In April 2018, ZTE was severely sanctioned by the U.S. Department of Commerce, prohibiting it from purchasing sensitive products from U.S. companies, causing the company's main business activities to come to a halt. This is an important event in the Sino-US war, and it is also a life-and-death crisis for ZTE. How does ZTE respond to the U.S. crackdown?After going through difficult rectification and negotiation, how did ZTE resume its operation and development?
The U.S. sanctions against ZTE are based on allegations that ZTE violated the U.S. export ban on Iran and made false statements in the settlement agreement.
ZTE said that it could not accept this, believing that the US sanctions were unfair and unreasonable, and at the same time admitting that it had flaws and deficiencies in compliance management. ZTE actively communicated and negotiated with the United States**, and submitted supplementary information and an application for suspension of the enforcement of the denial order to the U.S. Department of Commerce to seek a solution and ease the situation.
ZTE has strengthened its internal compliance management, established a compliance management committee under the direct leadership of the president, required each employee to Xi relearn and test compliance knowledge, and punished and dealt with employees involved in violations.
ZTE actively seeks support and help at home and abroad, and has received the attention and solidarity of China and all walks of life, as well as the understanding and sympathy of some American politicians and enterprises, especially the United States** Trump said on Twitter that he would help ZTE resume business and keep jobs for China.
After months of negotiation and rectification, ZTE finally reached a new settlement agreement with the U.S. Department of Commerce, lifting the export ban on ZTE, allowing ZTE to buy parts from U.S. companies again and resume normal production.
However, the terms of this agreement are also very demanding, with ZTE having to pay a $1 billion fine, retain an additional $400 million in security deposits, replace the board of directors and management, and accept the supervision of a compliance team appointed by the United States. In accordance with the requirements of the agreement, ZTE paid fines and deposits, replaced the board of directors and management, and accepted the supervision of the US side in exchange for the trust and tolerance of the US side.
ZTE has increased its investment in R&D and innovation, and launched new products and services to enhance its competitiveness and market share, especially in the field of 5G, ZTE has made a series of breakthroughs and achievements, and has carried out extensive cooperation with operators and customers at home and abroad.
ZTE has optimized the first-class chain and production line, reduced its dependence on American parts, and increased the number of domestic and other countries' first-class businessmen to improve its own anti-risk ability and cost-effectiveness, and also promoted the coordination and development of the industrial chain at home and abroad.
After a thrilling crisis, although ZTE escaped the catastrophe, it also paid a huge price and losses. According to ZTE's financial report, in 2018, ZTE's operating income was 85.5 billion yuan, a year-on-year decrease of 214% and net profit of 69.8 billion yuan, a year-on-year decrease of 653%。
In 2019, ZTE's operating income was 90.7 billion yuan, a year-on-year increase of 61%, net profit of 51800 million yuan, a year-on-year increase of 1737%。In 2020, ZTE's operating income was 101.6 billion yuan, a year-on-year increase of 118% and a net profit of 47300 million yuan, a year-on-year decrease of 173%。
It can be seen that ZTE has gradually recovered its growth momentum after experiencing a heavy blow in 2018, but it is also facing some challenges and difficulties. On the positive side, ZTE has some favorable conditions and opportunities.
First, ZTE has strong technical strength and innovation capabilities, especially in the field of 5G, ZTE is one of the world's leading companies, with numerous patents and standards, and has established good relationships with partners at home and abroad. With the popularization and application of 5G, ZTE's products and services will have more opportunities and scenarios, bringing more revenue and profits to ZTE.
On the negative side, ZTE also has some unfavorable factors and risks. First, ZTE is still subject to sanctions and restrictions from the United States, although the United States has lifted the export ban on ZTE, but still exerts strict supervision and review on ZTE, and at the same time exerts pressure and influence on ZTE's partners and customers, making ZTE face more obstacles and difficulties in the international market.
Second, ZTE is facing fierce competition and challenges, not only from foreign competitors, such as Nokia, Ericsson, Samsung, etc., but also from domestic competitors.
After ZTE was sanctioned by the United States in 2018 and harvested $1 billion by the United States, it experienced a difficult crisis and challenges, but it also showed a tenacious and innovative spirit and ability.
In the process of responding to the suppression of the United States, resuming operations and development, and facing the current situation and the future, ZTE has made positive efforts and explorations, and has made certain achievements and progress, but there are still some problems and difficulties that need to be solved and overcome.