ISLAMABAD: China’s technology giant ZTE has opened up on the controversy regarding its Export Control Compliance Regime, making it clear that within ZTE, compliance to the regime is regarded as the “foundation and bottom-line of the Company’s overseas operations”.
It merits mention that the US Secretary of Commerce Wilbur Ross had announced on April 16, that the US Department of Commerce’s Bureau of Industry and Security (BIS) had decided to impose a denial of export privileges against two Chinese companies.
As a result of this denial, ZTE, one of China’s largest manufacturers of telecommunications equipment, will no longer be able to obtain US made goods or software without special permission.
The US move is being seen in line with the recent announcement of US sanctions by Trump administration against certain Chinese companies. Commonly known as ‘US trade war on China’, the move is going to hurt Chinese shipments to the US.
In an official statement issued at the website of the company here in Pakistan, Zhongxing Telecommunications Equipment (ZTE) Corporation and ZTE Kangxun Telecommunications, the company’s media wing stated that ZTE has been working diligently on the export control compliance programme and has invested tremendous resources in export compliance and has made significant progress since 2016.
“It is unacceptable that BIS insists on unfairly imposing the most severe penalty on ZTE even before the completion of investigation of facts, ignoring the continuous diligent work of ZTE and the progress we have made on export compliance and disregarding the facts that ZTE self-identified the issues in the correspondence which were self-reported by ZTE immediately, the company has taken measures against the employees who might have been responsible for this incident, corrective measures have been taken immediately, and a prestigious US law firm has been engaged to conduct independent investigation,” the statement said.
“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 US companies,” the statement added.
The Chinese tech giant said that since April 2016, ZTE Corporation has continuously reflected on lessons from its past experience in export control compliance and has attached great importance to it.
“In March 2017, ZTE reached a settlement with the US Departments of Justice, Commerce, and Treasury for over $1 billion, covering civil and criminal charges levied against the company. The charges stemmed from allegations that ZTE exported US-controlled goods to Iran and North Korea in violation of the International Emergency Economic Powers Act (IEEPA) and then attempted to cover up those activities,” the statement said.
“Within ZTE, compliance is regarded as the foundation and bottom-line of the company’s operations. ZTE has established a Compliance Committee led directly by its CEO; built a global team of experienced export control compliance experts; engaged several world-class counsels and consultants to provide professional guidance in order to establish and optimise ZTE’s export control compliance structure, system and procedure,” the company statement said.
Further elaborating the steps taken to ensure compliance of the Export Control Regime, the company said it had introduced and implemented the SAP Global Trade System (GTS); organised compliance training covering over 65,000 employees; cooperated comprehensively with the independent monitor designated by the US government to ensure the monitor’s real-time and transparent monitoring over ZTE’s implementation of the relevant agreements with US government.
“(The ZTE also) ensured applicable export control compliance requirements, and provided over 132,000 pages of documents. In 2017 alone, ZTE invested over $50 million in its export control compliance program and is planning to invest more resources in 2018,” the statement added.
However, the company regretted that BIS activated the suspended Denial Order on April 16, on the ground that ZTE did not timely reduce bonus of and issued letters of reprimand to certain employees involved in past violation of export control and made false statements in correspondence with the US government.
“In any case, ZTE will not give up its efforts to resolve the issue through communication, and we are also determined, if necessary, to take judicial measures to protect the legal rights and interests of our company, our employees and our shareholders, and to fulfill obligations and take responsibilities to our global customers, end-users, partners and suppliers.
As a global company originating in China, ZTE will unite all of its employees as one with full confidence to work together taking best efforts to facilitate a final resolution,” the statement concluded.
