US ZTE ban sparks Chinese to rally around company

As part of the agreement, Shenzhen-based ZTE promised to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them but had failed to fully carry out those actions, United States government officials told Reuters this week.

Visitors are seen at a booth of Chinese telecom equipment maker ZTE Corp at an expo in Beijing, China September 27, 2017. Restricted activities include exporting or re-exporting to ZTE Corporation or ZTE Kangxun any hardware, software, or technology subject to the EAR (including US origin items overseas and foreign-made items with more than 25 percent USA content), as well as facilitating acquisition of such items by the ZTE entities, and servicing EAR-controlled items that are owned, possessed or controlled by the ZTE entities.

About a year ago, ZTE pleaded guilty to violating US sanctions against Iran and North Korea. Regardless, it's not looking good for ZTE in the Android world...

Last year ZTE shipped 46.4 million smartphones ranking seventh globally out of Android-based manufacturers and commanding around 12 percent of the USA market.

One key area of concern is whether ZTE will be able to continue to use Google's popular Android operating system on its mobile devices. "The action targets China, however, it will ultimately undermine the U.S. itself", Xinhua quoted spokesperson Gao Feng of the Ministry of Commerce as saying. New York-based software firm Taboola Inc, which this month announced it would supply ZTE with technology to personalize news feeds on phones, told Reuters it expects the deal to move forward. United Kingdom concerns regarding ZTE are similar to ones that the US Government has against Chinese equipment providers (including Huawei) and are mostly centered around claimed links to the Chinese government and new laws that allow them to pressure local companies in ways that could be used for foreign surveillance or penetration. Most ZTE phones sell for below $300, a low-end segment of the US market, ZTE's mobile chief executive, Lixin Cheng, told Reuters in January.

The Commerce Department initially banned USA companies from selling to ZTE in 2016 after the Chinese company was caught shipping equipment with us components to Iran in violation of us export controls. The company has spent billions of dollars licensing technology from USA partners, he said.

China's Ministry of Commerce and the Ministry of Industry and Information Technology (MIIT) did not immediately respond to faxed requests for comment late on Thursday.

  • Tracy Klein