Chinese Company Required to Hire U.S. Compliance Officers

In April, ZTE, China’s largest telecommunications equipment manufacturer, was sentenced to a seven year denial of export privileges for illegally shipping telecommunications equipment to Iran and North Korea.  The export denial bars American companies from selling components to the Shenzhen-based company.  ZTE depends on U.S. companies for parts used in its networking gear and smartphones.  San Diego-based chipmaker Qualcomm is a primary ZTE supplier.  In addition to the denial of export privileges, ZTE was fined $1.3Billion and was required to change its management team.  As part of the deal to restore their trading rights, ZTE agreed to create a new compliance department that is staffed with U.S. compliance officers.  Commerce Secretary Wilbur Ross said that the plan “literally would involve…implanting people of our choosing into the company to constitute a compliance unit… [which] would report back to the Department of Commerce.”