The Chinese telecommunications firm ZTE has claimed that its survival is at risk after the U.S. Commerce Department’s Bureau of Industry and Security, or BIS, this week banned American companies from selling to ZTE for seven years, saying the Chinese company had broken a settlement agreement with repeated false statements
The Commerce Department said on Monday that ZTE had lied to US officials about steps it had taken to punish employees who violated US sanctions against North Korea and Iran. The Chinese company last year agreed to pay a $1.2 billion fine after a US investigation found it had illegally shipped telecommunications equipment to the blacklisted countries.
At a press briefing in its Shenzhen headquarters, Chairman Yin Yimin admitted to wrongdoing but said the punishment didn't fit the crime."Such sanctions could put the company immediately into a coma," he said. "We resolutely oppose such an unfair, unreasonable punishment, and especially the act of politicizing trade issues."
Instead of punishing those involved, "ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand," the Commerce Department said .However, ZTE said that it has taken measures against employees who may have been responsible for the incident. It also said that it has introduced compliance training and in 2017 alone, spent over $50 million in an export control compliance program.
ZTE then said on Friday that the Commerce Department was ignoring the "arduous efforts" it has made to follow export rules, the steps it has taken to deal with people "who neglected their duty," and its hiring of an American law firm to carry out an independent investigation.
“It is unacceptable that BIS insists on unfairly imposing the most severe penalty on ZTE even before the completion of investigation of facts,” ZTE said in its first response since the ban was announced
I personally have a feeling that the denial order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies. There are definitely no signs of lifting the ban .
ZTE , which trades in Hong Kong and Shenzhen, shares that they have been suspended since the Commerce Department announced the ban.The company delayed its first-quarter earnings, which it originally planned to release on Thursday, while it assesses the impact of the US ban.
The Chinese government has repeatedly attacked the US government's decision, calling it reckless.
China and the United States are already locked in a bitter confrontation over their trading relationship and, in particular, China's acquisition of US technology. The two sides have threatened each other with steep new tariffs on exports worth tens of billions of dollars.
In my own opinion, unless the ban can be reduced or relaxed, it will not only hurt ZTE but also hinder China’s ambition to close the innovation gap on the United States and build the world’s largest 5G network by the end of the decade.
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