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Cablegate: Extrancheck: Post Shipment Verification:

VZCZCXYZ0012
RR RUEHWEB

DE RUEHHK #1566 1630712
ZNR UUUUU ZZH
R 120712Z JUN 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 1910
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 001566

SIPDIS

USDOC FOR 532/OEA/LHINES/DFARROW
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR
WILLIAM ZARIT
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION:
HK KOON YUE INDUSTRIAL

REF: A) USDOC 03923

1.Unauthorized disclosure of the information
provided below is prohibited by Section 12C of the
Export Administration Act.

2. As per reftel A request and at the direction of
the Office of Enforcement Analysis (OEA) of the
USDOC Bureau of Industry and Security (BIS),
Export Control Officer Philip Ankel (ECO)
conducted a post shipment-verification at HK Koon
Yue Industrial, 9/F May Gar Commercial Building,
288 Reclamation Street, Yau Ma Tei, Kowloon, Hong
Kong (Koon Yue). The item in question is an
Agilent gas chromatograph exported to Koon Yue on
or about April 3, 2007 and valued at USD 17,452.
On the applicable shippers export declaration
(SED), the item is classified as 3A999. Items
properly classified as 3A999 may be
exported/reexported to virtually all destinations
and end-users worldwide, license free, except for
certain designated state sponsors of terrorism
(including North Korea). The exporter was Agilent
Technologies Inc. of New Castle, Delaware.

3. According to the Hong Kong Inland Revenue
Department Business Registration Office, Koon Yue
has been in existence since 1992. It is a sole
proprietorship (and is therefore not listed in the
Hong Kong Companies Registry) and its owner is
listed as Hong Kong identity card holder, Ching
Wing Chau. The Hong Kong Trade and Development
Council lists the company's areas of business as
including trading and manufacturing of
electronic/electrical components and accessories.

4. On June 7, 2007, the ECO met with Mr. Victor
Chau, Director. ECO had been attempting to
schedule a meeting with Mr. Chau for some time but
according to his assistant, Mr. Chau had been
unavailable as he was traveling in mainland China.
Mr. Chau stated that Koon Yue is a trading company
but also does its own production of various
electronic parts and components in Shenzhen,
mainland China. It was apparent to ECO that no
production occurs at Koon Yue's location in Hong
Kong.

5. As to the specific item in question, Mr. Wong
provided copies of the relevant shipping documents
showing that the item had been received in Hong
Kong and was subsequently shipped to mainland
China. The purchaser on the applicable
documentation was listed as Shanghai Weiye Import
Export Company. Mr. Wong did not know the name of
the end user of the item. He noted that his
buyers are often unwilling to disclose the end
user as they are concerned that he may approach
their customer directly. During the meeting, Mr.
Wong offered to call his customer to obtain
information about the end user. After talking on
the phone, apparently with a representative of
Shanghai Weiye Import Export Company, Mr. Wong
stated that the name of the buyer of the item is
Shanghai Yinming Industrial Company Limited. That
name did not appear on the shipping and ordering
documentation Mr. Wong provided to ECO (neither
did Shanghai Weiye Import Export Company). When
asked by the ECO why the transaction was routed
through Hong Kong, Mr. Wong stated that such route
was advantageous from a mainland China tax
perspective.

6. At the time visited, Koon Yue appeared to be a
suitable recipient of the commodities shipped (as
reseller) since Koon Yue cooperated with the PSV
and provided all requested information concerning
the final disposition of the applicable items. At
the same time, the ECO was not able to inspect the
subject items as they had already been delivered
to Koon Yue's customer. Consistent with guidance
on reporting of PSVs where the items cannot be
physically inspected, the ECO recommends that this
PSV be classified as Limited.

Cunningham

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