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Cablegate: Extrancheck: Pre-License Check: Hongtu Hangyan Electronic

VZCZCXYZ0005
RR RUEHWEB

DE RUEHHK #3094 3620145
ZNR UUUUU ZZH
R 280145Z DEC 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 3743
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 003094

SIPDIS

USDOC FOR 532/OEA/LHINES/JSONDERMAN
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: PRE-LICENSE CHECK: HONGTU HANGYAN ELECTRONIC
(HK) CO

REF: A) USDOC 09615 B) D385940

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 pre-license check at Hongtu Hangyan Electronic (HK) Co., Rm 1209,
12/F, Workingbond Commercial Center, 162-164 Prince Edward West,
Hong Kong (Hongtu Hangyan). The purpose of the visit was to
determine the suitability of Hongtu Hangyan to be the ultimate
consignee of various semiconductor devices that are the subject of
export license application D385940. The items (ECCN 3A001) are
valued at USD $475 and are controlled for national security reasons
(NS). The license applicant is Concord Components, Inc. of Wayne,
Nebraska.

3. A Hong Kong Inland Revenue Department Business Registration
Office check of Hongtu Hangyan reveals that the company has been in
existence since 2003. It is a sole proprietorship and mainland
China citizen, Zhang, Xiao Ming is listed as the owner. His
identity card number is ZZ5085186. Mr. Zhang is not listed as a
director in any other corporate entities in Hong Kong. Hongtu
Hangyan is not listed in the Hong Kong Companies Registry because it
is not an incorporated entity. It is not possible to check the
Inland Revenue Department Business Registration Office by name of
business holder. As a result, it was not possible to determine if
Zhang, Xiao Ming is the owner of any other sole proprietorship in
Hong Kong.

4. Background research on the web reveals that Hongtu Hangyan
(www.szhtic.com) is part of the Hongtu Group. That group includes
three other companies, namely Shenzhen Hongtu Hangyang Technology
Co. Ltd., Shenzhen Xinghangyang Technology Co. Ltd., and Beijing
Hongtu Mingli Technology Trading Co. Ltd. The group's headquarters
are listed as Rm A801, Aerospace Skyscraper, No. 4019 Shennan Road,
Shenzhen 518048, China. The group web sites states that the group's
business is focused on hard to find and urgently needed industrial
and military ICs.

5. Another company, Shenzhen Star-Navi Technology Co. Ltd. has its
headquarters in room 802 of the same building as the Hongtu Group
headquarters. Star-Navi's web site states that it is the owner of
the Hongtu Group (www.star-navi.org).

6. On November 27, 2007, ECO and Commercial Assistant Carrie Chan
visited Hongtu Hangyan at the address listed above and met with Mr.
Johnny K.M. Yung. The company is located in a small one-room office
in an older commercial building. Mr. Yung stated that he is the
sole representative of Hongtu Hangyan in Hong Kong. He makes
payments and collects shipments for the parent company in mainland
China. The parent company either picks up the shipments or arranges
for a freight forwarder to do so. Mr. Yung stressed that he knows
nothing about the end-use or end-user for these items. He further
stated that he knows little about the activities of the parent
company ECO notes that he did not even attempt to talk about what is
listed on the parent's web site. Mr. Yung suggested that the ECO
contact the parent in Shenzhen for any information about the
parent's activities or about the proposed end-use or end-user for
the items. ECO suspects Mr. Yung knows more about the activities of
the parent then he is willing to share. When asked why Hongtu
Hangyan is established in Hong Kong and operates in this way, Mr.
Yung stated it is easier to make bank payments from Hong Kong and
Hong Kong is also a more beneficial tax jurisdiction.

7. During the interview with Mr. Yung, the ECO noticed business
registration certificates of two other companies. Mr. Yung
downplayed those registration certificates and declined to provide
additional information about them. ECO noticed that the name of one
of those companies is Ziheng International Electronics Co. but was
unable to obtain the name of the second company. An Inland Revenue
Department search reveals that this company is likewise a sole
proprietorship established in 2003. It is owned by mainland Chinese
national Luo, Guofang with mainland identification document number
ZZ5183579. A review of this company's web site (www.star-ic.com)
reveals that it is, likewise, a distributor of hard to find and
obsolete military electronic components.

8. ECO recommends that OEA conduct a thorough review of shipments
to companies in the Hongtu/Star-Navi Group as well as to Ziheng
International Electronics Co. as well as shipments to the addresses
of those companies.


Cunningham

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