ZTE names new CEO in quest for US reprieve

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ZTE has reportedly chosen a new CEO and a number of other senior executives as it seeks to overturn a seven-year ban from dealing with US companies.

The Chinese smartphone and telecoms network equipment manufacturer is required to change its management team, dismiss any employee at a senior vice president level or above and pay the US government a $1 billion fine for the ban to be overturned, with a further $400 million held in escrow.

ZTE US ban

The Wall Street Journal claims the former head of the company’s German business Xu Ziyang will be confirmed as early as later today, with a new CFO, CTO and head of HR also set to be named. Last week, eight members of the ZTE board resigned and were replaced, with Lie Zixue elected as the new chairman.

ZTE’s business has effectively been suspended since the order was given in April and it said its future survival was at risk if it could not continue to deal with US firms. Indeed, it is estimated that as much as 30 per cent of its components are sourced from America.

The ban was issued to ZTE for breaching a previous agreement for illegally shipping products to North Korea and Iran. ZTE was obliged to discipline executives involved in the scandal but failed to do so.

President Donald Trump personally intervened to find a solution to the situation, leading to the new arrangement. However the deal could face opposition from US lawmakers who have already passed a defence bill that included an amendment that could block the rescue plan. Senators have also written to Trump, urging him to re-instate the ban.

The US government has already started to repeal some elements of the ban and can now fix existing networks and equipment, work to disclose cybersecurity vulnerabilities, and support phones already in the marketplace with software updates. It cannot make and sell new smartphones however, and the limited repeal expires on 1 August.