ZTE to reopen after $1 billion fine, new leadership

Anna Jefferson
June 7, 2018

Reuters reported Tuesday that under the preliminary agreement, ZTE would pay a $1 billion fine in addition to another $400 million in an escrow in case it commits future sanctions violations. It's important to note that this deal is not confirmed, with Commerce Department spokesman James Rockas saying that "no definitive agreement has been signed by both parties". When U.S. regulators found that the company had not complied with the terms of the agreement, they cut off ZTE from its U.S. parts suppliers, a move described as a "death sentence" by the company, which employs 70,000 people in China.

ZTE would still have to pay the US government up to $1.7 billion in fines as part of this new settlement, according to the report. This compromise would allow the company to once again use US -made components in their products-although at a large cost.

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The deal also comes with requirements for ZTE's business operations.

ZTE's survival has been a topic of discussion in high-level US-China trade talks.

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A month ago, we reported that ZTE was on life support and had chose to mostly pause operations after being given a hefty ban from the United States government over lies it told as a part of a previous agreement stemming from related illegal shipments of products to Iran. The U.S. also needs China's help negotiating the denuclearization of North Korea ahead of a June 12 summit between President Donald Trump and North Korea's Kim Jong Un. This means that they could be fined up to $1.7 billion in total.

A man walks past a building with the ZTE logos in Beijing. Not only that, but the entire board and executive teams must be fully replaced within 30 days from the time of signing the agreement. The preliminary agreement was signed by ZTE over the weekend, but the Chinese company has yet to sign the amended settlement agreement. The visits would verify that ZTE is using USA components as they have agreed. It has a small but rising share of the smartphone business in the US.

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