Microchips ban unfair: ZTE head

By Chen Qingqing Source:Global Times Published: 2018/4/20 22:28:40

Tech company ‘in shock,’ says US has politicized trade issues

Yin Yimin (center), chairman of ZTE, speaks at a press conference on Friday at the company's headquarters in Shenzhen. Yin is flanked by all of ZTE's senior managers. Photo: VCG

 The US ban on exports of microchips and other component has sent Chinese telecom equipment manufacturer ZTE Corp into a "state of shock," with the company saying on Friday the US Department of Commerce order is unfair and unacceptable.

"The ban immediately sent the company into a state of shock, and has a direct impact on [our] 80,000 staff, hundreds of telecom operators and millions of American consumers," Yin Yimin, chairman of ZTE, said at a press conference held on Friday at the company's headquarters in Shenzhen, South China's Guangdong Province.

The penalty will also seriously damage the interests of the company's 300,000 shareholders around the globe, Yin noted.

"I strongly oppose the decision of the US Commerce Department to impose an unfair and unreasonable penalty, and for politicizing trade issues," the ZTE chairman said.

The US has exaggerated small issues and the order will have a significant impact on the company's business, Yin said during the press conference, adding that ZTE will tackle the problems through legal means and has confidence it will meet the challenges.

The company has been working to meet the requirements of the US Export Control Compliance program and has made significant progress since 2016, the company said in a public statement on Friday.

It is unacceptable that the Bureau of Industry and Security under the US Commerce Department has unfairly imposed the most severe penalty on ZTE before an independent investigation the company had entrusted to a US law firm was completed, the statement stated.

ZTE's latest statement suggests the ban will have a huge and immediate impact on the company, said industry insiders. ZTE will need to conduct a full-scale assessment of its business and undergo corporate restructuring, the insiders noted.

US Secretary of Commerce Wilbur Ross announced Monday local time that American companies will be banned from exporting components to the Shenzhen-based company, which produces smart phones and other telecommunication equipment.

The US Commerce Department claimed that ZTE lied to the US government about punishing employees who violated US sanctions against North Korea and Iran.

There is no room for any negotiations once the denial order has been activated, Chinese news site thepaper.cn reported on Friday, citing a recent interview with Will Reinert, spokesperson at US Department of Commerce.

The order will be in effect for seven years, and negotiations are only likely at the end of that period, said Reinert.

ZTE showed a tough stance on the US ban, said Wang Yanhui, head of the Mobile China Alliance, a Shanghai-based industry association.

"The major task for the company right now is to save its business," Wang told the Global Times on Friday.

ZTE has demanded all staff to study European and US laws and regulations in order to strengthen compliance management, domestic news site jiemian.com reported on Thursday.

About 30 to 40 percent of components that ZTE sources are from the US, including microchips, operating systems, optical network products and software, Wang noted.

"The next step for ZTE involves corporate restructuring that may involve selling some divisions," he said.

The seven-year ban comes on the heels of a pending China-US trade war, Xiang Ligang, chief executive of domestic telecom industry news site cctime.com, told the Global Times on Friday.

"The issue may be discussed between the two governments, which could have many different outcomes," he said.

"But in the short term, ZTE has to consider splitting some businesses to ease collateral damage," Xiang added. 

ZTE, along with Chinese companies Huawei Technologies and Lenovo, have also been put in the spotlight in a report released by US-China Economic and Security Review Commission on Thursday, which accused Chinese tech companies of conducting spy activities that may have been supported by the Chinese government.

"If US policies are based on such groundless statement, they are irresponsible and very dangerous," Chinese Foreign Ministry spokesperson Hua Chunying told at a press briefing on Friday.

Posted in: COMPANIES

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