Following the decision of the U.S. government to ban U.S companies from selling vital components to the Chinese company ZTE, it has stopped its primary operations in the country, the company announced on Wednesday. The U.S. government had taken the step last month.
This has put the company at the center of the ongoing trade tensions between the U.S. and China.
Even though there were very little details in the short statement issued by ZTE, it clearly issues a warning that Chinese company is being forced ot stop business in the U.S. because of the measures by the U.S. government.
The Chinese company has an employee strength of 75,000 and its products – including smartphones and communication equipment, are sold all across the world. In the U.S. market, it ranks forth in sale of smartphones.
The export ban has been imposed by the U.S. government because of non-payment of a fine of $1.2 billion imposed on ZTE because of alleged violations of sanction on Iran and North Korea, said the U.S. administration.
The ban is being appealed against by ZTE. The issue of ZTE was raised by the Chinese authorities with the U.S. trade delegation that recently had gone to China and the country has linked the ZTE issue with the trade dispute between the two countries.
One of the major reasons for the trade tensions between the two countries is China’s efforts to boost its high-tech industries. And ZTE has an important role to play in those efforts by China.
The company is very closely associated with the development of the next generation 5G technology. the company has clients in more than 160 countries and its clientele includes both government and the corporate.
The U.S. government is weary of the ties of ZTE to the Chinese government and this is the reason that the company has repeatedly come under scrutiny of the U.S. regulators and officials. A Chinese state-owned corporation – Shenzhen Zhongxingxin Telecommunications Equipment, is the controlling shareholder of the company.
A US congressional report focused on equipment manufactured for telecommunications networks by ZTE and Huawei in 2012 stated that the companies “cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems.”
The findings of the report have been vehemently refuted by both the companies.
Against this year, there was US pressure on the companies. Americans were warned about purchasing and using ZTE and Huawei phones by US intelligence agencies in February. They warned that there was a security threat posed by the companies and their products. and selling phones made by Huawei and ZTE were asked to be stopped at the stores on U.S. military by the Pentagon earlier this month based on security risk claims to the Department of Defense.
(Adapted from MoneyCNN.com)