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China's ZTE protests U.S. ban

How Would ZTE Ban on Procuring US Tech Supplies Impact the Smartphone Market?

China's second-largest telecoms equipment maker said in a statement.

ZTE Corp, one of China's biggest tech companies, warned yesterday that a ban on access to USA technology threatens the company's survival and said it is looking for a legal solution. China has announced its own $50 billion list of US goods for possible retaliation and says it is ready to take other steps. So, why did the company get dinged by the U.S. Department of Commerce for failure to significantly reprimand staff after pleading guilty to violating sanctions on Iran and North Korea?

The punishment comes as ZTE finds itself targeted by the USA government over spying charges, alongside fellow Chinese handset maker, Huawei.

Compliance is now a core risk for Chinese firms and the government must speed up the implementation of guidelines on corporate oversight following a USA ban on sales to ZTE Corp., said a state-backed Chinese trade body.

ZTE self-identified the issues in the correspondence and self-reported by ZTE immediately. "Within ZTE, compliance is regarded as the foundation and bottom-line of the company's operation", it said.

Its efforts included organizing compliance training for over 65,000 employees, as well as comprehensively cooperating with the US side and providing over 132,000 pages of documents. The Chinese company claims that they spent over Dollars $50 million in export control and compliance previous year. The company promised to discipline employees involved in the scheme, but the US Commerce Department said this week they were paid bonuses instead. While the new ban is limited to ZTE at this point, this countermove by China could stir the pot a bit more when it comes to its relations with the U.S.

The Treasury may bring forward parts of a bill to modernize security reviews by the Committee on Foreign Investment in the United States and use the International Emergency Economic Powers Act, Tarbert said a special Treasury office devoted to the China restrictions was considering such avenues.

Established in 1985, ZTE provides technology and products to clients in more than 160 countries and regions.

"If ZTE can not have these Google applications, ZTE phones will be a lot less attractive", said Kaur. "The plight of domestic chip making tells the state of the manufacturing sector - big but not strong".

Progress has been made in closing the technological gap and chip makers attracted by the huge market potential are increasing their presence in China. "The U.S. government is blowing this issue way out of proportion".

"We still need to increase our input in technological research", Yin Yimin said. "It's better to rely on oneself than to seek help from others", he said.