Trump Offers Lifeline to Sanctioned Chinese Firm ZTE -- Update
May 13 2018 - 1:00PM
Dow Jones News
By Dan Strumpf
President Donald Trump said he was working with Chinese
President Xi Jinping to keep ZTE Corp. in business, throwing an
extraordinary lifeline to the stricken Chinese telecommunication
giant.
Mr. Trump said in a Sunday tweet that the Commerce Department --
which is reviewing ZTE's request for a stay of an order banning
American companies from selling to the Shenzhen-based firm -- has
been instructed to "get it done." Mr. Trump added: "Too many jobs
in China lost."
The surprise intervention comes less than a month after ZTE was
hit the ban. The Commerce Department ordered U.S. companies to stop
exporting to ZTE in mid-April, saying the Chinese company violated
the terms of a 2017 settlement resolving actions for its evasion of
U.S. sanctions for earlier selling to Iran.
ZTE, which relies on billions of dollars in component imports
from U.S. tech titans such as Qualcomm Inc. and Intel Corp. has
warned the ban threatened its survival. Last week, the company said
it had ceased major business operations.
The Wall Street Journal reported Saturday that in its efforts to
have the ban stayed, ZTE has told U.S. authorities that process and
human-resource errors, not a plan of systematic deception, were
responsible for the lapses in fully complying with its 2017
settlement, according to a person familiar with the matter. The
company also believes that the ban is a disproportionate penalty,
this person said. The Commerce Department has said it was reviewing
the stay request.
ZTE and the Commerce Department couldn't immediately be reached
for comment following the president's tweet.
The sudden sales ban placed the company at the sharp end of a
rising trade dispute between Washington and Beijing that has
included tit-for-tat tariffs. Technology has become a focus of
tensions, with the U.S. accusing China of transferring key
technologies back home and unfairly supporting domestic
champions.
For years, the U.S. has accused equipment made by ZTE and its
larger crosstown rival Huawei Technologies Co. of being a national
security threat, an accusation that both companies have denied.
Chinese representatives complained to their U.S. counterparts
about the ban during a recent visit by a U.S. trade delegation to
Beijing. The export ban was expected to figure in another round of
trade talks between the two sides in Washington this week.
ZTE employs roughly 75,000 people and is the fourth-largest
mobile phone vendor in the U.S., selling 19 million phones in
America last year, making it the firm's biggest market.
Backed by the Chinese government as a tech national champion,
ZTE works alongside Huawei in the race to develop next-generation
5G wireless technology -- an area in which Qualcomm is viewed by
Washington as a crucial U.S. competitor. ZTE sent 11
representatives to a recent industry-sponsored meeting in India to
discuss 5G specifications, according to conference records.
In 2017, Huawei led the global telecom-equipment market with a
27% share, followed by Nokia at 17% and Ericsson at 13%, according
to research firm Dell'Oro Group. ZTE was fourth with 10%. But in
the U.S., Ericsson and Nokia each held a 48% market share.
Write to Dan Strumpf at daniel.strumpf@wsj.com
(END) Dow Jones Newswires
May 13, 2018 13:45 ET (17:45 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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