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Cablegate: Extrancheck: Post Shipment Verification:

VZCZCXYZ0002
RR RUEHWEB

DE RUEHHK #2289/01 2472337
ZNR UUUUU ZZH
R 042337Z SEP 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 2803
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 002289

SIPDIS

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

BEIJING FOR FCS JEANETTE CHU

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION:
HOPESEA IMPORT & EXPORT LIMITED

REF: A) USDOC 05666

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 Hopesea
Import & Export Limited, No 1 Hung To Road, Unit
12-16, Hong Kong (Hopesea). The items in question
are sinewave generator telerings exported to
Hopesea on or about May 10, 2007 and valued at USD
3,385. On the applicable shippers export
declaration (SED), these items are classified as
3A001 and, if properly classified, would likely be
controlled for national security (NS) reasons.
The exporter was Triangle Electronics Group, Inc.
of Ronkonkoma, NY.

3. According to the Hong Kong Companies Registry,
Hopesea has been in existence since 2006. It has
nominal authorized share capital (the equivalent
of less than USD 1) and no paid-up share capital.
The Commercial Registry lists Hong Kong Resident
Card holders Fung, So Kwan and Yeung, Chun Kwai as
directors. The company referenced in Reftel A,
namely Hopesea Electronics, is the former name of
what appears to be an unrelated company.

4. On July 24, 2007, ECO met with Ms. Anna Yeung
of Hopesea. She stated that Hopesea is an
electronic components trading company. It is an
affiliate of Shenzhen Huafuyang Import & Export
Co. Ltd. That company's phone number was listed
as the contact number for Hopesea in Reftel A and
Ms. Yeung's business card lists that company's
name and contact details on the flip side of the
Hong Kong contact details (which reference
Shenzhen Huafuyang Import and Export Co. Ltd., a
Hong Kong phone number but not Hopesea). Ms.
Yeung stated that the electronic components traded
by Hopesea are general use components used in the
production of televisions, computers, DVD players
and MP3 players. The company's standard business
is to source components in the United States,
Europe and Hong Kong for sale to mainland China.
Approximately 10-15 employees were located at the
company's offices, which also included space for
accepting and packing shipments to and from the
company.

5. When asked by the ECO, Ms. Yeung stated that
some of the company's products are controlled for
export to mainland China by the Hong Kong
government. She stated that Hong Kong export
licenses are difficult to obtain and often take
several weeks to process. She stated that in her
business where quick supply is critical, waiting
for licenses is a problem. Mr. Yeung stated that
in many cases, Hopesea sells the item to a
mainland customer but requires that customer to
pick up the items in Hong Kong and pay cash. When
asked whether the buyer takes on the obligation to
obtain the applicable Hong Kong license, Ms. Yeung
stated that she is not aware whether the company's
buyers obtain licenses but assumes they are being
exported without a Hong Kong license.

6. Ms. Yeung stated that most of her stock does
not typically come directly from the United States
but is rather sourced in Hong Kong. Her primary
supplier is Imgram Micro in Hong Kong. She stated
that Imgram Micro typically obtains the requisite
import licenses from the Hong Kong government for
items controlled by the Hong Kong government for
import into Hong Kong (Note: Hong Kong requires a
license for both import and export of strategic
commodities).

7. As to the specific transaction in question,
Ms. Yeung stated that the customer picked up these
items from Hopesea in Hong Kong. She provided a


copy of a Triangle Electronics Group Inc. invoice
(a copy of which the ECO had received
independently from OEA) on which the customer made
a notation that the items had been received. Ms.
Yeung stated that she was not familiar with the
customer although she believes it is a trading
company in mainland China. It is not a frequent
customer, according to Ms. Yeung. A google search
of the customer listed on the invoice (Shenzhen
Zhaocai Science and Technology Company) reveals
that this company is an electronics components
distributor in mainland China. According to the
company's web site, Shenzhen Zhaocai specializes
in end of cycle and hard to find components as
well as those components that cannot be found on
the mainland and Hong Kong markets. The company
lists a wide range of U.S. brands including Atmel,
Agilent, Aeroflex, Raytheon and many others.

8. The ECO provided Ms. Yeung with information on
U.S. export controls applicable to U.S. origin
items and encouraged Hopesea to become familiar
with and comply with those rules. Ms. Yeung
agreed to review the materials (she was not
previously aware of U.S. export controls) and
comply with U.S. export control rules.

9. The ECO notes that in certain circumstances,
items that fall into the applicable ECCN (3A001)
may be exported or reexported to mainland China
without a license, particularly where they are
destined for civil use. However, in other
circumstances, 3A001 items require a license to
mainland China regardless of end-use. This
difference is dependant on the ECCN subcategory
into which the applicable items fall. The ECO
recommends that, where practicable, OEA obtain
from the exporter the applicable ECCN subcategory
in situations where such subcategory would have an
impact on the licensing requirements for the
applicable items that are the subject of the
check. In this circumstance, given the business
practices of Hopesea related to Hong Kong export
licensing requirements and other factors noted
above, the ECO recommends that this check be
classified as Unfavorable.

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