ZTE, a Chinese technology firm, has been hit with U.S. sanctions that threaten to cripple the company. Two lessons can be drawn from this experience. First, that companies disregard U.S. laws at their peril. Second, that a global supply chain is inherently risky and every effort should be made to promote nationally developed technology. It looks as though China will focus on the second. That is the wrong approach.
ZTE is China's second-largest manufacturer of telecommunications equipment, with a stock market value of $20 billion before its recent troubles. About 60 percent of its revenue comes from network business and 32 percent from consumer business. It is the fourth-largest seller of smartphones in the United States.
In Japan, it has partnered with Softbank and NTT Docomo, seeking to claim a 10 percent share of the SIM market. The company has about 200 employees in Japan, some of whom work at a Tokyo research and development center that is focused on 5G and other next-generation network technologies that Japan will roll out for the 2020 Summer Olympic Games in Tokyo. Reportedly, those facilities are too small and the company is planning to expand to accommodate between 500 to 600 engineers.