ZTE Is Said to Replace Top Exec as China Seeks to Lift U.S. Ban
(Bloomberg) -- ZTE Corp., the Chinese telecom company that’s become a focal point of the nation’s trade dispute with the U.S., has replaced one of its most powerful executives in a move that may signal efforts to placate American demands.
Tian Dongfang, a ZTE non-executive director who’s also chief of a think-tank under the China Aerospace Science and Technology Corp., has already assumed the role of party secretary, people familiar with matter said, asking not to be named talking about internal decisions. He replaces Fan Qingfeng in a position that’s considered the ultimate responsibility in an era when Chinese President Xi Jinping has called for the Communist Party to lead in all things.
China is trying to convince the U.S. to lift a seven-year ban on ZTE’s purchases of vital American technology, imposed in April for breaching terms of a settlement over sanction-breaking sales to Iran. President Donald Trump said last week the U.S. would allow ZTE to resume business -- provided it pay a $1.3 billion fine and change its management and board. It’s unclear however if Tian’s appointment is intended to appease Washington, where opinions are divided on whether to let ZTE off the hook.
The dispute is now entangled in a trade dispute between the world’s two largest economies. The moratorium has all but mothballed China’s second-largest telecoms gear maker because it depends on U.S. components -- such as Qualcomm Inc. chips -- to build its smartphones and networking equipment.
A spokeswoman for ZTE didn’t respond to repeated calls or messages seeking comment.
Several U.S. politicians have agitated to keep the ban in place, fearful of China’s growing prowess and in retaliation for what they call years of technology theft. Chinese government officials are now undertaking negotiations on behalf of ZTE and the company, which doesn’t have much influence in the process, will have to accept the terms of any settlement reached between Beijing and Washington.
Shenzhen, China-based ZTE is already hurting, and is said to be estimating losses of at least 20 billion yuan ($3.1 billion) as clients pull out of deals and expenses mount. The company however is hopeful of striking a deal soon and already has a plan in place -- dubbed “T0” -- to swing idled factories into action within hours once the suspension is lifted.
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