ZTE strikes deal with US

Chi­nese com­pa­nies can learn lesson: trade ex­pert

Global Times - Weekend - - NATION - By Ma Jingjing

A Chi­nese trade an­a­lyst said on Fri­day that Chi­nese com­pa­nies can learn a lesson from ZTE af­ter the tele­com firm struck a deal with the US that in­cludes pay­ing a $1 bil­lion penalty and hav­ing a US-cho­sen com­pli­ance team on board to re­solve a high-profile dis­pute with the US.

US Sec­re­tary of Com­merce Wil­bur Ross an­nounced a ZTE set­tle­ment agree­ment un­der which ZTE must pay $1 bil­lion and place an ad­di­tional $400 mil­lion in sus­pended penalty funds in es­crow be­fore the US Com­merce De­part­ment’s Bu­reau of In­dus­try and Se­cu­rity (BIS) re­moves ZTE from the De­nied Persons List.

“ZTE will also be re­quired by the new agree­ment to retain a team of spe­cial com­pli­ance co­or­di­na­tors se­lected by and an­swer­able to BIS for a pe­riod of 10 years,” said a state­ment posted on the de­part­ment’s web­site.

ZTE is also re­quired un­der the agree­ment to re­place the en­tire board of di­rec­tors and se­nior lead­er­ship, ac­cord­ing to the state­ment.

ZTE said in an in­ter­nal let­ter to staff late Thurs­day night that it hoped the staff mem­bers could stick to their posts and not be af­fected by ru­mors, cs.com.cn re­ported on Fri­day.

Staff could draw a lesson from the bit­ter ex­pe­ri­ence and unswerv­ingly ad­here to the bot­tom line of com­pli­ance, said the let­ter, ac­cord­ing to the Beijing-based financial news web­site.

The set­tle­ment caused great losses to ZTE and the com­pany paid a heavy price, the let­ter said.

ZTE will soon re­sume op­er­a­tions af­ter the re­moval of the de­nial or­der, it added.

ZTE de­clined to com­ment as of press time on Fri­day.

Huo Jian­guo, a se­nior re­search fel­low at the Cen­ter for China and Glob­al­iza­tion in Beijing, told the Global Times on Fri­day that “de­spite the heavy penalty and harsh con­di­tions, it is a good thing from the per­spec­tive of ZTE’s devel­op­ment, as the prob­lem [of the de­nial or­der] is fi­nally re­solved.”

From this in­ci­dent, Huo said, “ZTE and other Chi­nese com­pa­nies should learn the lesson of being more pru­dent in their op­er­a­tions overseas.”

Prob­lems in­volv­ing trade and cross-bor­der in­vest­ment should not be in­volved in po­lit­i­cal dis­putes. In­stead they should be solved through pro­fes­sional con­sul­ta­tions, Huo said, while not­ing the so­lu­tion to ZTE’s prob­lem would also ben­e­fit US com­pa­nies like ZTE’s sup­plier Qual­comm.

On Thurs­day, Shang­hai-based Full­goal Fund Man­age­ment Co an­nounced it would lower the val­u­a­tion of ZTE shares, Shang­hai-based cap­i­tal mar­ket news site cail­ian­press. com re­ported.

The val­u­a­tion of ZTE’s A shares was low­ered to 20.04 yuan ($3.13), while the Hong Kong-listed shares were val­ued at HK$16.38 ($2.09), a drop of about 36 per­cent in both cases, com­pared with the price of ZTE when trad­ing was sus­pended on April 17.

In May, China’s ex­ports to the US were $39.3 bil­lion, a 13.6 per­cent year-on-year in­crease, and im­ports from the US stood at $14.73 bil­lion, an in­crease of 11.9 per­cent year-onyear, data from Chi­nese cus­toms showed on Fri­day.

That brings the Chi­nese trade sur­plus with the US to $104.8 bil­lion in the first five months of this year.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.