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March 17, 2016

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ZTE set to appeal US export ban

CHINA’S ZTE Corp will appeal tough US export restrictions imposed last week, according to a person familiar with the matter, after the telecom equipment maker’s costly lobbying effort failed to allay concerns about its business.

The US Commerce Department imposed restrictions on US suppliers providing crucial components to ZTE for alleged Iran sanctions violations, a move likely to disrupt its global supply chain.

“The US Department of Commerce and ZTE Corp are in ongoing discussions,” a senior Commerce Department official said. “These discussions have been constructive, and we will continue to seek a resolution.”

How long the appeals process might take remains unclear. It usually takes a year or more for export curbs to be removed for a company, but Washington can act more quickly.

ZTE, also a smartphone maker, declined to comment on its appeal plans or about its lobbying efforts. In statements following the imposition of the restrictions, ZTE said it was “actively facilitating communications with the US governmental department to search for a solution.”

Since coming under fire in 2012 for alleged deals with sanctions-hit Iran and possible links to the Chinese government, ZTE has ramped up its spending on Washington lobbyists.

It spent US$5.1 million in the last four years, up from US$212,000 in 2011, as it sought to assuage national security concerns, according to publicly available lobbying records maintained by Congress.

That was around US$1 million more than what Huawei Technologies, a larger Chinese telecom equipment company also under scrutiny in Washington over national security issues, spent over the same period.

ZTE used at least five lobbying firms and former US officials such as ex-Nebraska congressman Jon Lynn Christensen, who met various officials to provide “education regarding supply-chain security” and “cyber security issues.”



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