In this on Feb 27, 2017 photo, visitors pass in front of the ZTE stand on the first day of the Mobile World Congress in Barcelona in Barcelona. The Chinese telecommunications equipment maker has teamed up with global carriers to test and verify 5G technical performance. (LLUIS GENE / AFP)
BEIJING/GUANGZHOU/WASHINGTON - China's Ministry of Commerce (MOC) on
Tuesday urged the United States to create fair, just, and stable legal and
policy environment for Chinese companies.
This came hours after the US Department of Commerce announced activation of denial of export privileges against leading Chinese telecom equipment maker ZTE Corp. Based in Shenzhen, ZTE is a leading global provider of telecom equipment, networking solutions and one of the world's fastest growing smartphone manufacturers.
"The MOC will closely track the case and is ready to take necessary measures to protect the legitimate rights and interests of Chinese companies, " said a MOC spokesperson. ZTE has extensive trade and investment cooperation with hundreds of US companies, creating tens of thousands of jobs in the United States, the spokesperson said.
"China has consistently asked Chinese companies to comply with the laws and policies of host countries and manage their businesses in line with laws and regulations," said the spokesperson.
ZTE, whose Hong Kong and Shenzhen shares were suspended on Tuesday, said it was assessing the implications of the US decision
American companies are estimated to provide 25 percent
to 30 percent of the components used in ZTE’s equipment, which includes
smartphones and gear to build telecommunications networks.
READ MORE: ZTE says follows law, remains trusted partner of US clients
The ban is the result of ZTE's failure to comply with anagreement with the US government after it pleaded guilty last year in federal court in Texas to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran, the US Commerce Department said.
The Chinese company, which sells smartphones in the US, paid US$890 million in fines and penalties, with an additional penalty of US$300 million
that could be imposed.
As part of the agreement, Shenzhen-based ZTE Corp promised to dismiss
four senior employees and discipline 35 others by either reducing their bonuses
or reprimanding them, senior Commerce Department officials told Reuters. But the
Chinese company admitted in March that while it had fired the four senior
employees, it had not disciplined or reduced bonuses to the 35 others.
ZTE, whose Hong Kong and Shenzhen shares were suspended on Tuesday, said it was assessing the implications of the US decision and was communicating with "relevant parties."
"At present, the company is assessing the full range of potential implications that this event has on the company and is communicating with relevant parties proactively in order to respond accordingly," ZTE said in a statement.
Under terms of the ban, US companies cannot export prohibited goods, such as chip sets, directly to ZTE or via another country, beginning immediately. Shares of big US ZTE suppliers fell sharply on the ban.
The ban on supplying ZTE comes two months after two Republican senators introduced legislation to block the US government from buying or leasing telecommunications equipment from ZTE or its Chinese rival Huawei Technologies Co Ltd.
ZTE has sold handset devices to US mobile carriers AT&TInc,
T-Mobile US Inc and Sprint Corp. It has relied on US companies including, Qualcomm Inc, Microsoft Corp and Intel Corp for some components.