ZTE Seeks Legal Solutions to Face American Restrictions

Chinese company ZTE acknowledged on Friday that the ban on using American technologies poses a risk to its future, and the company is seeking a legal solution to address this issue. Last Monday, the United States banned American companies from selling technology to this Chinese state-owned company for seven years due to ZTE's role in exporting telecommunications equipment to Iran and North Korea. This ban could hurt ZTE's business in the smartphone sector, as the company uses Google's Android operating system in its smartphones. This situation could also result in a multi-billion dollar blow to companies like Qualcomm, which provide chips, software, and other technologies. These bans were imposed following five years of investigations by the U.S. government regarding ZTE's violations of U.S. sanctions against Iran and North Korea. From January 2010 to March 2016, this Chinese company exported $32 million worth of American telecommunications equipment to Iran and sent 283 mobile phone shipments to North Korea, with full knowledge of the company's senior executives. In March 2017, ZTE admitted its wrongdoing in sending telecommunications equipment to Iran and North Korea, which constituted a violation of U.S. regulations, and agreed to pay a $1.2 billion fine, described as the largest export-related penalty in U.S. history. However, on Monday, the U.S. announced that ZTE had failed to fulfill its commitment to penalize those responsible for violating sanctions, leading to the seven-year technology sales ban. Now, the company has accused U.S. officials of taking the 'harshest action' against it without waiting for further investigations and corrective actions. The statement claims that the imposed penalty will not hinder the company's operations but could jeopardize the interests of ZTE's business partners, which include some major American companies. ZTE emphasized that it will not cease efforts to resolve this issue through communication and dialogue and is determined to protect its legal rights and interests using all legal means. The statement did not mention any potential legal actions by the company. ZTE, along with other suppliers of new technologies such as Huawei and Lenovo, is among the first Chinese companies competing in the global market for new technologies. The company, headquartered in Shenzhen, southern China, operates in 160 countries and primarily provides switches used by phone manufacturers and internet providers, as well as phones and other products. The company's annual revenue in 2017 was reported to be over 108 billion yuan, approximately $17.3 billion. Both ZTE and Huawei halted the sale of telecommunications switches in the U.S. market since 2012 after being accused of security threats by the U.S. Congress. While ZTE will not have issues using the Android operating system, which Google offers for free, it may lose access to applications like Google Maps, Gmail, and YouTube. According to an analyst quoted by the Associated Press, if this Chinese company cannot use Google applications, its smartphones will be less attractive to users. The analyst also noted that ZTE smartphones are heavily reliant on processors from American company Qualcomm. The potential ban on Qualcomm supplying processors to ZTE could create a major problem in producing these products. ZTE has not responded to Associated Press inquiries on this matter, and rival company Intel has also declined to comment.