China's ZTE protests United States ban

ZTE In Danger Of Losing Android OS License

ZTE In Danger Of Losing Android OS License

China's ZTE Corp 0763.HK 000063.SZ said on Friday that a US ban on selling parts and software to the company was unfair and threatens its survival, and the mobile phone and telecommunications equipment maker vowed to safeguard its interests through all legal means. The Chinese phone maker, which is No. 4 in the United States with about 10 percent of our market, was recently banned from using USA components by the Commerce Department because it didn't eliminate the bonuses of 35 employees caught selling electronics to Iran. China has announced its own $50 billion list of US goods for possible retaliation and says it is ready to take other steps.

ZTE pleaded guilty in March 2017 and agreed to pay a $1.19 billion penalty for shipping the equipment in violation of US regulations. This ban was enacted as a penalty for ZTE not taking action in a 2016 judgement concerning exports to embargoed countries like Iran and North Korea and includes companies like Qualcomm and Dolby. As you can probably imagine, for a company that relies heavily on processors from US based Qualcomm, this is a huge hit, but it looks like China is looking for a way to avoid catastrophe. It may also decide to take non-specific "judicial measures" to defend its position - if a lawsuit is filed, the company may attempt an injunction at the Denial Order to keep parts supplies from the U.S. flowing.

"It is extremely unfair to ZTE and we can not accept it!"

ZTE earlier in a statement said the US had ignored its efforts to comply with American laws, which includes agreeing to pay as much as $1.2 billion in fines a year ago over allegations of doing business with Iran.

Unsurprisingly, ZTE says it is looking to resolve the problem, suggesting that it will first "not give up its efforts to resolve the issue through communication". It said it would safeguard its interests through all legal means.

China is set to implement a set of new national standards on compliance management systems on July 1, as the government steps up efforts to monitor companies' overseas operations and strengthen their compliance management to curb risk.

ZTE and Huawei have been shut out of the USA market for switching gear since a congressional panel in 2012 labelled them security threats. Potentially, the ban could even prevent ZTE from using Google's Android OS.

"Although ZTE can not represent all Chinese manufacturers, it is also not an isolated case", Zhang said.

Qualcomm didn't immediately respond to an email seeking comment. It would allow Qualcomm, which flourished by supplying chips to the mobile phone boom, to broaden its product range into other industries.

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