July 3, 2018
As the future of Chinese kit vendor ZTE continues to hang in the balance, it’s doing everything it can to demonstrate contrition to its US tormenters.
ZTE had its 2017 AGM recently and it was presumably not a light-hearted affair. Among the fun items on the agenda were the resignation of 14 directors and their replacement with eight new ones. The old guard were presumably sullied by association with all the transgressions that incurred the wrath of US regulators and getting rid of them seems like a clear attempt so demonstrate the company has learnt the error of its ways.
The new Chairman of the board is Li Zixue, who is deputy head of the Xi’an Microelectronics Technology Research Institute, a major shareholder in ZTE. Then we have three other ZTE non-execs: Li Buqing, Gu Junying, Zhu Weimin and Fang Rong; and three independent non-execs: Cai Manli, Yuming Bao and Gordon Ng. Subsequent to that it was announced that the Shareholders’ Representative Supervisor – Xu Weiyan – has also decided to clear off due to ‘personal commitments’.
The depressing thing for ZTE is that even this level of corporate capitulation offers no guarantee of success. US President Donald Trump has been trying to find a way back for ZTE but has been firmly reminded that the US is not a dictatorship and to date he has failed to persuade the Senate to support his cunning plan.
On top of that, ZTE’s humiliation at the hands of the US is likely to leave enduring diplomatic and cultural scars. The company seems to have been given no opportunity to save face (although it could be argued it squandered that opportunity previously) and its treatment, however justified, will probably add fuel to the antagonism already created by all the talk of trade wars. However this resolves itself it seems clear that ZTE itself and US/Chinese relations have suffered a permanent setback.
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