[Global Network Technology Reporter Zhang Yang] ZTE announced on the 7th that the company has reached a settlement with the U.S. government on the US government's export control investigation case. As part of the settlement agreement, ZTE agreed to pay approximately US$890 million in criminal and civil penalties. In addition, the US$300 million fine for the Bureau of Industry and Security of the US Department of Commerce was suspended. Whether or not to pay depends on the company's compliance with the agreement in the next seven years and continues to be subject to independent compliance supervision and auditing. The export controversy that lasted for one year has finally come to an end.
The U.S. Department of Commerce’s export restrictions on ZTE's implementation date back to March 7 last year. At that time, the U.S. Department of Commerce proposed to impose export restrictions on its products and prohibited domestic component suppliers from exporting technical products such as components, software, and equipment to ZTE because of alleged violations of U.S. export control policies against Iran.
According to public information, ZTE smartphones ranked fourth in the United States in terms of sales volume, second only to Apple, Samsung, and LG, and purchased components from US companies including Qualcomm, Microsoft, and Intel. It also sells mobile phones to AT&T, T-Mobile and Sprint.
Regardless of whether the outcome is good or bad, this matter has settled down and will eventually come to an end. We do not need to analyze why ZTE has encountered US sanctions, and we should consider how ZTE's next road should go. Zhao Xianming, chairman and chief executive of ZTE Corporation, said: "Reconciliation with the U.S. government will enable ZTE to gain a more solid foundation for future development."
Pain
Industry analysts said to Global Network Technology that “ZTE should first carefully sum up the lessons of this storm. Since going global to participate in global competition, we must be more familiar with international trade rules, especially relevant laws and regulations of overseas markets. All of these are so thorough that you can predict the possible risks in advance and prevent them from happening."
In April 2016, at the beginning of the storm, Zhao Xianming, who took the post of chairman of ZTE as the chairman of ZTE Corporation, said in an internal letter to all employees that he must frankly and positively resolve the crisis, reflect on self-examination, and pay attention to compliance, legality, and irregularity. Behave resolutely.
Since then, ZTE has continued to improve its compliance system and strengthen compliance management from key aspects such as corporate structure, monitoring, and procedures. In terms of structure, ZTE has established the “Compliance Management Committee†as the highest leadership organization for compliance management, and employs chief compliance. The officer is responsible for the compliance management of the company, supervises the formulation and implementation of the company's compliance risk control measures, and prevents and controls the compliance risks in the company's business activities.
An independent compliance audit team was set up to assess the operational effectiveness of the company's compliance management and investigate and handle any violations. A globally-renowned consulting agency was hired to participate in the company's export control compliance construction. The progress and effectiveness of compliance construction were evaluated, and three defense lines were established for on-site execution, process audit, and follow-up audit.
At present, ZTE's compliance measures have been embedded in business processes and fully implemented. The "Export Control Compliance Manual" was updated and issued, providing clear guidance on specific business activities and adding compliance control points to provide real-time and comprehensive control over the export business of the headquarters and its subsidiaries. Every year, all staff training is conducted, and special training for export-related staff is carried out to increase awareness and ability of compliance.
ZTE has also established anti-corruption and anti-bribery compliance mechanisms applicable to global businesses, including clear and detailed anti-corruption and anti-bribery compliance policies and compliance procedures, and established a special anti-bribery compliance department management department. Responsible for the operational management of the compliance mechanism.
Zhao Xianming, chairman and chief executive of ZTE Corporation, stated that ZTE recognizes violations of US export control laws and regulations and is willing to assume corresponding responsibilities. The company will continue to actively commit to change, and has established new compliance procedures and major personnel adjustments. We have learned a lot of lessons from this experience and will strive to become a model for compliance control in export control and work hard to build a new compliance, health, and trustworthy ZTE Corporation."
Discard baggage and move forward
After reaching a settlement and getting rid of the sanctions, ZTE is tantamount to getting rid of a big burden on the road of development. Even if the burden is lightened, it will be easier to move forward. Poems and distances are the next technical commanding points that all major manufacturers are fighting for – 5G. Although last year fell into a sanctions turmoil, ZTE once made the development very passive, but fortunately ZTE did not relax the constant pursuit of technology, after all, leading the human technology is the foundation of a technology company.
At the just-concluded GTI summit in Barcelona, ​​ZTE won the 2016 GTI Awards 2016 on Innovative Solution by the Global TD-LTE Initiative (GTI) with the eWBB (Enhanced Wireless Broadband Access) solution. And Application).
At present, ZTE has taken the lead in technological breakthroughs in terms of 5G, especially in the industry-leading level. In 2016, ZTE Corporation completed the first test of the 5G high-frequency field in the world and passed the first-phase test of China's national 5G test with excellent performance.
Currently, ZTE's PRE 5G products have deployed more than 40 networks in 30 countries. A series of 5G high and low-frequency products and complete solutions for pre-commercial use have been introduced, which will effectively promote the 5G industrialization process. It can be said that ZTE has completed the product technology layout in the 5G era in advance and looks forward to the future with promising prospects.
At this year's World Conference on Mobile Communications (MWC), ZTE also announced cooperation with technology giants such as Qualcomm INTEL. International cooperation in high-tech fields is an indispensable force for the development of the industry.
Overwintering, spring is coming
In 2016, PricewaterhouseCoopers released the “Global Innovation Top 1000 Enterprise Research Report†and “Global ICT50 Top Firm Reportâ€, benefiting from the successful transformation and implementation of the company’s strategy to M-ICT (All Things Mobile Internet), breaking and redefining In the future, the borders of the communications industry are rapidly locked in emerging technologies such as 5G, chips, cloud computing, Internet of Things, and wireless charging. ZTE has successfully entered into the top 70 global innovative companies and the top 50 ICT companies.
In August 2016, according to Gartner's evaluation report on the competition status of 10 suppliers of global LTE network infrastructure, ZTE Corporation was selected as the Gartner Magic Quadrant leader. The report pointed out that ZTE is one of the world's leading LTE infrastructure providers. It has a strong market position in China and other Asia-Pacific countries and has made quite good progress in other markets around the world.
In March 2016, the report of the World Intellectual Property Organization showed that ZTE ranked No. 3 in the number of international patent applications for the sixth consecutive year (2010, 2013, ranking second, 2011, 2012, No. 1 in 2014, and No. 3 in 2014 ), the only company in China that won this honor for six consecutive years. In September, the Internet of Things patent report released by consulting firm Lex Innova showed that in 2016, ZTE’s patented Internet of Things (IoT) products ranked the top three in the world.
Dr. Zhao Xianming emphasized: "ZTE has established a good partnership with many U.S. suppliers and provided nearly 130,000 high-tech jobs. As we continue to improve our operational efficiency and strengthen our innovative leadership in 5G, ZTE The communication is expected to achieve a good overall performance. With the support of global partners, the company expects to maintain its business growth and expansion in the next few years."
2016 was a difficult year for ZTE. Fortunately, ZTE survived the winter. Founder Securities and China Merchants Securities believe that the export restrictions are expected to be fundamentally resolved; the company’s long-term supply risk of core electronic components will be reduced, and domestic and foreign long-term order bearish factors will gradually weaken. After the company releases its supplier risk in the future, the business will be carried out normally.
For ZTE, which has survived hardship, the winter is over. Can spring be far behind?