United States ban causes ZTE to cease main operations

10 May, 2018, 14:09 | Author: Gladys Mathis
  • Chinese company ZTE stops business operations after US ban

The Shenzhen-based company said it had ceased "major operating activities", in a filing late on Wednesday to the Hong Kong stock exchange.

As of now, all major operating activities have been shut down while ZTE tries to negotiate a modification or even reversal of the Denial Order.

Saying it has improved its compliance, ZTE has asked for a stay on the ban and supplied supplemental data bolstering its case to the Commerce Department.

However the company stated that it still has enough money to fulfil its commercial obligations, and is communicating with the USA government to try and modify or reverse the blocking order.

The Chinese firm is greatly dependent on USA chips imports and the ban on sales hampers the smartphone business.

Last March, ZTE came to a settlement agreement with the USA government after they admitted to shipping products to Iran and other countries that are under a trade ban.

Last year, ZTE admitted it shipped US-made parts to Iran and North Korea despite trade restrictions.

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The US Department of Commerce's Bureau of Industry and Security (BIS) in April imposed the denial of export privileges against ZTE. The ban has been in effect for over three weeks and ZTE is hurting. In a glimmer of hope, Taiwanese firm Mediatek has obtained a permit from the Taiwanese government to continue to supply the company with its components.

Although US officials have said the action taken against ZTE is not related to trade policy, some believe it is reflective of the wider treatment of Chinese technology firms by America.

It looks like the sanctions that the USA government has placed on ZTE may be the beginning of the end, at least for their main business operations.

Earlier this week China pleaded with the U.S. to amend the seven year ban during talks in Beijing between senior officials from both countries who are close to a trade war.

According to Reuters, ZTE has halted all main business operations due to the ban.

ZTE wasn't kidding around when it suggested that a U.S. Department of Commerce order would "severely impact" its survival.

The firm does not provide details on which operations are affected, but says that it has enough cash to fulfil its commercial obligations in the public filing. Press Secretary ZTE declined to comment.

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