Chinese ZTE Company Ceases Operations Due to US Ban on Components

The Chinese technology company ZTE has announced the cessation of “its main operating activities” due to the impossibility of buying components from US companies.

The company which relies on political negotiation for Washington to soften or eliminate this ban, Becomes one of the first victims of the growing trade conflict between China and the United States, which has an important technological background.

The US administration announced three weeks ago that it was banning its companies from doing business with ZTE for the next seven years a reprisal for the Chinese company’s failure to comply with a judgment in which it pleaded guilty to selling technology to Iran and North Korea.

The decision has put the mobile phone manufacturer in a very delicate situation because several of its main suppliers, including the semiconductor firm Qualcomm, are originally from this country.

ZTE, in a statement sent late on Wednesday to the Hong Kong Stock Exchange – where it suspended the listing of its securities after the announcement of the ban, says that “due to the US refusal order, the main activities of the company have ceased. ”

Although it does not indicate it explicitly, the company trusts that it is a momentary break. The company maintains that at the moment “it maintains sufficient cash and adheres strictly to its commercial obligations”.

The problems and litigation of ZTE second manufacturer of telecommunications equipment in China with the US administration began years ago and follows an independent line to the current commercial frictions.

After five years of investigations, the Chinese company was declared guilty in 2017 of having missed these embargoes and forced to pay a fine of 1.2 billion dollars. Also to take action against employees who violated the regulations, something that did not comply.

But the US administration decided last month to take this drastic measure with swords held high by the allegations of alleged trade misconduct in Beijing and the intention to drastically reduce the huge trade deficit that the United States accumulates in its merchandise exchanges with the giant Asian.

The importance of the ZTE case for China was demonstrated in the first round of talks between the two countries on their trade relations, held last week.

The Chinese delegation called for lifting the ban on the company with the promise of the US counterpart to raise the situation with President Donald Trump. “The company and related parties are actively communicating with US government departments.

UU to facilitate the modification or reversion of the order and to forge a positive result in the development of the issue, “ZTE said in the statement.

Meanwhile three weeks lack of supply begins to be noticed. This Thursday you could not buy any mobile phone from ZTE or through its official website or other online sales channels, such as its official website on Tmall, one of the Alibaba portals. Instead of the usual catalog of products, you see an image of a group of people paddling in unison and notice that the page is “under construction”.

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Brian Lynn

About the Author: Brian Lynn

Brian Lynn is the lead editor with 15 years of experience in the field of journalism, He is Ph.D. Holder in the field of Arts.

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