Summary
On June 7, 2018, United States Commerce Secretary Wilbur Ross announced a settlement deal with Chinese smartphone manufacturer ZTE requiring that the Chinese firm pay a $1 billion fine, shuffle top leadership, and deposit $400 million in an escrow account in case ZTE violates the deal. Should ZTE agree to the terms, the Chinese manufacturer will regain access to the American market. In April 2018, the US government announced that American companies would be prohibited from selling goods to ZTE following allegations that ZTE failed to abide by American sanctions on Iran. This is likely to come as welcomed news by American microchip makers, such as Qualcomm and Intel, who raised concerns over potential revenue loss as a result of the ban.
FAO Global Assessment
Scandals surrounding Chinese firms’ misbehavior while operating inside the US have plagued newspaper headlines for the last few years. This opens a window for law and public relations firms specializing in international business and trade. Chinese investment in the United States has been vital to small business growth, especially for the tech companies nestled in California’s Silicon Valley. Ensuring that Chinese companies understand the vast differences between Chinese and American business cultures and how to successfully navigate potential pitfalls will be critical to their success in the future. Moreover, this announcement will relieve some concerns by US firms that fall in the downstream supply line to ZTE.
Related Links
- CNN Tech: US cuts a deal with Chinese smartphone maker ZTE
- New York Times: U.S. Strikes Deal to Help China’s ZTE
- BBC China: 中興與美國政府達成和解 認罰10億美元並改組 (ZTE and the US government have reached an accommodation, ZTE is willing to pay $1 billion fine and change the management and board)
- Xinhua: 美国商务部与中兴公司达成新和解协议 (U.S. Department of Commerce and ZTE Corporation agree the accommodation)
- Caixin: 中兴与美国政府达成和解 认罚10亿美元并改组 (ZTE and the US government have reached an accommodation, ZTE is willing to pay $1 billion fine and change the management and board)
- Rhodium Group: Chinese Investment in the United States; Recent Trends and the Policy Agenda
Analyst Bio
Ziqing Zhang- International Policy Associate
Ziqing “Sunny” Zhang is an international policy intern and a Masters student in the Elliott School of International Affairs at George Washington where she is majoring in Asian Studies with a concentration in international development and focusing on East Asia and development in Southeast Asia. A native Chinese speaker, Ziqing is fluent in both Mandarin and Cantonese as well as English. She has previously interned at the U.S.-China Education Trust, the Japan-American Society of Washington, DC, and is an alum of American University in Washington, DC.
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