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China's ZTE bans US sales ban, says the company in danger



HONG KONG (Reuters) – China's ZTE Corp. ( 0763.HK ) ( 000063.SZ ) said on Friday that a US ban on the sale of parts and software is pending the companies were unfair and threatened to survive, and vowed to protect their interests by all legal means.

The interior of a ZTE smartphone is shown in this image from April 17, 2018. REUTERS / Carlo Allegri / Illustration

The United States banned the sale of US companies to ZTE for seven years this week The Chinese company had broken a settlement agreement with repeated false statements – a move that threatens to disrupt the supply chain.

"It is unacceptable that BIS insists on giving ZTE the hardest punishment even before the investigation is finalized," ZTE said in its first reaction since the announcement of the ban, citing the Bureau of Industry of the US Department of Commerce and safety.

"The rejection decision will not only severely impact the survival and development of ZTE, but will also harm all of ZTE's partners, including a large number of US companies," ZTE said in a statement.

ZTE said compliance is the cornerstone of its strategy, adding that it is investing $ 50 million in export control compliance projects in 2017 and plans to invest more this year.

A senior US Commerce Department official told Reuters earlier this week that it was unlikely to lift the ban.

"We'll have to see how it unfolds, but there are no provisions for that right now," said the official, who could not be identified because of the sensitivity of the matter.

The Department of Commerce has appealed to companies to try to disappear from the list, but it is unclear whether this would be available to ZTE because the case had previously been regulated, according to people involved with the Thing familiar.

However, ZTE will have little room for maneuver in the near future as the appeals must be approved by the Bureau of Industry and Security, the same authority that issued the ban.

Companies must appeal to a committee that, according to the agency's website, will make a decision within 30 days.

ZTE said it will not give up its efforts to solve communications problems and is determined to take legal action to protect the company's rights and interests.

WAR WAR

The ban exacerbated tensions between China and the United States at a time when they were already threatening with tariffs of tens of billions of dollars, raising fears of a wholesale trade war.

In China, there was a patriotic backlash with a spate of support for ZTE in the social media, and most domestic newspapers have decided to attribute the lion's share of ZTE's debt to the country's reliance on foreign semiconductors.

Meanwhile, the US government is considering using emergency law to restrict Chinese investment in sensitive US technologies, a senior finance official said Thursday.

ZTE stock trading has been suspended since Tuesday. On Monday, they were worth about $ 19 billion.

Reporting by Anne Marie Roantree; Edited by Edwina Gibbs and Christopher Cushing


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