ZTE issue

Issue Time:2018/06/14
On the evening of Beijing time yesterday, both Xinhua News Agency and foreign media released the latest news, saying that US Commerce Secretary Ross had just formally announced a new settlement agreement with China’s ZTE Corporation.

The US Department of Commerce issued a statement on the same day that Ross announced on the same day that ZTE and its affiliates have agreed to pay fines and take compliance measures to replace the US Commerce Department’s previous ban on the company’s purchase of spare parts from US suppliers.

| Paying a large fine, the US Compliance Group stationed in ZTE

The statement pointed out that according to the new settlement agreement, ZTE Corporation pays a fine of US$1 billion and prepares another US$400 million for safekeeping by a third party. Then the US Department of Commerce will remove ZTE Corporation from the ban list.

In addition, according to foreign media CNBC reports, apart from paying huge fines, one of the conditions that ZTE must also accept is that the United States selected a compliance team to enter ZTE and requested ZTE to replace its board of directors and senior management team within 30 days.

"We are actually embedding our chosen compliance department in the company to monitor it in the future. They will pay for these people, but these people will report to the new chairman," Ross said.

Ross told CNBC last week that the US stock market will "adjust" any changes in U.S. trade policy. He also said that ending the tariff reduction on Canada and Mexico reflects the lack of progress in the North American Free Trade Agreement negotiations.

It is reported that last week the Trump administration decided to impose tariffs of 25% and 10% on steel and aluminum imported from Canada, Mexico, and the European Union. The three U.S. allies quickly announced retaliatory measures.

ZTE escapes life and death, Chinese companies should take warning

As one of the world's leading integrated communications solution providers, ZTE has maintained a good cooperative relationship with numerous US suppliers and provided support for nearly 130,000 high-tech jobs in the United States. Experts pointed out that because ZTE has closely cooperated with many U.S. companies, the U.S. government’s export control measures for ZTE will cause losses to suppliers such as Qualcomm, Intel, and ZTE in the United States.

CCTV International International published a commentary saying that after experiencing a negotiation game of nearly two months, the ZTE event finally had the latest results. This result is not easy to come by and is worthy of consideration and cherish by all parties. Among them, the party ZTE Corporation finally escaped the disaster and recovered its vitality. Of course, judging from the content of the agreements signed with the United States, the huge fines, adjustments made by the board of directors and management, and accepting the US's supervision at any time ... The price paid by ZTE can be quite heavy and painful.

ZTE's mistakes originated in 2010. Because they were driven by commercial interests, they did not hesitate to undermine the basic rules of cooperation with the United States, violated US regulations, and were punished by commercial transaction rules and laws and regulations. Objectively speaking, this is a list that a multinational company must buy because it violates the spirit of contract. Because the consequences that must be borne against the laws and regulations are worthy of caution for Chinese companies and even all multinational companies.

The commentary pointed out that the ZTE incident was only a case of corporate violations, but the Chinese government has invested a lot of resources and solemnly negotiated with the U.S. side for the sake of people-oriented considerations, and finally reverted to a living path of ZTE. However, this does not mean that Chinese companies will come to the government in the future. International companies need to have international standards, not to be "giant babies," and not to use commercial interests to enshrine the government.

This incident also sounded a warning to Chinese companies. ZTE does not represent the overall appearance of Chinese companies, but it is a mirror for Chinese companies. The situation in which China’s key core technologies are controlled by people has not been fundamentally changed. Chinese enterprises must firmly hold the core technology in their hands as soon as possible.

Shenzhen Runxiang TelecommunicationTechnology Co., Ltd, established in Jan 2008, is located in Longgang District,Shenzhen City.  RUX is a high-techcompany specialized in research, development, production and sales of fibercommunication products.