ZTE suspends smartphone sales and after-sale services
May 15, 2018 Category China News Round-up, Weekly
ZTE Corp, China’s biggest publicly traded telecommunications equipment provider, has halted sales of its consumer products and related services after the U.S. government last month banned the sale of American technology to the company. The closure appears to be part of the cessation of “major operating activities” described by the Shenzhen-based company in a filing to the Hong Kong stock exchange. ZTE was slapped with a seven-year ban prohibiting it from any transactions with the U.S. for breaching the terms of a settlement related to its business dealings with Iran. No products were listed on ZTE’s official online store on e-commerce platform Tmall and the website said it was “undergoing revision”. The company’s main Chinese-language webpage said “the website is under revision, please stay tuned.”
ZTE said that it maintains sufficient cash as of now and “strictly adheres to its commercial obligations subject to compliance with laws and regulations”. The company had immediately halted almost all of its operations both overseas and at home after the denial order came into effect on April 15. Beyond the company’s executives and employees, the denial order also categorized any “representatives” or “agents” as falling under the ban that prohibited participation “in any way in any transaction involving any commodity, software or technology exported or to be exported” from the U.S. ZTE declined to comment on the suspension of its sales channels and after-sale services as well as the revision and redirection of its websites.
China’s Ministry of Commerce said in a statement that Chinese officials had made “solemn representations” over the ZTE case to the U.S. trade delegation visiting China for trade talks earlier this month. On May 12, U.S. President Donald Trump said that he has asked the Commerce Department to help ZTE “get back into business, fast”. “Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he is working with Chinese President Xi Jinping on a solution. President Trump added in a second tweet: “China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries. But be cool, it will all work out!” ZTE could be back in business within a few weeks.
In 2017, ZTE paid over USD2.3 billion to 211 U.S. exporters, a senior company official said. In the first quarter of this year, ZTE shipped 6.6 million smartphones globally, 72% of which were to the U.S. market.
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