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Cablegate: Extrancheck: Post Shipment Verification: Wah Wai Electronic

VZCZCXYZ0000
RR RUEHWEB

DE RUEHHK #2091 3170716
ZNR UUUUU ZZH
R 130716Z NOV 09
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 8951
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 002091

USDOC FOR 532/OEA/ MCANNER
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR PATRICK SANTILLO
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: WAH WAI ELECTRONIC
TECHNOLOGY

REF: A) BIS e-mail request dated October 22, 2009 (01210084)

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 (PSV) at Wah Wai Electronic Technology,
Room 1001, 10/F Wang Yip Industrial Building, No 1 Elm Street, Tai
Kok Tsui, Hong Kong (Wah Wai). The items in question for this PSV
are monolithic integrated circuits exported to Wah Wai on or about
September 20, 2006. These items are likely classified under Export
Control Classification Number (ECCN) 3A001 and are controlled for
national security (NS) reasons. These circuits are likely eligible
for license exception Civil End Use (CIV) for export/reexport to
mainland China. The exporter is America II Electronics of St.
Petersburg, Florida.

3. According to the Hong Kong Companies Registry, Wah Wai has been
in existence since March 1986. Its paid up share capital is the
Hong Kong equivalent of USD 65,000. The Hong Kong Companies
Registry lists Hong Kong residents Cheung, Hei Kwan (HKID
P243933(A), Lee, Wah Wong (HKID H389299(O) and Li, Man Har (HKID
K245459(9) as directors.

4. Wah Wai does not appear to have a web site of its own although
it appears to advertise on B to B web sites including
www.diytrade.com. On that web site, the company's business is
described as trade in high level electronic components at the
military, industrial and commercial level.

5. On November 10, 2009, ECO and FCS Commercial Assistant Carrie
Chan visited the company and met with Mr. Lee, Wah Wong, director.
The company is located in a warehouse building and has space for
several desks, a reception area and a small director's office.
According to Mr. Lee, Wah Wai is a family business and the company
owns the premises.

6. Mr. Lee stated that Wah Wai is a small trading company. He
offered that the company has seen a nearly 90% drop in its business
this year. Mr. Lee noted that it has become standard practice to
sell to mainland customers in Hong Kong on a cash basis to avoid the
risks associated with nonpayment by mainland customers. Mr. Lee
agreed that this practice may also be useful for minimizing customs
formalities and duties at the Hong Kong/Shenzhen border. Mr. Lee
noted that most such transactions are actually completed by use of
freight forwarders so as to insulate the buyer from any customs
related issues (in this scenario, the freight forwarder sometimes
also pays for the items in Hong Kong). ECO suspects that this
structure also serves other purposes including export control
avoidance.

7. Mr. Lee stated that he does not sell military temperature range
products. He expressed an understanding of U.S. export control
rules and stated his commitment to comply with them. By separate
e-mail, ECO sent Mr. Lee additional information about U.S. export
controls.
8. As to the particular shipment in question, Mr. Lee stated that
the company no longer had any of the applicable documentation. Mr.
Lee stated that there are many changes in trading companies so he
does not keep too many records. Mr. Lee stated that the
representative of the buyer, a Mr. Ching, had provided him with a
phone number that is apparently no longer operational. Mr. Lee
stated that he did not know the final end-user or end-use for the
items.

9. ECO notes that Mr. Lee was quite talkative when talking about
the electronics business and expressed his commitment to comply with
U.S. export controls. At the same time, Mr. Lee did not provide ECO
with any significant information about the underlying shipment.
Based on a totality of the circumstances, ECO cannot recommend that
Wah Wai be considered a suitable recipient of U.S. origin controlled
technology.

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