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ZTE sends mixed signals with pullout from Shanghai trade show

Renewed tensions with Washington cloud Chinese telecom equipment maker's future

Posters promoting Chinese telecom equipment maker ZTE greet visitors at the Mobile World Congress Shanghai venue. ZTE pulled out of the annual trade show at the last minute. (Photo by Kenji Kawase)  

SHANGHAI -- At this time of the year, just before the arrival of Shanghai's hot, humid summer, telecom industry players from China and beyond gather to showcase their latest technologies and services, and to talk about the future of the industry.

The Mobile World Congress Shanghai, a major telecom trade show in Asia that runs through Friday, should have been the perfect venue for ZTE to get off to a fresh start after its business was upended by U.S. trade sanctions. Although the embattled Chinese telecommunications equipment manufacturer appears to have dealt with that problem with the U.S. government, it pulled out of the event at the last minute, leaving only hints of its ambition to be a competitive player once again.

On the second day of the three-day trade show, Hu Junjie, ZTE's chief global marketing officer for transport products, was scheduled to speak at a conference titled, "Tomorrow's Operator Summit." His name was on the official printed conference guide, although it was removed from the schedule on the event's website.

Other key ZTE people will also be absent. Zhang Sihong, the company's chief engineer for artificial intelligence, and Chen Zhiping, in charge of its wireless solution business, were scheduled to speak on Friday at two separate conferences on AI and 5G mobile technology. But they also canceled, according to the event organizer.

ZTE's absence has left a gaping hole at the venue. At the center of the five halls hosting the event's 550 exhibitors is a "super hall" meant to allow attendees to "find the most cutting edge and leading products and solutions," according to the official description of the event by operator GSMA.

Barcelona has previously taken a similar approach at its own electronics trade show, but this was the first such layout for the Shanghai event. The organizer decided to shift its emphasis to the business market from the more consumer-oriented exhibitions of the previous six years.

ZTE was one of six exhibitors given space in the super hall, along with Huawei Technologies, China Mobile, China Telecom, Ericsson and Shanghai Nokia Bell, a joint venture between Nokia and China Huaxin Post & Telecommunications Economy Development Center.

In addition to pulling speakers from the trade show, ZTE asked GSMA to remove its exhibit, creating a 775-sq.-meter void just a few days before the doors opened to the public on Wednesday.

"It's their decision. We can't influence that," Michael O'Hara, chief marketing officer of GSMA, told the Nikkei Asian Review in an interview on Thursday. "It was so close to the [opening of] the show."

But the empty space was quickly occupied by a booth on an art and technology award, and extra resting area for attendees. O'Hara said his organization hoped "to find a way somewhere in the situation where ZTE continues to operate." He tried to distance his organization from Washington's polices, saying, "How the U.S. deals with ZTE is an issue for the U.S. government."

The timing of ZTE's pullout appears connected to Washington's latest moves to punish it. According to a stock exchange filing by ZTE on June 12, the Chinese company reached a settlement with the U.S. Commerce Department, agreeing to pay an additional $1.4 billion in penalties, including $400 million to be placed in an escrow account that will be refunded if the company commits no further violations. In exchange, the seven-year ban on the company doing business in the U.S. was lifted. The ban was imposed in April for alleged violations by ZTE of sanctions prohibiting technology exports to Iran and North Korea. ZTE shares, listed in Hong Kong and Shenzhen, resumed trading on June 13, after an almost two-month suspension.

However, the company's standing in the U.S. became murky again after the Senate moved to restore the ban. On June 18, the Senate passed the National Defense Authorization Act, defying President Donald Trump's effort to ease sanctions against ZTE. Although the bill has not yet been passed by the House of Representatives, the news was a reminder that the company remains on shaky ground. Its shares closed at 11.82 Hong Kong dollars and 12.92 yuan on Thursday, down more than 50% from where they were before the trading suspension in April.

ZTE has not responded to a request for comment from Nikkei on why it pulled its booth, and its executives and officials from the trade show.

Although ZTE now has no exhibit or official spokesman at the event, it has a ghostly presence. In addition to its listing in the trade show's official print publication, the ZTE booth is still marked on the floor plan of the exhibition halls. ZTE is also named as one of 10 supporters of this year's show -- along with along with U.S. tech companies Intel and Qualcomm -- putting it just below "diamond" and "platinum" partners China Mobile and Huawei.

ZTE billboards and posters at the venue show men stripped to the waist, rowing boats: The slogan reads: "Advancing bravely to break the wind and get through the waves." But its actions in suddenly pulling out of the Shanghai event speak louder than its words.

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