The U.S. temporarily lifted the ban it imposed on China's ZTE Corp., allowing the telecom company to resume its business in America. The reprieve granted by the Commerce Department is set to take effect from July 2 to Aug. 1.
In April, the Chinese company that makes cutting-edge smartphones and telecom equipment were forced to stop most of its operations in the U.S. after it was hit with a supplier ban. Now, more than two months later, it was lifted, but ZTE needs to comply with some conditions.
As cited in The Wall Street Journal, the deal stated that ZTE must replace its top executives. ZTE agreed to remove its CEO and others involved in the violation of U.S. sanctions.
Accordingly, Xu Ziyang was named as the new CEO. He is the former head of the company's business center in Germany. The chief financial officer, chief technology officer, and the human resource head were removed and replaced as well.
A source told the media that ZTE issued a memo on Tuesday. The management sent out the note to announce the removal of at least seven executives of the company.
Some of the names mentioned in the memo include legal department's VP Wang Keyou and Xie Jiepeng, VP of finance and supply chain division. It was reported that the announcement did not provide reasons for their dismissal.
The Commerce Department also ordered ZTE to enlist U.S. compliance officers before their operation resumes. And still part of the settlement, the company also agreed to pay a hefty penalty of $1.19 billion.
CBS News reported that China's telecom leader pleaded guilty in March 2017. It admitted its offense of disobeying the U.S. rule against doing business with North Korea and Iran. America prohibits it, but ZTE went on to export some sensitive technology to the said countries. In this case, the company also paid $1 billion fine.
With the reprieve, ZTE is now permitted to continue its business with the American firms and maintain existing telecom networks. Then again, the ban will only last for a few months so the US-China trade tensions are still on.
Meanwhile, ZTE shares went down following its two-month hiatus. It suffered a big loss with shares dipping to as much as 60 percent, effectively dissolving more than $11 billion of its market worth.
