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March 9, 2017

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ZTE reaches settlement with US

CHINA’S largest listed telecom equipment maker ZTE has reached a settlement with US authorities over US export controls and sanctions charges “in order to clear unstable factors in the global communications market.”

The Chinese company said late on Tuesday that it has agreed to pay a criminal and civil penalty of US$892 million and an additional penalty of US$300 million, which will be suspended for a seven-year probationary period to deter future violations.

Zhao Xianming, chairman and CEO of ZTE, said yesterday that reaching the settlement with US authorities could “secure ZTE a solid foundation to acquire more market opportunities.”

He said ZTE has established sound relations with its US suppliers and created 130,000 high-tech jobs in the United States. Under a global partnership, ZTE expects business growth and expansion in the years to come.

US authorities had claimed that ZTE and its affiliated entities had illegally shipped telecommunications equipment to certain countries in violation of US regulations.

The US Commerce Department added ZTE on the Entity List under the Export Administration Regulations in March 2016. This made it difficult for ZTE to acquire US products such as chips and software.

Following the settlement, the Bureau of Industry and Security under the Commerce Department will recommend that ZTE be removed from the list, according to a ZTE statement.

ZTE currently holds about 7 percent of the US smartphone market, the fourth-largest after Apple, Samsung and LG. It currently has 14 offices and six research centers in the US, with 80 percent of the total 350 staff being Americans.

On Tuesday, ZTE also issued its 2016 performance report, showing yearly revenue topping 101.2 billion yuan (US$14.6 billion). Deducting fines triggered by the US authorities’ penalties and other losses, the company listed on both the Hong Kong and Shenzhen stock exchanges still earned a 5.4 billion yuan profit in 2016, up 25.82 percent year on year.

Net income applicable to its common stockholders increased 19.24 percent to 3.8 billion yuan. The company also expects an increase between 21.21 percent and 31.65 percent in profit in the first quarter of 2017.



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