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Chinese lessons for ZTE
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Illustration: Lazaro Gamio/Axios
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The details of the deal, per
a report on the settlement by official news agency Xinhua (美国商务部与中兴公司达成新和解协议):
"[The deal] is a bill that must be paid by a multinational firm
that violated a contractual obligation...consequences that must be borne as
the result of contempt for laws and regulations."
- Chinese firms with international business should have
international standards and not be "giant babies...who use
commercial interests to coerce the government."
- But Xinhua also details the process Beijing went through to save
ZTE and states that "a powerful and self-confident government is a
firm backup for the people."
Not stated by Xinhua, but
clearly another big lesson for PRC firms from this case, is "don't get
caught."
Why it matters: The ZTE mess
was another wakeup call about China's vulnerability to foreign technology,
but it may also be used as a negative educational example to improve
compliance and global behavior by the increasing numbers of PRC firms going
global.
What's next: Some members of
U.S. Congress want to block the deal, but it appears unlikely they will
succeed. And so far there are few details about the insertion into the
company of a U.S. compliance team.
- The big questions: Who decides who's on that team, and will it end up being a huge
payday for big U.S. law, consulting and accounting firms? Will Beijing
assume that some or all of the members of the compliance team are
working for U.S. intelligence?
- The arrangement sounds complicated in practice … [Axios China, June 8, 2018]
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