US Government Sanctions Push Smartphone Maker ZTE Out of Business

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China’s second largest smartphone maker by sales volume is reportedly shutting down global operations following trade sanctions issued by the United States government against the company. In an announcement to investors, ZTE said that they had halted all trade operations at the Stock Exchange of
Hong Kong Limited. The letter read, in part, “As a result of the Denial Order, the major operating activities of the Company have ceased.”

The Denial Order that the letter is referring to, is a sanction order that has been issued by the US government directing all US registered companies to desist from trading with ZTE. Robert Majauskas, a US Commerce Department official, said that ZTE had demonstrated a pattern of deception, false statements, and repeated violations. A July 2017 letter to US officials was “brimming with false statements,” ars technica reports.

ZTE’s woes started when the company admitted to having trade relataions with Iran and North Korea to sell US-made technologies to these countries. The US government was not pleased by this, as the relations were in violation of US sanction laws. Consequently, ZTE was fined  $890 million and the company promised to take actions against the senior company officials who had orchestrated a scheme to violate US sanctions laws.

After several back-and-forth accusations between the US government and ZTE, Trump’s administration finally issued a Denial Order against ZTE on April 15. This order has taken a huge toll on ZTE, which relies heavily on US companies such as Qualcomm and Google to operate their business.

Even as the company announced that is had ceased all major operations, it maintained that it had sufficient funds to adhere to its commercial obligations and that they [ZTE] were actively communicating with relevant U.S. government departments in order to facilitate the modification or reversal of the Denial Order.

ZTE’s downfall will eventually be felt here in Kenya, seeing that companies like Jamii Telecommunications Limited make use of the company’s equipment and devices, especially on their Faiba 4G network.

We have seen the US government issue similar attacks on Chinese companies. Huawei was under fire and had its plans to launch its smartphones in the US paralyzed after government officials urged US companies to cut ties with Huawei amidst security fears.

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