China's ZTE apologizes after paying 'disastrous price' in US sanction case

Devin Lawrence
June 11, 2018

It was reported that last month T-Mobile was going to walk away from an agreement worth more than $1 billion to distribute ZTE smartphones, among other products, in the U.S.

Yin's letter said there were "problems in our compliance culture" and ZTE should "hold the relevant people accountable and avoid similar issues in future", according to the Post.

ZTE did not immediately respond to requests for comment today. An employee who asked not to be identified further confirmed Yin sent a letter to the workforce but would not confirm its contents.

Trump later said his administration would allow the company to stay in business after paying a $1.3 billion fine, changing its management and board and providing "high-level security guarantees".

China-based ZTE has reportedly signed an agreement in principle that would lift a U.S. Commerce Department ban on the company which barred it from buying from U.S. suppliers.

Although the company dismissed four senior officials for their part in the scandal and installed a compliance team and new procedures at a cost of more than $50 million, it did not discipline a further 35 staff involved - a failure which prompted the United States government's action.

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The ban in effect nearly destroyed ZTE as it now relies on many components from American companies.

President Donald Trump has drawn fire from Congress for intervening in the case to rescue a Chinese company that had violated USA sanctions against two rogue nations that have been pursuing nuclear weapons programs.

Beijing said it reserved the right to retaliate and warned Sunday it would scrap any deals reached in talks on narrowing the Chinese trade surplus with the United States if tariff hikes go ahead.

The agreement signals that China will be likely to quickly approve the $43 billion acquisition of NXP by Qualcomm Inc, a deal that has been pending for 18 months.

However, they said the settlement might reduce the likelihood of a prolonged escalation of tensions. The company was subverting U.S. laws by buying USA components, incorporating them into its own devices which it exported to Iran and North Korea. Qualcomm and Intel count ZTE as a customer, as do smaller component makers Oclaro and Acacia, both of which saw their stock prices drop sharply when the ZTE export ban was announced. China has vowed to retaliate on everything from US soybeans to airplanes, and said it will abandon its commitments if the USA follows through on its tariff threat.

ZTE must "always adhere to the bottom line of compliance", the letter was quoted as saying.

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