In March last year, ZTE was suspected of violating the US export policy toward Iran. The US Department of Commerce imposed a series of measures to restrict the export of ZTE (China) parts, software and hardware support. At one time, the ZTE news of the network public opinion went without a hitch, and the ZTE sanctions incident was pushed to the forefront, and the ZTE crisis incident also led to a series of problems facing ZTE in 2016: ZTE A stock The market stopped, ZTE publicly issued the sanctions declaration, and ZTE in early 2017 was affected by the global layoffs due to the impact of the incident... How did the ZTE sanctions incident occur, and how did China handle the sanctions incident? What is the impact on ZTE?
The beginning and end of the ZTE sanctions incident
The thing is this: According to Xinhua Net News on March 7, 2016, ZTE was blacklisted because of the alleged violation of US export control policies against Iran.
The list explicitly prohibits US companies from offering a range of restricted products to Iran, including computers, software and telecommunications equipment. This decision has greatly limited ZTE's use of US parts and software. Therefore, on March 8, the Chinese Ministry of Commerce expressed strong dissatisfaction and resolute opposition to the U.S. sanctions against ZTE, and will continue to negotiate with the U.S. on this issue.
In the following two weeks, that is, on March 20 last year, according to Reuters and the Wall Street Journal respectively, the news that "the US will temporarily lift the sanctions" was released, and according to the US, the move was only temporary. During this period, ZTE must fulfill its commitment to the US government. It is understood that after the ZTE sanctions incident, ZTE and the US Department of Commerce launched a "positive, harmonious and constructive" communication.
However, shortly after the announcement, the US Department of Commerce granted ZTE a three-month grace period, and the ban was suspended until June 30.
On June 28th, Beijing time, the US Department of Commerce once again stated that the decision to restrict ZTE’s export (China) restriction was postponed to August 30 again.
Regarding the suspension of the ban, Zhao Xianming, chairman of ZTE, said that ZTE is addressing compliance issues and cooperating with government departments. This allows ZTE to maintain its relationship with hundreds of US companies and continue to invest in the United States.
Why is ZTE going to be sanctioned by the United States?
According to the analysis of the Wall Street Journal article, ZTE’s market share in the United States once reached 7%, becoming the smart terminal manufacturer after Apple, Samsung and LG, becoming the fourth largest communication in the United States and the world. Equipment listed company. For ZTE, the US market is already another market that has surpassed China. According to the 2015 annual data report, ZTE’s sales in the US account for more than 24% of the company’s total sales. It has reached $15.5 billion. It is said that ZTE has plans to increase capital investment in the US new product marketing budget, and to achieve globalization of talents, R&D globalization and product globalization with an internationalized operation, with a view to challenging the dominance of Apple and Samsung.
The ZTE sanctions incident just happened to allow the US Department of Commerce to seize the exact evidence that Chinese companies are selling products and services to Iran. It is not just a simple violation of the sanctions incident, but more importantly, the challenge of the rapid rise of the United States and China in politics and economy. In recent years, Chinese high-tech enterprises have been repeatedly seen by the United States through various means of suppression: intellectual property lawsuits, anti-dumping, 337 investigations, various means have been going on for many years, but in the past more pointed to Huawei, and this time to find It is the trouble of ZTE.
For the Chinese government, the Ministry of Foreign Affairs and the Ministry of Commerce are also active in conducting friendly and cooperative consultations to arrange this matter through sound compromise, mutual benefit, cooperation and win-win, and not to develop the ZTE sanctions incident. Sanctions for the US trade war.
Sanctions have an impact on ZTE's stock market
Regarding the possible impact of the ZTE sanctions incident, ZTE’s official statement is: The company has been informed that the US Department of Commerce intends to implement export restrictions on ZTE, and the company is fully assessing the possible impact of the incident on the company and actively communicating with various parties. . In view of the significant uncertainty of the matter, the company's shares have been suspended since the market opened on March 7 after application by the company.
It is understood that ZTE was previously suspected of violating the US export control policy for Iran. The US Department of Commerce ordered the restriction of ZTE's US suppliers to ban the export of ZTE (China) parts and components.
ZTE announced in the first month of this year that 3,000 people lay off 5% of the total number of employees
In view of the impact of the ZTE sanctions, the market share in the US has fallen sharply, and the 5G network revenue is still promising. ZTE expects to lay off 3,000 people in early 2017. The total number of layoffs is equivalent to 5% of ZTE's total manpower. This wave of layoffs is scheduled to be completed in the first quarter of 2017.
In this layoff list, a total of 600 employees will be cut in the global mobile phone business, equivalent to 10% of the company's mobile phone business. A high-end executive of ZTE said that more than 20% of ZTE's mobile phone business in China will be fired. In this regard, ZTE has not commented.
At present, ZTE is China's first Chinese brand mobile phone manufacturer with a market share in the US smartphone market. Its share has reached about 10% in the US smart terminal market. However, according to market research IDC data, in 2016, ZTE’s smartphone market in the global market share fell by 36.5% compared with 2015. ZTE said that “the company is experiencing the biggest crisis since its establishment 31 years ago. ".
Part of the ZTE crisis came from last March, when the US Department of Commerce announced that it would ban US companies from selling parts. The reason is that "ZTE is suspected of violating Washington’s sanctions against Iran." It is reported that about one-third of ZTE's products are from American technology companies such as Qualcomm, Microsoft and Intel. The ZTE sanctions incident has caused serious trauma to ZTE's parts supply chain.
General comment: From the ZTE sanctions incident, we can know that this incident is not a general legal violation, but the two countries in the political and economic fields between China and the United States. Like ZTE’s legal operation in the United States, and thought it can evade US laws and regulations, this is just a fact that we are facing an empty mouth. These cases have been unavoidable. From the government’s point of view, we find a balance between sanctions and The solution is to alleviate the pressure of the ZTE incident, reduce the damage to the national enterprises, recognize the overall situation of the enterprise development, make appropriate compromises, and do less small moves, which is the mutual benefit of the two parties.
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