ZTE Replaces 3 Key Executives to Meet U.S. Demands

The Chinese smartphone maker made the changes to appease the U.S. after it allegedly violated U.S. trade sanctions against Iran.

ZTE, executives, smartphones, Iran sanctions, China, export restrictions, management reshuffle, networking equipment, Commerce Department

Three senior ZTE executives have been replaced in a move aimed at regaining the trust of U.S. government officials after ZTE allegedly shipped American technology goods to Iran in violation of U.S. sanctions against Iran.

The executive changes, which include the company's CEO, were rumored on April 3 and have now been announced in a ZTE regulatory filing, according to an April 5 story by The Wall Street Journal.

A ZTE spokesman has not responded to several email inquiries from eWEEK about the situation.

The moves by the Chinese smartphone and networking equipment company come about a month after ZTE was hit by export restrictions by the U.S. government in March as punishment for allegedly making deals to ship needed parts from U.S. technology companies to Iran in violation of U.S. sanctions that bar such sales, according to an earlier eWEEK story.

The import restrictions by the Commerce Department against ZTE made it harder for the company to get parts it needed from U.S. technology companies. That made it more difficult for ZTE to obtain what it needed to build and sell its products around the world, essentially causing supply chain and delivery issues for the company. The Commerce Department has since agreed to lift the export restrictions temporarily, the Journal reported earlier.

The United States has for years banned the sale of many items to Iran due to disputes with that country.

ZTE's executive changes include the appointment of Chief Technology Officer Zhao Xianming as the company's new CEO, replacing Shi Lirong, who has served as CEO since 2010, the Journal reported. Zhao was also named as ZTE's new chairman, replacing the company's founder Hou Weigui, who will retire from his current position as nonexecutive chairman, the story reported. Shi, the former CEO, will continue to serve as a nonexecutive director on the board.

Executive vice presidents Tian Wenguo and Qiu Weizhao are also stepping down as part of the management shuffle, the Journal reported. ZTE did not explain in its filings why the executive changes were being made, but the moves were likely due to an earlier agreement with U.S. officials to replace the key leaders in exchange for the dropping of the U.S. export sanctions that are hindering ZTE's business. That provision, which would replace the executives who had set up the U.S. parts shipments to Iran in violation of the U.S. trade sanctions, was reported earlier by the Journal.

"In a 2011 ZTE internal document obtained and disclosed last month by the U.S. government, Mr. Tian and Mr. Qiu were named as executives who were in charge of the company's plans for allegedly circumventing U.S. export rules," the paper said. "The document detailed ZTE's plans to set up shell companies to ship goods to Iran without getting caught by U.S. authorities."

In a statement on its Website in early March, ZTE said it is "fully committed to compliance with the laws and regulations in the jurisdictions in which it operates. ZTE has been cooperating, will continue to cooperate and communicate with all U.S. agencies as required. The company is working expeditiously towards resolution of this issue."

ZTE has been shipping its smartphones and other products to the United States for years, including the ZTE ZMAX2 through AT&T in September 2015 and the ZTE Warp Elite in August 2015 through Boost Mobile.