ZTE replaced another top executive amid its row with the United States Department of Commerce, having removed party secretary Fan Qingfeng in favor of Tian Dongfang, one of its previous non-executive directors and the head of China Aerospace Science and Technology Corp’s main think thank, Bloomberg reports, citing sources familiar with the development. The move is speculated to be part of concessions ZTE agreed to as part of a provisional deal reached with President Trump last month, with the agreement being meant to replace the company’s seven-year denial order on the purchase of crucial American technologies with a $1.3 billion fine and management changes, with Tian’s appointment possibly being one of them.
Several days back, ZTE is said to have sidelined two other senior executives – overseas corporate operations head Huang Dabin and Xu Huijun, its Executive Vice President and Chief Technology Officer. The Shenzhen-based firm has been crippled by the Commerce Department’s denial order for six weeks now, having halted its main operations last month as it was unable to continue manufacturing smartphones without being able to license an up-to-date version of the Android operating system with Google’s apps while also being prevented from purchasing Qualcomm’s Snapdragon chips. The federal regulator punished ZTE after accusing it of lying to its investigators and breaking the terms of a 2017 settlement over violations of stateside trade sanctions placed on Iran and North Korea. ZTE already paid an $892 million fine and fired four executives due to the ordeal last year but failed to discipline 35 other employees.
Previous reports indicated ZTE may lose as much as $3.1 billion in sales — roughly 17-percent of its annual turnover — over the current episode. While President Trump was willing to provide it with a lifeline deal, that initiative is now facing bipartisan opposition from Congress and may end up being blocked by a supermajority vote. ZTE previously called the denial order too harsh of a reaction to a compliance failure that it claims was accidental and self-reported to the Commerce Department.