ZTE Lashes Out At US Ban, Vows To Protect Company

ZTE has described a US sales ban on its products as "unacceptable" and pledges to take legal steps, if necessary, to protect the company's interests as well as that of its stakeholders and customers.

The Chinese vendor said in a statement Friday that it had invested significant efforts since April 2016 to ensure its practices and processes were in compliance with export laws.

Pointing to "lessons" it learnt from "past experience", ZTE said it had established a compliance committee led by its CEO, developed a global team of experts in export control compliance, and sought professional advice from counsels and consultants. It further implemented the SAP Global Trade System and conducted compliance training for more than 65,000 employees.

It added that it also worked with an independent official designated by the US government to monitor ZTE's implementation of agreements with the US government. Last year alone, it said it invested more than US$50 million in its export control compliance efforts and planned to invest more resources this year.

Despite these initiatives, the US Bureau of Industry Security earlier this week triggered the Suspended Denial Order, banning ZTE from purchasing components and software from US manufacturers for seven years.

The export ban came after the Chinese vendor was alleged to have made false statements and paid bonuses to employees involved in the sale of telecommunications equipment, running on US technology, to North Korea and Iran.

According to the US, this was in violation of a settlement in March 2017 that encompassed ZTE's agreement to a seven-year suspension of export sales if it broke additional conditions, including carrying out disciplinary action against executives responsible for the equipment sale to the two countries.

In response, ZTE reiterated efforts it made to ensure compliance to US export laws. "It is unacceptable that BIS insists on unfairly imposing the most severe penalty on ZTE even before the completion of investigation of facts, ignoring the continuous diligent work of ZTE and the progress we have made on export compliance," it said in the statement.

The vendor said it itself had identified the issues and reported it "immediately" and had taken action against the employees responsible for this oversight. It also hired a US law firm to conduct an investigation, it added.

"The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of US companies," it said, adding that it would continue with its attempts to resolve the issue "through communication".

It noted, however, that it was "determined, if necessary, to take judicial measures to protect the legal rights and interests of our company, our employees, and our shareholders". It said it also would do so to fulfil obligations and responsibilities to its customers, partners, and suppliers.