Telecoms maker ZTE vows to cooperate with Washington to resolve import restrictions, but China blasts US for ‘incorrect’ handling of issue

PUBLISHED : Tuesday, 08 March, 2016, 7:58pm
UPDATED : Tuesday, 08 March, 2016, 8:09pm

ZTE, China’s largest listed telecommunications manufacturer, said it is fully committed to cooperating and communicating with the US government after it was placed on a list of restricted imports by Washington that took effect today.

But Chinese Foreign Minister Wang Yi was more critical of the decision, blasting the United States for imposing the restrictions on ZTE for allegedly shipping products to Iran in violation of Washington’s longstanding trade sanctions on the country.

“We don’t think this is the correct way to handle the contradictions in economy and trade between the two countries. It [Washington] is just harming others without benefiting itself,” Wang told media in Beijing on the sidelines of the ongoing National People’s Congress.

ZTE, also a major smartphone vendor in China and the United States, could face severe component supply problems from this month as a result of the restrictions.

Calling for greater cooperation across borders, Wang cited the example of the climate change talks held in Paris last December, which was capped by the signing of the Paris Agreement. China ranks as the world’s biggest emitter of greenhouse gases, followed by the United States.

From today, any of ZTE’s suppliers that plan to ship US-made components or other products to the company must apply for permission from the US Commerce Department, making export licences harder to obtain.

Cheng Lixin, the chairman and chief executive of ZTE USA, showed no sign of ruffled feathers.

“ZTE is a constructive force playing a positive role in bilateral trade and the [growing] friendship between China and the US,” he said. “We want to keep playing that role.”

ZTE declined to comment on whether it would file an appeal.

On Monday, it requested that trading of its Hong Kong-listed shares be suspended pending the release of information about the proposed action by the US Commerce Department.

Distinct from the international sanctions placed on Iran over its nuclear programme, which were lifted in January, the US has imposed restrictions on trade with the Middle Eastern country since 1979 following the seizure of the American embassy in Tehran.

Stressing that ZTE USA is off the restricted-imports list as it is a separate entity from ZTE, Cheng was quick to downplay any adverse fallout from the move on the company.

He said the affiliate has trusted partnerships with major operators and was able to ship over 15 smartphones to US consumers in 2015.

“Our market share in the fastest-growing US$200 to US$400 handset segment has almost tripled from 11 per cent to 30 per cent in the US market over the past two years,” he said.

The company also has 2,000 employees in the US who are dedicated to supporting its business locally, he added.

Keen to expand to foreign shores, ZTE already ranks as the fourth-largest smartphone vendor in the US with a nearly 8 per cent market share, according to consultancy firm Strategy Analytics. It follows Apple, Samsung and LG in that market.