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ZTE

ZTE

Industry: 
Telecommunications
Symbol: 
SEHK: 0763
States: 
TX
Country: 
China
Contact Information: 
Sources: 

"In March and April, Reuters reported that China's ZTE Corp, a Huawei competitor, had sold or agreed to sell millions of dollars worth of U.S. computer gear, including HP equipment, to Telecommunication Co of Iran, the country's largest telecommunications firm, and a unit of the consortium that controls TCI. The articles sparked investigations by the U.S. Commerce Department, the Justice Department and some of the U.S. tech companies. ZTE says it is cooperating with the federal probes." (Reuters, "Exclusive: Huawei partner offered embargoed HP gear to Iran," 12/30/12)

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"Reuters reported in March that China's ZTE Corp had recently sold Iran's largest telecom firm, Telecommunication Co of Iran, a DPI-based surveillance system that was capable of monitoring landline, mobile and internet communications. ZTE later said it intends to reduce its business in Iran." (Reuters, "Special Report: How foreign firms tried to sell spy gear to Iran," 12/4/2012)

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"Under-fire Chinese telecoms kit maker ZTE has warned it will report a loss of up to 1.75bn yuan (£174m) for the first nine months of the year, blaming a slowing global economy and the Iranian market, where US investigators are probing its activities... In a separate filing to the Hong Kong Stock Exchange, ZTE added that its 'operating results were adversely affected by the Iranian market'. Those operations remain contentious in other ways, as Washington is still investigating whether ZTE broke embargoes by selling US products on a 900-page ‘packing list’ to Iran and then deliberately tried to cover its tracks when exposed by media reports. ZTE claims that it 'always respects and complies with international and local laws wherever it operates' and that – like Shenzhen rival Huawei – it is winding down its business in Iran... Another barrier to its attempts to move back into profitability will be last week's report by a House of Representatives Intelligence Committee which concluded that ZTE and Huawei's network infrastructure tech poses a national security risk to US companies. Apart from seemingly blocking off this revenue stream until further notice, the high profile report may also interfere with ZTE’s attempts to build its handset brand in the massive North American market." (The Register, "Iran blamed for ZTE's 260 PER CENT profit slump," 10/15/2012)

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"The report follows an 11-month investigation by the committee into Huawei Technologies Co Ltd and its smaller rival, ZTE Corp. The companies have been fighting an uphill battle to overcome U.S. lawmakers' suspicions and expand in the United States after becoming key players in the worldwide market...  The committee recommended that the Committee on Foreign Investment in the United States, an inter-agency group that evaluates the national security risks of foreign investments, should block any deals involving Huawei or ZTE... Rogers, responding to a question at the press conference, stopped short of urging a U.S. boycott of mobile phones and other handheld devices made by Huawei and ZTE... The panel's warning pertains only to devices that involve processing of data on a large scale, he said, not Huawei- and ZTE-made mobile phones. Employee-owned Huawei is the world's second-biggest maker of routers, switches and other telecommunications equipment after Sweden's Ericsson. ZTE ranks fifth... ZTE, in a newly released copy of a letter to the committee, said it 'profoundly disagrees' with allegations that it is directed or controlled by the Chinese government. 'ZTE should not be a focus of this investigation to the exclusion of the much larger Western vendors,' it said... ZTE's Hong Kong-listed shares fell as much as 3.4 percent early on Monday... ZTE's U.S. telecom infrastructure equipment sales last year were less than $30 million. In contrast, two of the larger Western vendors alone had combined U.S. sales that topped $14 billion, ZTE has said, alluding to Espoo, Finland-based Nokia Siemens Networks and Paris-based Alcatel Lucent." (Reuters, "U.S. lawmakers seek to block China Huawei, ZTE U.S. inroads," 10/8/2012)

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"Cisco Systems Inc. has ended a longstanding sales partnership with ZTE Corp after an internal investigation into allegations that the Chinese telecommunications equipment maker sold Cisco networking gear to Iran. Cisco's probe followed stories by Reuters in March and April that documented how Shenzhen, China-based ZTE had sold banned computer equipment from Cisco and other U.S. companies to Iran's largest telecom firm. ZTE also agreed last year to ship millions of dollars worth of additional U.S. tech products, including Cisco switches, to a unit of the consortium that controls the telecom firm... ZTE's general counsel at its Texas-based subsidiary alleged that the parent company plotted a cover-up, including possibly shredding documents, after the first Reuters story broke... The U.S. House of Representatives' Intelligence Committee said in a draft of a report to be released Monday that ZTE and fellow Chinese telecom equipment maker Huawei Technologies Co. Ltd should be shut out of the U.S. market because potential Chinese state influence on them poses a security threat. Both companies deny the allegation. David Dai Shu, a ZTE spokesman, said of Cisco's decision to cut ties: 'ZTE is highly concerned with the matter and is communicating with Cisco. At the same time, ZTE is actively cooperating with the U.S. government about the probe to Iran. We believe it will be properly addressed.' In a recent interview, John Chambers, Cisco's chief executive, declined to discuss the results of the company's investigation of ZTE's sales to Iran... Cisco and ZTE partnered for the past seven years in a relationship that was at times rocky, according to a former Cisco executive with knowledge of the matter. ZTE described the initial partnership as an effort to develop business opportunities in China and Asia Pacific, excluding Japan. The partnership expanded about five years ago when Cisco began viewing ZTE as a means to combat Huawei, the world's second-biggest maker of telecoms equipment by revenue after Sweden's Ericsson. Huawei had been beating out Cisco in emerging markets by offering significantly cheaper products. Part of Cisco's strategy, the former Cisco executive said, was 'we would license technology to ZTE and they would produce equipment locally, and we could therefore have a range of equipment in the marketplace that would be cost-competitive with Huawei.' ZTE was 'reasonably successful' in reselling Cisco products inside China, where it was well entrenched in the marketplace, the former executive said. But the plan to develop projects jointly, and offer them in markets such as Africa, floundered... 'ZTE wanted to bring things to market in the U.S. with our help. We really didn't want them to do that,' the former executive said. By 2010, the partnership had basically ended, although ZTE continued as an authorized distributor and reseller of Cisco products, according to a person familiar with the matter. The ZTE spokesman did not comment on its relationship with Cisco. ZTE has continued to do business in Iran where American-made tech products long have been subject to U.S. sanctions. A parts list dated July 2011 for an equipment contract between ZTE and Telecommunication Co of Iran (TCI) included several Cisco switches. ZTE later agreed to sell five Cisco switches to a unit of the consortium that controls TCI, according to documents reviewed by Reuters. After the Reuters report in March, ZTE, China's second largest telecom equipment maker, said it would 'curtail' its business with Iran. Ashley Kyle Yablon, ZTE's Texas-based general counsel, gave the FBI an affidavit in May in which he alleged the company had plotted to cover up the Iran sales. The affidavit became public in July. ZTE recently placed Yablon on administrative leave, according to his attorney, Tom Mills." (Reuters, "Exclusive: Cisco cuts ties to China's ZTE after Iran probe," 10/8/2012)

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"Seventeen U.S. lawmakers have called on Treasury Secretary Timothy Geithner to investigate ZTE Corp, the Chinese telecommunications equipment maker, over allegations it sold a surveillance system and banned U.S. computer equipment to Iran.

In a letter sent to Geithner, the members of the House of Representatives - 16 Republicans and one Democrat - wrote, 'We urge your department and other concerned agencies to examine the nexus between ZTE and Iran and, if warranted, take action to prevent companies that assist the repressive policies of the Iranian regime from expanding in the United States.'

The letter said ZTE 'appears to have violated U.S. sanctions on Iran' by selling a surveillance system to the Telecommunication Co. of Iran. The letter added that it 'appears that ZTE conspired to violate additional export control laws' by agreeing to sell millions of dollars worth of U.S. computer equipment to the unit of the consortium that controls TCI." (Reuters, "Treasury Secretary urged to investigate ZTE," 7/27/12)

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"The FBI has opened a criminal investigation into ZTE Corp's sale of banned U.S. computer equipment to Iran, a website reported, as the Chinese telecoms gear maker warned its first half net profit could fall as much as 80 percent…According to the affidavit, Yablon told two FBI agents that ZTE officials had discussed shredding documents, altering the packing list and denying it was genuine in an effort to subvert a Department of Commerce investigation into ZTE's sales of U.S. equipment to Iran." (Reuters, "FBI probes China's ZTE over Iran tech deals," 7/13/12)

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"Reuters reported in March and April that ZTE Corp, a Chinese telecom-equipment maker, had sold or agreed to ship millions of dollars worth of U.S. hardware and software to Iran since 2010 despite a longtime U.S. sales ban on tech products to Iran." (Reuters, "Iranian cell-phone carrier obtained banned U.S. tech," 6/4/2012)

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"The Department of Commerce is investigating Chinese telecommunications equipment maker ZTE Corp for allegedly selling embargoed U.S. computer products to Iran. The investigation was launched following reports by Reuters in March and April that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of America's best-known tech firms to Telecommunication Co of Iran (TCI) and a unit of the consortium that controls it along with the Iranian regime. TCI is Iran's largest telecom carrier. 'We've been pursuing it very aggressively,' said a Commerce Department official. Investigators already have met with representatives of ZTE. A spokesman for ZTE, based in Shenzhen, China, declined to comment... According to people familiar with the matter, some of the U.S. companies have received subpoenas requesting information about their dealings with ZTE and a Chinese trading company, Beijing 8-Star International Co, which also was a party to the Iranian contracts. According to contract documents, Beijing 8-Star was responsible for providing certain 'relevant third-party equipments.' One U.S. company received a subpoena in March requesting documents relating to 'Sales to ZTE Corporation (any and all locations and offices to include but not limited to: U.S. locations, Hong Kong, China and Iran) and/or Beijing 8-Star International Company in Hong Kong or China,' according to a person familiar with the matter... ZTE could face a variety of potential penalties, including fines of double the value of the U.S. products, according to the Commerce Department official... The ZTE investigation is expected to take many months, the official said. Reuters reported on March 22 that ZTE had sold numerous American hardware and software products as part of a 98.6 million euro ($123.4 million) contract with TCI in December 2010. The products were listed in a ZTE parts list dated July 2011. They included HP computer parts and printers, Microsoft Windows software, Cisco switches, Dell flat-screen monitors, Oracle database products and Symantec Corp anti-virus software. The day after the article was published, a ZTE spokesman said the company would "curtail" its business in Iran. The company later issued a statement saying: 'ZTE no longer seeks new customers in Iran and limits business activities with existing customers.'... Reuters also reported on April 10 that in June 2011, ZTE had agreed to ship millions of dollars worth of additional U.S. products, including IBM servers, to Aryacell, a unit of the consortium that controls TCI. The U.S. products comprised the bulk of an 8 million euro ($10 million) equipment-supply contract. In response, a ZTE spokesman said the company had decided 'to abandon' the agreement after 'we realized that the contract involved some U.S. embargoed products.' Some of the U.S. companies have had partnerships with ZTE." (Reuters, "Exclusive: U.S. probes China's ZTE over tech sales to Iran," 5/25/2012)

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"China's ZTE Corp, which recently sold Iran's largest telecommunications firm a powerful surveillance system, later agreed to ship to Iran millions of dollars worth of embargoed U.S. computer equipment, documents show. The American components were part of an 8 million euro ($10.5 million) equipment-supply contract, dated June 30, 2011, between ZTE, a Chinese trading firm and a unit of the consortium that controls the Iranian telecom, Telecommunication Co. of Iran, according to documents reviewed by Reuters. ZTE is China's second-largest telecommunications equipment maker... The parts were intended for business-support services, including a ZTE billing system. A spokesman for ZTE said last week in an email that 'as far as we know' the company had not yet shipped any of the products. Asked if ZTE intended to do so, he emailed a new statement Monday that said: 'We have no intention to implement this contract or ship the products.' He also said ZTE decided 'to abandon' the agreement after 'we realized that the contract involved some U.S. embargoed products.' The contract had made clear the American provenance of the goods: Its accompanying parts list, signed by ZTE, lists more than 20 different computer products from U.S. companies. Washington has banned the sale of such goods to Iran for years... The article reported that despite a longtime U.S. sales ban on tech products to Iran, ZTE's 'Packing List' for the contract, dated July 24, 2011, also included numerous American hardware and software products, although they were not part of the surveillance system... The day after the article was published, a ZTE spokesman said the company would "curtail" its business in Iran. The company later issued a statement saying, 'ZTE no longer seeks new customers in Iran and limits business activities with existing customers.'... It is not clear how ZTE will get out of the contract. According to the terms, the contract only can be terminated if Aryacell breaches it, becomes bankrupt or can't pay its debts." (Reuters, "China's ZTE planned U.S. computer sale to Iran," 4/10/2012)

 

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"While Israeli couple Ronny Edri and Michal Tamir made global headlines this week with their 'Israel loves Iran' Facebook campaign, Iranians face increasingly aggressive crackdowns on internet use as the Islamic Republic ramps up its attempts to control information and quash dissidents. This month, watchdog group Reporters Without Borders (RWB) named Iran as the '2012 enemy of the internet,' and US President Barack Obama accused the Islamic Republic of creating an 'electronic curtain' cutting off Iranians from the outside world... US-based non-profit advocacy group United Against Nuclear Iran (UANI) says Iran also conducts surveillance against web surfers with sophisticated technologies purchased from international companies. Earlier this week, UANI slammed Chinese telecom giant ZTE for selling an advanced surveillance system to Tehran, which it says enables the Islamic Republic to monitor citizens' voice and text messaging as well as internet communications. UANI spokesman Nathan Carleton told The Jerusalem Post that companies like ZTE risk contributing to human rights violations in Iran. 'Any responsible company should pull out of Iran and eliminate the possibility of the regime misusing its technology to track, monitor, and oppress dissidents,' he said." (JPost, "Inside Man: Behind Tehran's 'electronic curtain," 3/29/12) 

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"Feyzi said sanctions haven’t stopped IT providers from selling to Iran as contracts for equipment such as switches and transmission and radio systems show. Companies including Siemens, Nokia , Eriksson, Alcatel-Lucent, Cisco Systems, Telaps, NEC, ZTE, Huawei Technologies Co and Wuhan Research Institute have all supplied the Islamic republic. Feyzi said TCI was focusing on buying equipment and technology that isn’t considered dual-use or 'problematic' due to the sanctions." (Gulf Times. "Iran telecom firm to offer '50% stake by March'," 1/12/09)

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"Shenzen-headquartered telecom equipment manufacturer, ZTE Corporation, exhibited its technologies and solutions in the fields of wireless networking, optimization of networks, broadband data networks, multimedia communications, optical transmission and switching systems at the Iran Telecom-infotech 2001 exhibition held on Oct 1-4 in Tehran, Iran. ZTE considers Iran to be one of its most important export markets. The Company set up a branch office in Tehran in the year 2000." (World IT Report. "China's ZTE seeks more cooperation opportunities in Iran," 4/8/03)

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"ZTE Corp, China's second-largest telecommunications equipment maker, said it will 'curtail' its business in Iran following a report that it had sold Iran's largest telecom firm a powerful surveillance system capable of monitoring telephone and Internet communications.Reuters reported Thursday that Shenzhen-based ZTE had signed a 98.6 million euro ($130.6 million) contract with the Telecommunication Co of Iran in December 2010 that included the surveillance system... Shu said ZTE had decided 'some time ago' to 'shrink' its business in Iran, although he said the company had not yet decided on the details. 'It's still being discussed,' he said. He also said he did not know the reason for the decision." (Reuters.  "China's ZTE to "curtail" business in Iran,"  3/23/12)