Smartphone maker ZTE is fast emerging from the crisis that followed the crippling sanction slapped by the Trump administration for allegedly engaging in business transactions with North Korea and Iran violating US rules. Both sides are making efforts to de-escalate the hostility, which otherwise would have made the China-based telecommunication giant the first casualty of the simmering trade standoff between Beijing and Washington.
The tech firm, one among the top players in the Chinese telecom sector, embarked on a comprehensive management overhaul this week to comply with the demands set by Trump for lifting the ban. The move follows an agreement signed by ZTE with the Federal Government last month to end the dispute. Earlier this week, the government eased its stance against the company, allowing it to resume some of its dealings in the US.
As part of the restructuring, the company appointed Xu Ziyang as the new chief executive officer and replaced the chief financial officer, chief technology officer and human resources head. Ziyang, who had been serving as the head of ZTE’s German operations, is also in charge of its network product portfolio and the cloud segment. According to sources close to the matter, employment contracts of seven senior executives, including senior vice presidents and executive vice presidents, will be canceled this week.
This week, the government eased its stance against the company, allowing it to resume some of its dealings in the US
Meanwhile, the government’s mandate stipulates that ZTE should also constitute a new board of directors to be able to buy US-made components on a long-term basis. As of now, the company is allowed to import electronic components from American suppliers on a temporary basis.
The executive reshuffle is the continuation of a series of damage control measures taken by ZTE since it earned the ire of the US Prez. The steps include a new $11-billion financing plan, the election of eight new members to its board of directors and a crackdown against the employees involved in the dealings that allegedly breached the US laws. For the company, which is heavily dependent on US suppliers for parts, the sanction came as a bolt from the blue, forcing it to close down certain facilities in China.
ZTE’s share price more than halved in the Hong Kong Stock Exchange in early June when Trump tightened his grip on the company and was broadly flat since then. The stock traded lower in the early trading hours Thursday despite the positive developments.
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