ZTE to dump CEO, chairman in wake of Iran sanctions scandal

ZTE is about to dump its senior leadership as part of the settlement over its breach of US Iran sanctions.

The Wall Street Journal reports that CTO Zhang Xianming will take over as chairman and CEO, displacing Hou Weigui and Shi Lirong. Two executive vice-presidents will also be moved out, the Journal said, citing unnamed sources.

If true, that’s a good win for the US Commerce Dept: it's imposed a meaningful punishment on a rule-breaking Chinese company with the endorsement of Beijing and without inflicting pain on third party businesses.

The original ban threatened to stop ZTE buying any components from US suppliers, threatening a host of small US optical component firms as well as the Chinese vendor.

Beijing talked a good game in public about supporting ZTE but in the end was willing to cut loose individuals who were responsible. That’s a message that won’t go unmissed among other Chinese businesses that do business in the US.

At least it won't go unmissed if Chinese execs actually hear it. So far no China media outlet appears to have picked up the story. That may be because it is a public holiday, although Taiwan and Hong Kong publications have run it.

So, a good win and maybe a template for how US deals with Chinese scofflaws in future. However, it would be a much bigger win if the US insisted that news of the settlement be published prominently in official news agency Xinhua and all major business and tech publications.

As posted at Light Reading, the ban on ZTE prompted a lot of indignant media coverage in China, although no one reported that ZTE had been convicted in part by internal documents that described the sanctions evasion in detal.

This information asymmetry between China and the rest of the world is an unacknowledged problem that affects many other issues, including the behaviour of Chinese executives abroad.  Neither China's government nor business leaders will improve their behaviour until they cop to their failings.