). The official said ZTE doesn't have administrative appeal rights under agency regulations, but the agency had agreed to receive the evidence through informal procedures in the near future. ZTE said that they created several compliance teams (some led by the CEO) and hired external consultants to formulate training, operations, and procedures to ensure that their products won't be sold to embargoed nations.

Backstory: A trade war could be brewing, with tit-for-tat tariffs being applied by the U.S. and China, spurred by Donald Trump's concerns about China stealing American IP.

Cheng did not respond to an email and a LinkedIn message seeking comment.

The United States is ZTE's top smartphone market, accounting for 46 percent of its shipments, followed by China at 24 percent, according to research firm IDC. The company is set to pay a $1.19 billion fine.

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