ZTE has overhauled several top management positions, effective immediately, as they seek to mend bad blood with the US Department of Commerce over Iran trade sanction violations.
Former CTO Zhao Xianming will take over as CEO, a position previously held by Shi Lirong, who took up the post in 2010. Mr Zhao will also replace founder Hou Weigui as the company’s chairman. Two executive vice chairmen, Qiu Weizhao and Tian Wenguo, will also step down after failing to be reelected among seven new roles. Former CEO Shi Lirong will remain on the board though he will no longer involved in ZTE management.
ZTE, which sells telecommunications equipment as well as smartphones, was blacklisted but the US Commerce Department last month after documents from 2011 showed company was forward selling US-made components to Iran through at least one shelf company.
The US has strict rules against providing technology which could potentially aid in the development of an Iranian nuclear program. While some sanctions have recently been lifted, US companies are still banned from selling certain software and hardware to Iran or to companies, like ZTE, that then plan to reexport to Iran.
ZTE was blacklisted by the US Department of Commerce following the investigation, meaning they were cut off from U.S. suppliers. ZTE sources a number of components from US companies, including the Qualcomm chips within their handsets. The company has since been granted temporary approval to continue working with U.S. companies, though they remain blacklisted. According to sources who spoke with the Wall Street Journal, the management overhaul was one of the requirements for the temporary license.
In a statement on the reshuffle, new CEO Zhao Xianming said that “at this juncture, we must take time to rethink. We will be taking extra measures to ensure that legal compliance and anti-corruption processes eliminate any possibility of non-compliance.”
He also noted that the company would be taking steps to eradicate “top-down culture” within the company, pointing to bureaucracy as one of the weak factors in the organization. “We will put practical measures in place to rebuild our operational philosophy and turn the challenges into opportunities,” said Mr Zhao.