Smartphone circuit boards sit on a tray in a manufacturing facility at ZTE Corp.’s headquarters (Photographer: Brent Lewin/Bloomberg)

China Warns After Helping ZTE: Firms Shouldn't Be `Giant Babies'

(Bloomberg) -- China has a lesson for the nation’s companies: don’t get into the habit of relying on the government for a rescue when you run into trouble.

China’s government devoted a lot of resources to save ZTE Corp. because it was concerned about the livelihood of its 80,000 employees, but that doesn’t mean such support will always be there, according to a commentary carried on the website of a state radio station.

"When doing business in the international market, what matters is the spirit of contracts, the rules and laws, rather than any government intervention," the article from China National Radio said. "Companies shouldn’t be like ‘giant babies’ and should not use commercial interests to force the government to become involved" in any problems, it said.

The Trump administration yesterday announced a deal to allow the telecommunications company to resume buying from U.S. companies, eliminating a key sticking point for the two nations in their talks on trade. The U.S. blocked ZTE’s access to U.S. suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.

After a personal plea from Chinese President Xi Jinping to help the company get back into business, President Donald Trump said last month that the punishment of ZTE would lead to “too many jobs in China lost,” directing the government to fix the situation. Under the new deal announced on Thursday, the company will pay a $1 billion fine, place another $400 million in escrow, and also make management changes.

©2018 Bloomberg L.P.

With assistance from Editorial Board

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