Trump To Rescue ZTE
June 4, 2018
When ZTE popped into headlines a couple months ago, becoming a pawn in the U.S.-China trade fight, it was probably the first time in a long while that many people in China heard of the company. Five years ago, the Shenzhen-based smartphone and telecommunications equipment maker competed with the Apple, Samsung, Huawei and Xiaomi. Then Oppo, Vivo and other rivals came along. Now, ZTE has a market share of less than 1 percent of the Asian smartphone market. In its main business of selling networking gear, ZTE is a distant competitor to cross-town rival Huawei and Ericsson.
Now, it's all anyone is talking about. The ban against ZTE from using U.S. technology — key components that it needs to stay competitive — has ironically given the manufacturer more name recognition than it's enjoyed in years. (Bonus fact: ZTE is an acronym for Zhongxing Telecommunication Equipment Corporation, although it doesn't even go by its full name in China anymore, using a similar contraction.)
ZTE agreed in 2017 to pay as much as $1.2 billion for violating U.S. laws restricting the sale of American technology to Iran. Then on April 15, U.S. President Donald Trump's administration announced punitive measures, saying ZTE didn't honor the terms of the agreement. Since then, China's government has stepped in to try and resolve the impasse, while hot-and-cold statements by the Americans have only added fuel to the trans-Pacific drama. Opinions differ depending on where you are on the political spectrum. For some, ZTE is a vessel for nationalistic pride. In the beginning, many thought the Chinese smartphone maker was being attacked because the U.S. feared its technology. Then, when it became clearer that technological prowess wasn't the issue sentiment shifted to ZTE being seen as a victim of bullying because it's weaker and less able to defend itself, becoming a pawn for those seeking to bolster their protectionist credentials. It reminded folks that China depends heavily on imported American technology. In fact, China spends more money on buying chipsets than importing oil. But, the reality on the ground here in Beijing is much more mundane.
“ZTE asked this for itself,” a taxi driver said in a recent ride. How could the company's managers be foolish enough to breach the Iran embargo, and then not honor the terms of the original sanctions? The cabbie even managed to praise the rule of law in the U.S.: "A good thing about the U.S. — although it has all kinds of problems — is that everyone follows the rules.” When news emerged that China might step up purchases of agricultural products from the U.S. in return for an easing of the ban against ZTE, that irked even more people. “Why should it be the farmers who pay the bill for ZTE?” a friend of mine complained. “ZTE should be responsible for its own mistakes.”
Trump's tweets indicating that the Commerce Dept. will be tasked to find a solution for ZTE has caused twists and turns of the saga that spread across Weibo, WeChat and other online platforms with astonishing speed. It's like the greatest show in town. Now, all ZTE has to do is turn all this attention into sales. After all, the characters of its shortened name (中兴) can also be read as "prosperous China."