Published: Mon, July 09, 2018
Economy | By

ZTE changes CEO to comply with US deal

ZTE changes CEO to comply with US deal

The Journal reported that the swift change indicates ZTE is hurrying to meet requirements laid out by the U.S. Commerce Department as part of a deal to allow the Chinese phone-maker to do business in the United States again.

ZTE's major operations were halted in April after it was hit with a supplier ban from the United States, saying it broke an agreement to discipline executives who conspired to evade USA sanctions on Iran and North Korea.

The move comes after ZTE had promised to overhaul its management within 30 days of agreeing to a US$1.4 billion settlement with USA authorities in June, aimed at lifting a seven-year supplier ban.

ZTE announced on Thursday that it has appointed Xu Ziyang, a former head of the firm's Germany business, as its new chief executive, Reuters reports.

About one-third of the components ZTE uses are US-made, and the company is on the verge of shutting down, after paying fines but declining to remove its head officials.

The company has also replaced its chief financial officer and named three executive vice presidents.

Some employees Reuters spoke to have expressed concerns about whether a new board and management could settle in smoothly to successfully revive the firm without the help of veterans.

When regulators in the U.S. found ZTE to be violating the terms of the agreement, they cut off the firm from its USA parts suppliers. It has 90 days to fulfill its other obligations.

It's not clear whether a permanent order will follow, but ZTE is expected to be in full compliance with US demands by August 1, Bloomberg reports. It's estimated to have lost billions of dollars in revenue - and the halt to its operations has strained relationships with major customers.

The Trump administration on Tuesday temporarily lifted part of a ban it had placed on ZTE, allowing the Chinese telecoms giant to resume some of its business activities while the US Congress continues to consider penalties on the company.

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