ZTE CEO to Quit in US Export-Ban Dispute

ZTE bids so long to CEO Shi Lirong along with two other senior executives caught up in trade dispute with the US.

Iain Morris, International Editor

April 4, 2016

3 Min Read
ZTE CEO to Quit in US Export-Ban Dispute

Three senior ZTE executives, including CEO Shi Lirong, are set to announce their resignations in the wake of the Chinese vendor's run-in with the US Commerce Department, according to a report from the Wall Street Journal.

The management reshuffle appears to be an effort to placate the US authorities, which recently hit the company with a damaging export ban.

The US Commerce Department introduced that ban after accusing ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) of violating sanctions on Iran, but it was temporarily lifted in late March following reports of "constructive" negotiations between ZTE and US officials. (See US Lifts ZTE Export Ban – Report, ZTE: What On Earth Were They Thinking? and ZTE Faces Trade Restrictions Over Iran Links.)

Those negotiations now appear to resulted in the departure from ZTE of senior executives responsible for sanctions violations, according to the WSJ report, which cites sources familiar with the matter.

Besides Shi Lirong, who has led ZTE since 2010, they include executive vice presidents Tian Wenguo and Qiu Weizhao, the WSJ reports.

Current Chief Technology Officer Zhao Xianming is expected to be appointed as the new CEO. According to the WSJ, he is also set to be named as chairman.

Tian and Qiu are said to have been involved in ZTE plans to set up so-called "shell companies," allowing them to ship products to Iran while evading US authorities.

As previously reported by Light Reading, the export ban will have made it difficult for ZTE to obtain hardware and software developed by US authorities, with ramifications for the Chinese vendor's supply chain.

ZTE obtains components from US technology players including IBM Corp. (NYSE: IBM), Intel Corp. (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT) and Qualcomm Inc. (Nasdaq: QCOM), which also stood to lose business while the ban was in force.

The ban was an even bigger threat to a collection of smaller US optical component firms, as noted in a blog from Electric Speech, which covers mainly China-related telecom issues.

It also prompted ZTE to delay the publication of its annual report, which was due to appear in March but will now be released this week. Shares in the company have not traded in Hong Kong since news of the ban first broke.

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

In January, ZTE indicated that it expected net profit in 2015 to have risen by 43.5%, to 3.78 billion Chinese yuan (US$584 million), with sales rising by 23.8%, to RMB100.8 billion ($15.6 billion). (See ZTE Set to Report Profit Hike for 2015.)

According to a separate report from Reuters, a ZTE spokesperson told that publication the forthcoming management shake-up was nothing out of the ordinary, pointing out that ZTE reshuffles its management every three years.

Larger Chinese rival Huawei Technologies Co. Ltd. , which appointed a new acting CEO under its "rotating CEO" system last week, saw net profit increase by one third in 2015, to RMB36.9 billion ($5.7 billion), with sales up 37%, to RMB395 billion ($61 billion). (See Huawei Profits Soar Despite Forex Hit.)

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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