ZTE is undoubtedly one of the largest technology concerns in China. It seems, however, that a sad end may soon be waiting for him, and only thanks to the Americans. The effects can be really powerful.
It is no novelty that for Asian companies (well, maybe outside of Xiaomi), America is the main market. This is where huge amounts of equipment go, and it is these customers who often decide about the substantial earnings of dynamically growing companies. The position of ZTE has been established for a long time, but paradoxically it is the US that can stand behind the real catastrophe of this Chinese player in the field of new technologies.
ZTE on censored
ZTE is a victim of a ban on sales and trade in the US due to trade relations with Iran , which in a straight line means huge losses for the company. The accumulated funds allowed the company to survive a few months of diplomatic impasse, but it seems that the source of money is starting to run out. It seemed, however, that the agreement was really close, because even the Donald Trump himself and the Chinese president, Xi Jinping, were involved in solving the problem. It turns out, however, that the preliminary agreement (containing a colossal penalty for ZTE of $ 1.7 billion) has just hit the basket. The legislative body at the US congress decided on the imminent restoration of the penalty. Asian markets quickly responded to this information – ZTE lost as much as 27% in one day on the Hong Kong stock exchange, lowering the company to its lowest level this year, while in the Chinese trading floor the company has been reporting a 10% drop in 10 days . This is, of course, a suggestive picture showing how near ZTE is from the final abyss, which is the fall.
A company in serious trouble
Donald Trump is supposed to meet with the Republican party in Congress, but it may turn out that it will not do too much, which will result in maintaining the penalty, and thus – signing the sentence on the Chinese concern. As it turns out, ZTE complains not only about the lack of sales opportunities, but also access to technologies offered by American companies, such as Google or Qualcomm. Well, how can you create a smartphone without Android and Snapdragon? Probably you can, but it will be hellishly hard. It is sad, because the action may end with one of the older technology concerns, whose activity began in 1985. The Chinese government has a considerable nut to crack, because it is one of the main shareholders of ZTE, and its possible collapse will bring significant losses in the state treasury. However, a larger problem is a social one – as many as 75,000 people will lose their jobs. Sure, with a billion-dollar society, this may not be much, but nevertheless such a situation will have a very noticeable effect on the economy. Thus, it can also be said that China will not let it go, and if everything is not cleared up quickly, the relations between them and the US may become very tense … source: gizmochina