ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions
nytimes.comYou'd be naive to think if ZTE were to go under will be at America's best interest. U.S. semiconductor industry as a whole will be impacted as ZTE is one of the largest mobile handset and networking equipment manufacturer.
Right, because when a supplier for anything that has a massive market goes out of business, no one has ever come in to serve that market...
Agreed. Their 3% market share would be arbsorded into Xiaomi, Samsung, and Huawei within months.
Imagine assets that could be bought at a discount.
Well sure lets put 28000 people out of their jobs. It's a perfectly good company with a bad management. Management is being replaced, fine is levied, enforcement is done to prevent future mistake, life goes on.
> lets put 28000 people out of their jobs
Minor correction: I keep seeing totals around 75,000 jobs[0] though I'm not sure if it includes all their subsidiaries[1] - some of which are classified as associates.
[0] https://www.statista.com/statistics/233051/number-of-employe...
Do you know of any analysis on the projected impacts?
On the one hand, ZTE buys a lot of semi components from the US, and if ZTE craters, those sales disappear.
But on the other hand, if ZTE craters, then other NEMs and handset makers would presumably replace those sales. The thousands of 5G base stations that AT&T and friends are building are still going to get built whether it's ZTE or someone else supplying the components. So if ZTE disappears, it's not like demand for the low-level components disappears too - in theory, those demanded supplies should just get rerouted through other intermediate suppliers, right?
So to first order, I'd think the the effects would be zero. To second order, maybe there would be changes in supplier mix, as Huawei's favorite supplier gains relative to ZTE's favorite supplier. And maybe the loss of ZTE does cause some near-future work to be delayed, shrinking the short-term market slightly. And maybe the loss of a player concentrates more market power in the ZTE-level of the supply chain, drawing profits from the carriers above and the component makers below. And of course there will be costs caused by rerouting supply chains and inventories and the uncertainties therein. But I have no clue how marginal or substantial those second-order costs might be.
For the same reason it is surprising that the Chinese government would not let ZTE go under. Without ZTE, Huawei would likely be able to charge higher prices around the world. ZTE's know-how and business relationships can be sold off to other domestic entities. The employees of ZTE will find jobs elsewhere. The failure of ZTE would then set an example to other Chinese companies for being dependent on US suppliers.
If the failure of ZTE is not necessarily a loss to the Chinese government, we can infer that it is not necessarily a gain to the US government, as the gp claimed but using the logic of zero-sum.
The only reason the US is concerned with saving ZTE from going under in this instance, is as a favor-trade with China (they sign off on Qualcomm-NXP, the US gets to conclude eating an important EU company). It acts as an overall goodwill exchange in the midst of the trade deal positioning.
Hey, fair is fair. Your "important EU company" ate up Freescale and VLSI Technology, both of which were important US companies. We're just taking our stuff back.
I love how we are slapping sanctions on our allies and letting our adversaries in the backdoor. All the while complaining about IP theft from China. Sad!
Exactly this. It's insane that the US is threatening EU companies for (currently, legally) doing business in Iran, while at the same time letting ZTE get away with, well, having done the same thing (except illegally, when the sanctions were still in place). And all of that to save "many jobs"... in China.
ZTE didn't get away with anything. The US action against them nearly destroyed the company and they've been fined $2.2 billion.
As of right now, if all the US has done is threaten sanctions on EU companies, then it's ZTE that has received the dramatically worse outcome.
ZTE objectively got punished with a lot less than what was meant. They got away with a lot, while the US chickened out. And EU companies will lose a lot more than a billion (caused by the US breaking an international treaty).
The US did not break an international treaty. It was a "deal" from Obama, which he never put in front of the Senate to actually become an international treaty... Likely because the Senate would not have confirmed it as it was.
Meanwhile, a Chinese state investment puts $500 million dollars towards an Indonesian project heavily involving Trump properties, golf courses and branding.
https://www.nationalreview.com/news/china-contributing-500-m...
Peddling influence and using government for personal profit seems par for the course in this administration.
https://www.salon.com/2018/05/16/trumps-bizarre-zte-tweets-p...
China knows how to play the game. They know that their investment won't stay under wraps... so I don't see how this would benefit Trump. Could the trump organization have rejected China's investment into the Indonesian state project if they wanted to stay clean? Or would that require dropping out of the entire project completely, and what would the contract violation terms have entailed if they were as major a part of that project as it seems? Would the contract violation agreement result in greater than 500M losses? There are very interesting political games afoot.
In this case the "game" is outright corruption and quid pro quo.
This is not a game without consequence.
All of your questions demonstrate why the President should never be in that situation in the first place. That Trump wasn’t instantaneously impeached for enormous ongoing conflicts of interest is a stain on Congressional leadership.
Very true, could you imagine the political implications if the Trump organization DID reject the Chinese investment into an Indonesian state project? If acceptance of money is, ipso facto, a sign of political corruption, then would blocking the exchange of money between 2 sovereign nations be considered meddling in foreign economies? What intentions could be read from an act of rejection? How much of the invested money would have actually reached the Trump organization? The Trump organization is far too tied to the Trump presidency for comfort. But this has been true of the Clinton foundation during Bill and Barack's terms as well.
As an aside, the president should first and foremost, represent the nation's best interests. But I can't determine what Trump holds in higher regard, the office of the president, or himself. I imagine most people think being president of the US would be the highest position in the world. For any politician at least, US or foreign, the top of their food chain is the US President. But how does a billionaire like Bezos, with a business and news-media empire, view being president? Does someone like that look down or up? What I mean is, would and should a billionaire 'play' president the same way a politician would 'play' president? My imagination is that a billionaire would want to become president in order to use the office to accomplish political goals not possible simply with money, versus a career politician who might simply see the US Presidency as a goal in itself. At the end of the day, both want to see their desired outcomes come to fruition, both want to be in a position of governmental power to make their wants happen. Which one is better for the nation?
I don’t understand what you’re saying about what Clinton Foundation. It wasn’t formed until after Bill left office and as far as I know Obama wasn’t involved. The worst Obama did was have a book people could buy.
I had to look it up since I didn't know enough about it, but it looks like the Clinton Foundation was set up in 1997, at the beginning of Bill's 2nd term. As for mentioning Obama's term, what I meant by that was that since Hillary was Secretary of State at the time, there's definite potential for conflict of interest. I used wikipedia for my info.
From that article: “The origins of the foundation go back to 1997, when then-president Bill Clinton was focused mostly on fundraising for the future Clinton Presidential Center in Little Rock, Arkansas. He founded the William J. Clinton Foundation in 2001 following the completion of his presidency.”
Whether its a charity/fundraiser/guest-lecture/business-deal, I imagine it still works the same way, regardless of the stated focus or purpose of said thing: Money goes in, Influence comes out (or Favor_B in exchange for Favor_A). I have neither money nor influence, and the favors I can grant are minuscule, so I can't tell you what ratio of Money:Influence works for powerful people, but I can at least say that they are not inversely proportional. The more you give, the higher your surface area becomes to receive something and the more offended you can act if you don't receive something quid pro quo.
Here's one thing the public purse gave to the Clinton foundation:
https://nypost.com/2016/10/02/bill-clintons-executive-suite-...
(Of course the real power behind money isn't the money itself, the ownership, but the power to use it. So for taxpayer's money, the power comes from the mayor, governor or president and to a lesser extent congress/senate and their lower level equivalents. For companies the power behind the money is management/directors/CEO, and to a (much) lesser extent shareholders. So one should always make the distinction between ownership and the ability to control something. The control is much better than ownership, for one thing, control is not taxed)
And before you say "but that's the president". Well we know about Bill Clinton, don't we. He's the sort of man that forces people in his employ to service him sexually. So clearly, he's the sort of guy that takes "one service for another" pretty damn (in fact illegally) far.
Now you can say "but Bush, and Obama (and even Trump) are better than that". Perhaps, but first, not likely, and secondly even if it's just the one, the results will be similar, perhaps a bit more limited in time at best.
One wonders just what level of favor that buys, but it must have been ... well let's say at least $20 million worth of favor. If you can put a price on it at all, as this is a property that doesn't get taxed, even gets maintained and serviced by the government for free and normally wouldn't be available at all. So that price is the cost price of this thing, actually buying this as a private individual would have been at the very least 10 times that.
What do you mean, “the public purse”? That was funded entirely with donations.
https://en.wikipedia.org/wiki/Clinton_Presidential_Center
So $165 million, firstly $11.5 million directly from the local government, > 10% from foreign governments, and several high 6 figure "donations" from people he pardoned (on top of those people paying "consultation fees" to close family members of the Clintons).
I probably should have said "by the public purse, among others".
> I don't see how this would benefit Trump
It puts money in his bank account. Of all the things to understand, this seems like it should be the easiest.
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Im not too sure what your arguing. He is doing ALL things that are good for the Republicans. Maybe your just upset he has been successful? Trump has the MOST conservative cabinet in more than a quarter-century. Do your homework and stop ranting...
I suppose one man's successful negotiation is another man's reason to launch into a digressive rant.
And I suppose one man's "successful negotiation" is another man's "fragile egomaniac taken advantage of again".
Much like his inaugural Carrier "negotiation", these things tend to fluff his ego, benefit the other party and somehow leave everyone else worse off.
Ever notice how Republican presidents are always portrayed by partisan liberals as blithering idiots (Bush II as a religious fundamentalist warmonger dunce; Trump as an narcissistic ADD loose cannon dunce)?
And how Democrat presidents are always portrayed by partisan conservatives as morally corrupt degenerates (Clinton as a murdering, philandering drug kingpin; Obama as a Kenyan-born Muslim homosexual on globalist puppet strings)?
Usually I just assume this is confirmation bias + partisans being partisan.
But sometimes I like to wonder, "What if it's all true?"
Trump’s stereotypes are clearly true. Just listen to the man talk. He has the attention span of a poorly fed sparrow. The other day he raved about the wonderful letter he got from Kim Jong Un, then eight minutes later said he hadn’t read it. Google “trump nuclear uncle” for a sentence so meandering and incomprehensible that it should probably be banned as a weapon of war on humanitarian grounds. Thousands more examples can be found.
W was a bit naive but not a dunce. His folksy Texas way of talking was an affectation. He flew fighter jets in the 70s, when that was about as safe and easy as juggling chainsaws. I think W is one of the worst leaders we’ve ever had, but he wasn’t an idiot.
Trump has confirmed himself that he does not read. Not books, not the news. It is widely reported by his own cabinet the man does not pay attention or have the depth of understanding of well, anything.
The thing about Obama being a muslim homosexual is fucking stupid and not worth responding to.
What about 5 years pushing the racist lie that was birtherism? That his supporters didn't care, or they liked it?
Peace for our time!
“Too many jobs in China lost” - Xi’s waterboy and president of the USA
1.4 Billion in penalties. I don't see any other President of the USA doing that. Its a WIN for us.
... the US armed forces are spending roughly 2b every day (~590b in 2015, proposed ~680b in 2019). That penalty is a drop on a hot stone. That's not a "WIN".
Why is the budget of the US armed forces the point of comparison here?
Because ZTE is a prime instrument of PRC hegemonic ambitions, and $1B is a bargain to put such an asset back on line.
I don't understand why you bring in the military budget.
I could do the same with welfare, as it greatly outnumbers military spending even though its no where in our constitution or bill of rights to offer such.
Remove your personal issue and think about this rationally please.
You don’t see any other President doing that? This doesn’t even make the top 10! https://learn.censible.co/risky-business-top-ten-corporate-c...
Of a foreign country?? Try again...
Several of the companies on that list are foreign, including #3 and #1.
So the outcome here is:
- All key leadership and board memebers are to be fired and replaced within 30 days
- US picked compliance team embedded in ZTE that the commerce department is reimbursed for by ZTE
- $1B fine and $400M in escrow
- Qualcomm / NXP deal seems likely to be approved, helping US jobs
In the past we've seen other countries deal with Iran while under sanctions, and we've gotten nothing out of them other than speeches at the U.N.
I kinda think I like this better.
oblig disclaimer - I didn't vote for Trump, and I don't knee-jerk defend his actions...
> In the past we've seen other countries deal with Iran while under sanctions, and we've gotten nothing out of them other than speeches at the U.N.
> I kinda think I like this better.
I think this is immensely unfair - you cite one deal that got a lot of press due to a series of unexpected about-faces in the US position. There’s no reason to believe that agreements of this nature are made but not publicized.
Also, I'm not sure I understand how this action relates to the sanctions placed on Iran. What is your reasoning?
I used the term sanctions in the broad sense when I could have used a more specific term, but I was referring to the trade and technology transfer restrictions (which fall under the generic umbrella of sanctions) that ZTE violated.
Just wait until the next time when China holds the keys to decide on an important matter. It'll be interesting to see how this eventually plays out, but maybe you won't like it better then.