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Chinese telecom giant ZTE's problems may be going away. President Donald Trump said in his Twitter account over the weekend that he has ordered the Commerce Department to help ZTE get back into business. The department had banned the manufacturer from sourcing vital components from US companies, after finding ZTE was deceptive about its promised resolution of earlier sanctions. ZTE's problems may now have a solution, but how has the company's retail business been doing here at home? Our reporter Chen Tong visited stores in Shanghai to find out.
ZTE's tangle with the United States has had its ups and downs for several years. Because the new US sanctions resulted in a lack of key components, ZTE announced last Friday that it had halted operations. But one of the company's first businesses has in fact been sluggish for some time. Managers at this retail cellphone shop in downtown Shanghai say ZTE in fact pulled out of the store a year ago. Its sales volume simply was not competitive with other domestic phone brands.
ZHANG CHAO, MANAGER ON DUTY DIGITONE JIANGSU RD.BRANCH "The sales volume of ZTE phones was less than Huawei's because Huawei got better reviews from users. Users trust Huawei more. Oppo and Vivo are also getting more buyers than ZTE because they do a lot more advertizing."
In fact ZTE has been pulling out of shops all over Shanghai for years. In the beginning of this month, the company even suspended its phone sales on Tmall. Although some of ZTE's phones still can be found in a few online shops, the sales volume is not high. Data from research company IDC show that ZTE ranks 9th in term of sales volume in the domestic market.
For some time now, ZTE has been shifting its primary corporate focus from making phones to making telecommunication equipment. That's the main reason the US commerce department's ban was a serious threat to ZTE's whole production chain.
DR. NEIL WANG, PRESIDENT FROST & SULLIVAN CHINA "There will be a very major influence, a negative impact on ZTE products and future imports from developed countries like the US of major components and chips. Semiconductor and chips are playing an important role in electronic industry. China has really to focus on how to develop its own IP in areas of semiconductors and microchips."
In addition to the US export ban's interruption of its production chain, ZTE is facing the impact of a $1.2 billion dollar fine levied on it by the commerce department. It will now be waiting to see just how Trump's order to the department will be implemented.