Dear Valued Business Partner:
At ZTE, we understand that export compliance benefits both our company and our business partners. This update describes some of our efforts in Q2 2020 to ensure export control compliance and to maintain strong relationships with our business partners.
●Export Control Law and Policy Tracking: In order to ensure compliance with the latest export control legal requirements, ZTE has established an effective export control law and policy tracking mechanism. During the quarter, ZTE actively tracked various rules updated by the US government, such as the elimination of License Exception Civil End-Users (“CIV”) , amendments to foreign-produced direct product rule, and expansion of controls for military end users and end use in China, Russia and Venezuela. Through timely tracking and professional in-house analysis and external counsel support, ZTE responded quickly by updating the company's export control compliance requirements and maintained the stability of the company's supply chain, so as to make efforts for the business stability between ZTE and our partners.
●Risk Assessment: As the focus of ZTE’s 2020 export control compliance work plan, risk assessment includes two parts: risk assessment of ZTEC’s business areas and risk assessment of ZTE-controlled subsidiaries. For the ZTEC, the risk assessment team selected a typical and common business area of the ZTEC as the risk assessment pilot. Through the evaluation of the pilot area, ZTEC can deeply explore the methodology of ZTEC's risk assessment in this business area, and establish a risk assessment mechanism, while accumulating practical experience and preparing for future assessment for all business areas of ZTEC. In terms of the subsidiaries, through a structured review and inspection on the subsidiaries’ regular export control compliance system, an evaluation of the completeness and effectiveness of the subsidiaries’ compliance control points will be made. This will eventually produce the assessment with risk-evaluation level, as a basis to support and guide the construction of the subsidiaries export compliance program ("ECP") and normalize inspection/self-inspection and audit. Through risk assessment, ZTE can better identify the export control compliance risks that the company may face, establish countermeasures to control these risks, and continue to improve the effectiveness of the company's export compliance control system.
●Continued Progress of the SAP-GTS System Implementation Project: In Q2 of 2020, ZTE continued to extend Global Trade Services (“GTS”) screening scopes and integrated a new system module to transfer subcontractor individual master data into SAP-GTS for automatic SPL screening, which will reduce workload and promote screening efficiency greatly. At the same time, ZTE was implementing more comprehensive product screening solution for different sales models to enhance screening accuracy and reduce compliance risks. Through these measures, ZTE’s automated compliance management and control has been enhanced continuously.
●Continued Progress the ECCN Project: The ECCN Classification Management Team has provided on-site training on the Subsidiary ECCN Online Publication Operation Guideline for the pilot subsidiaries, so as to further improve the standardization of the subsidiaries’ Export Control Classification Number ("ECCN") online publication operation of the subsidiaries. In addition, the ECCN Classification Management Team has continuously enriched the ECCN classification expert team by the completion of training and certification of level 1 ECCN classification experts in the first half of 2020. Through these measures, ZTE will further improve the construction of the export authorization system and expand talent resources for export control compliance.
●Cooperation with External Regulators: The recommendations of external regulators can help ZTE improve the Export Control Compliance system and reduce the systematic risks on Export Control Compliance. ZTE has always taken the cooperation with external regulators seriously.During the pandemic, ZTE continues to support the interview and on-site inspection of external regulators mostly in a remote way. As part of the Company's efforts to strengthen its Export Compliance Program, ZTE will continue to work closely with the SCC team and the Monitor team to further improve its export control compliance system.
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ZTE thanks our business partners for their continued support. If you have questions, please do not hesitate to contact ZTE by your point of contact.
Chief Export Control Compliance Officer
+65 84999511 (Singapore/新加坡)
+86 18588454350 (China/中国)