Original title: why ZTE was completely blocked by the US
4hw.com.cn comprehensive news on April 16, 2018, the US Department of Commerce announced that it would immediately restart the order activating suspended special order against ZTE, and ZTE would be prohibited from importing goods from the US in any form.
This means that ZTE pleaded guilty in March 2017 and signed a settlement agreement, which failed. The $892 million fine it has paid is still not enough to calm down the situation, and it may even have to pay the $300 million fine that has been suspended. What's more, after being completely blocked by the United States, ZTE, which relies heavily on chips and other components imported from the United States, is undoubtedly a disaster.
At such a time point, ZTE has been subject to such severe sanctions. It's hard not to think of it. Does this mean that the Sino US trade war will further escalate?
Outline of this article
1、 Why is ZTE punished?
2、 What are the contents of sanctions?
3、 Reciprocity, will the next one be Qualcomm?
1、 Why is ZTE punished?
There are many reports about ZTE being sanctioned on the Internet, but most of them focus on the outbreak of Sino US trade war, while few mention the background and reasons for ZTE being sanctioned. Therefore, this article is more quoted and translated from the official reports of the United States and domestic public information. As for the truth, it's up to different people.
In fact, the ZTE sanctions case occurred far earlier than the Sino US trade war. It has been nearly six years since it was investigated by the United States in 2012. Before that, in March 2017, ZTE finally pleaded guilty and signed a settlement agreement. ZTE was punished by the U.S. regulatory authorities for violating the U.S. export control system by nearly 892 million US dollars, plus 300 million US dollars' suspended execution '. This is also the history of OFAC (the office of foreign assets control of the US Department of the United States) The largest ticket issued by Treasury against non-financial institutions.
The following is the whole story of ZTE's sanctions case,
two thousand and twelve
In 2012, ZTE signed a contract to sell a number of products carrying software and hardware from US technology companies to TCI, Iran's largest telecom operator, Reuters reported.
According to the U.S. export restrictions, the U.S. government prohibits the export of U.S. - made science and technology products to Iran. ZTE's deal is suspected of violating the U.S. export ban on Iran. The U.S. Department of Commerce led the investigation on ZTE's sanctions. The focus of the investigation is whether ZTE purchased American products through a cover company and then provided them to Iran, thus violating the U.S. export ban.
two thousand and sixteen
Four years later, on March 7, 2016, the official website of the US Department of Commerce disclosed ZTE's internal documents obtained by its investigators. According to the document, ZTE had projects in Iran, Sudan, North Korea, Syria and Cuba, which depended on the US supply chain to a certain extent. The U.S. Department of Commerce has taken measures to restrict ZTE's exports on the ground that ZTE has violated U.S. export restrictions. ZTE announced that it "learned that the US Department of Commerce intends to impose export restrictions on ZTE, and the company is comprehensively evaluating the possible impact of the incident on the company and communicating with all parties. '
In the early morning of March 8, 2016, China's Ministry of Commerce, as always, expressed 'strong dissatisfaction and firm opposition','zte has been actively engaged in international business, carried out extensive trade and investment cooperation with hundreds of American enterprises, and contributed tens of thousands of jobs to the United States. The US move will seriously affect the normal business activities of Chinese enterprises. China will continue to negotiate with the US side on this issue. ". The Consulate General in New York also said that "ZTE has suffered trade restrictions in the United States, and American technology suppliers are suffering.". "The implication is that the United States will hurt the enemy by one thousand and will lose eight hundred.
On March 21, 2016, the US Department of Commerce announced that it would issue temporary licenses to ZTE and its subsidiaries to temporarily lift export restrictions on the two companies. The temporary permit is valid from March 24 to June 30. According to the Wall Street Journal, the reason for the suspension of sanctions is that the US Department of Commerce has reached an interim agreement with ZTE, and one of the contents of the agreement is that ZTE executives involved in violations must resign from their management positions.
On April 5, 2016, ZTE's top management was changed, and the former CEO and other three senior executives resigned, while Zhao Xianming was appointed chairman and CEO of the company. Several ZTE executives gave up their own interests in exchange for the US Department of Commerce lifting export restrictions on ZTE, the Global Times reported.
Since taking office, Zhao Xianming has made reforms in the team and management mechanism, including the appointment of American lawyers as chief export compliance officer, the improvement of the export control compliance manual, and global export control training.
two thousand and seventeen
On March 7, 2017, in just one year, Zhao Xianming led ZTE through the crisis. After the settlement, Zhao Xianming also made a statement for the first time, but his attitude was quite different from that of China's Ministry of Commerce before. He said, "ZTE admits to violating the relevant laws and regulations of us export control, and is willing to bear the corresponding responsibility & hellip; & hellip;" Zhao also believes that the settlement with the US government is a win-win situation.
As a result, ZTE pleaded guilty and was fined $892 million by three U.S. agencies, with another $300 million suspended.
ZTE announced,
'the company has reached an agreement on the investigation of the company's compliance with the U.S. export control regulations and U.S. sanctions laws by the Bureau of industry and security of the U.S. Department of Commerce (hereinafter referred to as' bis'), the U.S. Department of Justice (hereinafter referred to as' DOJ ') and the Office of overseas assets management of the U.S. Department of the Treasury (hereinafter referred to as' OFAC') (hereinafter collectively referred to as' these agreements').
In view of our violation of U.S. export control laws and our violation of relevant U.S. laws and regulations due to the provision of information and other acts during the investigation, we have agreed to plead guilty and pay a total fine of $892360064. In addition, BIS also imposed a suspended fine of US $300 million on the company, which will be exempted from payment after the company fulfills the requirements of the agreement reached with BIS within the seven-year suspension period.
The agreement between the company and OFAC shall come into force upon the signing of the agreement. The agreement between the company and DOJ shall come into force upon the approval of the U.S. District Court for the North District of Texas (hereinafter referred to as the 'Court'). The court's approval of the agreement between the company and DOJ is a prerequisite for BIS to issue a settlement order. At the same time, after the agreement between the company and DOJ is approved by the court, the company pleads guilty and the BIS assistant minister issues a settlement order, the BIS will propose to remove the company from the entity list. '
The Ministry of commerce also made a statement on the result of the punishment when answering a reporter's question,
Q: the US Secretary of Commerce announced on the 7th that ZTE group has admitted that it has violated US foreign trade regulations and sold its products to North Korea, Iran and other places. ZTE will pay a fine of $1.19 billion, which will be the highest fine ever imposed by the U.S. foreign trade regulatory system. How does the Ministry of Commerce respond to this?
A: we have noticed that ZTE has reached a settlement with the US government on issues related to us export control. China has always been firmly opposed to the US using domestic laws to impose sanctions on Chinese enterprises. The Chinese government always requires enterprises to operate in accordance with the law in the process of opening up overseas markets. We hope that the US side will proceed from safeguarding the overall situation of Sino US economic and trade relations, properly handle this matter, and create a good atmosphere for the stable and healthy development of bilateral economic and trade relations. '
The translation is,
1. Enterprise recognition and punishment does not mean that you are justified;
2. We will strictly discipline our own enterprises;
3. Now that a fine has been imposed, business will continue in the future.
At that time, the fine event has been settled, and domestic securities companies have also said that this is a bad profit, "a good opportunity to build a position has come." therefore, after being fined $900 million, which directly led to ZTE's 2016 annual report from a net profit of 3.8 billion yuan to a huge loss of 2.3 billion yuan, the company's share price went like this..
At that time, sporadic reports and announcements in China seemed to describe this punishment event as a successful crisis public relations, and even rarely mentioned the reason and amount of punishment.
In October 2017, BIS published an investigation and analysis of ZTE, from which we can see the whole story of the case. In this report, BIS summed up five lessons for ZTE.
Reasons for punishment:
Key evidence in hand
After years of investigation, a confidential document of ZTE in 2011 was picked out, "report on comprehensively rectifying and standardizing the company's export control related business" and "risk aversion scheme of import and export control - Taking YL as an example".
The following statements in these reports have become the key evidence.
'at present, the company's biggest risk is the ongoing Iranian Business & hellip; & hellip; At the end of 2010, our company signed a four party agreement with Iranian customers and adopted a semi partitioned operation mode. For example, our company only provided Iranian customers with self-produced equipment, while sensitive products purchased from the United States were provided to customers by our partners. '
'our company has signed many contracts with YL, an Iranian company, and these contracts are currently being implemented. Originally, these contracts were signed by the four parties. However, in the process of implementation, ZTE did not operate in strict accordance with the mode agreed in the contract. Instead, ZTE assumed the rights and obligations under the contract and directly exported the controlled goods to Iranian companies. '
'when our company conducts business with ZTE group, we should avoid using our own name, and also avoid exporting products and providing services directly to these customers. This operation method is called partition mode. '
"In the partition mode, 7S company purchases products from the United States and resells them to 8s company, 8s company exports products to 10s company in Dubai, and finally 10s company resells them to YL company and its customers & hellip; & hellip;, and another operation is that 9s company established outside China buys American products and exports them to Dubai, and 10s company resells them to YL & hellip; & hellip;"
'our re export business, especially the business in Iran, may make our company blacklisted by the United States. Once blacklisted, our company may lose the supply chain of American products. '
'Many of our technology and parts are provided by American suppliers & hellip; & hellip; once our company violates the relevant export control laws of the United States, the U.S. government may prohibit domestic suppliers from providing products to our company. '
In short, ZTE has used many channel companies to export American products to Iranian enterprises through layers of transshipment.
Five lessons
Here are five lessons from bis for ZTE
Lesson one: don't lie
During the period from August 26, 2014 to January 8, 2016, ZTE representatives assured the US regulatory investigators in several meetings that the company had ceased its business with Iran in March 2012, so it would no longer violate the US export control laws. '
To achieve this goal, ZTE is very interested