Things are looking bleak as ZTE ceases main business operations


It's been unclear what would become of ZTE for the past few weeks following an export ban against the company earlier this year by the U.S. government.

Consumer Cellular Inc, a USA wireless operator, said ZTE was unable to continue supplying phones after the sanctions, but had asked the company to hold inventory spots open as it worked to resolve the export ban, said Consumer Cellular Chief Executive John Marick in an interview.

The Chinese government has also been said to be negotiating with the US on the company's behalf, in hopes of stemming what is looking more and more like a looming trade war between the two countries. This move comes in the aftermath of a United States ban placed on the company.

As of now, all major operating activities have been shut down while ZTE tries to negotiate a modification or even reversal of the Denial Order. Now, in a new filing with the Hong Kong stock exchange, where ZTE shares are traded, the Chinese company revealed it has begun to feel the effects of these decisions, though it still has enough cash to fulfill its "commercial obligations".

ZTE sent an internal memo to its employees stating that the firm has been "proactively communicating with relevant departments of the U.S government", according to the South China Morning Post.

The company posted a press release stating it had shut down major operations due to the denial order issued by the U.S. government. A seven-year ban on USA exports was stayed until US officials determined that ZTE had been lying to them about its compliance with the penalties.

We've reached out to ZTE for further comment on the matter.

"ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation", U.S. Secretary of Commerce Wilbur Ross said in a statement. The company was forced to pay a $1.2 billion fine, fired four senior employees and hit 35 others with wage and bonus restrictions.

ZTE Corp.'s main business operations have ceased due to a ban imposed by the USA government, but the Chinese firm is trying to have the ban modified or reversed, it said in exchange filings late on Wednesday.