ZTE Ceases Major Operations in the US Following Ban

Mae Love
May 10, 2018

Trading will remain suspended pending the further release of an inside information announcement regarding, among other things, an assessment on the major impact of the denial order on the business and operations of the company, ZTE recently said in a statement.

Chinese technology company ZTE said late Wednesday it has halted its main operations after US authorities banned it from doing business with American suppliers. "As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations".

The Chinese government has also been said to be negotiating with the US on the company's behalf, in hopes of stemming what is looking more and more like a looming trade war between the two countries.

FILE PHOTO: People stand at ZTE's booth during Mobile World Congress in Barcelona, Spain, February 27, 2017. The company's false statements were reported to the US government after the Bureau of Industry and Security requested documentation showing proof that employee discipline had occurred.

ZTE sent an internal memo to its employees stating that the firm has been "proactively communicating with relevant departments of the U.S government", according to the South China Morning Post.

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ZTE, which also makes smartphones, had said the ban threatened its existence by cutting off access to US suppliers of key components like microchips.

It was rather expected that ZTE's supply chain was going to suffer from the US-China trade war so the firm had to act accordingly - the official site doesn't allow you to buy anything and buying from Alibaba's Group e-commerce Taobao is a no-go as well. But the Commerce Department has asserted that ZTE's practices were egregious and included a surreptitious system to sell American-made goods in Iran.

ZTE has announced it has shut down its operations after it was hit with a ban preventing it from purchasing products from companies in the United States.

Marick said ZTE has not given guidance on whether its phones can continue receiving software updates from Android, and discussions between the companies have been about ensuring ZTE can supply parts and service to honor phone warranties. A ZTE employee also mentioned that employees are reporting to work as usual, but "with not much to do".

In a separate filing last week, ZTE said that it would not rule out taking legal actions against the export ban. Another said he hoped the Chinese government would help, saying he was confident President Xi Jinping would "sort out this trouble". A seven-year ban on USA exports was stayed until US officials determined that ZTE had been lying to them about its compliance with the penalties.

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