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Cablegate: Extrancheck: Post Shipment Verification: Hopesea Import &

VZCZCXYZ0009
RR RUEHWEB

DE RUEHHK #2205/01 2350903
ZNR UUUUU ZZH
R 230903Z AUG 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 2696
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 002205

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 Expor Co.
Ltd., a Hong Kong phone number but not Hopesa). Ms. Yeung stated
that the electronic componnts traded by Hopesea are general use
componentsused in the production of televisions, computers, VD
players and MP3 players. The company's standad business is to
source components in the United tates, 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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