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China's ZTE Pleads Guilty, Will Pay $1.19 Billion For Violating US Trade Sanctions (reuters.com)
An anonymous reader quotes a report from Reuters: Chinese telecom equipment maker ZTE Corp will plead guilty and pay $1.19 billion ($892 million in the Iran case) to settle allegations it violated U.S. laws that restrict the sale of American-made technology to Iran and North Korea, the company and U.S. government agencies said on Tuesday. ZTE entered into an agreement to plead guilty to conspiring to violate the International Emergency Economic Powers Act, obstruction of justice and making a material false statement, the U.S. Justice Department said. The Commerce Department investigation followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of the best-known U.S. technology companies to Iran's largest telecoms carrier. Between January 2010 and January 2016, ZTE directly or indirectly shipped approximately $32 million of U.S.-origin items to Iran without obtaining the proper export licenses from the U.S. government. ZTE then lied to federal investigators during the investigation when it insisted that the shipments had stopped, Justice said. It also took actions involving 283 shipments of controlled items to North Korea, authorities said. Shipped items included routers, microprocessors and servers controlled under export regulations for security, encryption and anti-terrorism reasons.
use middlemen because of tradition. they are called "factors".
True, but China's government is probably aware that swooping in to protect ZTE and save $2B that can be bilked from holdings belonging to out of favor managers and directors is not worth the political capital and international goodwill they'd burn in the process.
If you work 40 hours per week to afford rice, a mud hut, and a pail to go fetch water from the river, you're poor. In the US, we work 40 hours per week and spend a tiny fraction of our income on food (12% of the median household's consumer spending) and running hot water (lol, $45/month here); and only represent about a third of our expenses with large houses with insulation, glass windows, running electricity, and heated space.
The difference is technology. When you do something in a developed country, you use machines and advanced techniques to invest very little human labor and produce enormous output. If 10 people all work together to produce 1,000 units of a thing in an hour with the median-income wage of $27/hr, that's $270 / 1,000 or $0.27 per thing--which might sound meaningful in its own right, but essentially boils down to that thing selling for a price no less than 36 seconds of the median earner's labor. If those 10 people were only able to produce 10 units of that thing with their combined labor, then it's going to cost $27 or 1 hour (3,600 seconds!) of the median earner's labor.
How stable do you think North Korea's government would be in an environment that had to support higher technology? North Korea can bring advanced weapons against us in a war if we sell them advanced weapons; it can't produce advanced weapons. To produce advanced weapons, North Korea needs technologically-advanced factories, which means they need a highly-educated population skilled in all forms of engineering, business management, logistics, and a broad array of the sciences. That's not enough: they need to be able to support the population which provides these things, meaning they need to apply technology in the private sector so as to improve access to food, running water, and so forth, reducing the amount of labor they expend on keeping their population alive and freeing that labor for their military machine.
Does that sound like the kind of blind, raving, fanatical population that would tolerate Kim Jong-Un?
By the time any of these people developed an economy which could support their war effort, they'd have an educated population used to a high standard-of-living and utterly disinterested in their political bullshit. They'd face military coups if nothing else, because their government support structure would also need sufficient education to raise their country to a state capable of supporting the kind of war we're afraid they'd bring to us--and then their intelligence community and their military power centers would quickly recognize the tactical instability brought by the existing government, and tear it down in any way expedient.
They can't become a threat to us without acquiring a steady stream of ready-to-go weapons from a highly-developed third party seeking to wage war without the political consequences of war or simply collapsing internally along the way as the political basis of a developed country fails to support mindless and self-destructive war-mongering.
Economic sanctions are an ineffective and dangerous way to handle undeveloped ratholes.
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It was started as a "state-owned and private-operating" economic entity. None of this is a secret, it's easy to find on the Internet.
No business in China gets as big as ZTE without input from the Chinese Government, that's how business is done over there.
While they have not told the US to get stuffed this time, there might come a day when they will, and I wonder what will happen then?
yes, can't have them turrists using modern phones. Much easier to hack and spy the older ones...like our president uses.
This goes along with him doing business with an Iranian bank which funds terrorists or his dealings with Cuba while that country was under sanctions.
No big deal. It's only Trump.
that selling that technology to bad actors makes them more dangerous.
This is truly nearly pointless. Even crushing fines that result in bankruptcy and failure only move the corporate assets to another, more devious, and more ingenious entity, harder to detect.
There is no compensatory punishment for such acts. We are left with enemies of their own choosing, more able to harm us, and more costly to repel or defeat.
deleting the extra space after periods so i can stay relevant, yeah.
If ZTE simply didn't pay, there'd be no problem. The US would have to ask China to enforce the ruling. China wouldn't need to "swoop" to protect anything, simply respond slowly, or not at all to protect ZTE. All that goodwill China has with Trump? Trump China-bashes quite often. Both Trump and China would be happy if China didn't enforce the ruling. That would give both fodder to stir up the locals into a frenzy.
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You forgot to mention that ZTE is owned partially by the state and one of the listed owners is leadership of the PROC Army. The equivalent US example would be if the US Government created Cisco and provided all the investment money and one third of the company was owned by the Joint Chiefs of Staff.
ZTE is for all intents and purposes a Chinese state actor and should be viewed with suspicion.
What political leaders say and do are two separate things.
Generally, yes. But Trump has surprised a lot of us by actually trying to do some of the outlandish things he said he would. Hyperbole aside, his comments have not changed that much since getting elected.
He did veto TPP which is extremely beneficial to China
I'm still scratching my head on that one. The TPP was built to contain China.
There is LOTS of stuff the US can't readily produce. Or produce at a cost remotely comparable to what China can.
If you want everything to be "Made in USA", be prepared to do without a LOT of stuff. A lot of things just won't be in stores, and a bunch of other stuff will get much more expensive.
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Both economies would suffer, but none will be demolished.
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This also seems highly political. The old ITAR controls, whose current form is what ZTE were prosecuted under, are so overbroad and vague that virtually any piece of technology is a controlled item. Some years ago we ran a Dell equipment catalogue up against them and found that roughly 50% of everything in there was covered by one or more export controls. Almost everyone taking a laptop out of the country was an illegal arms dealer because of how overbroad, and in many cases out of date, the regulations were. For example technical restrictions meant to cover export of flight simulators/trainers meant that anything more powerful than about a GeForce2 was controlled, that's how out-of-date the requirements were . So this isn't "ZTE violates export controls", it's "ZTE does business with a country the US doesn't like".
Having said that, I don't understand why ZTE didn't just tell the US to take a running jump.