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Cablegate: Extrancheck: Post Shipment Verification: Hwadar Scientific

VZCZCXYZ0004
RR RUEHWEB

DE RUEHHK #0299 0530216
ZNR UUUUU ZZH
R 220216Z FEB 10
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 9667
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 000299

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: HWADAR SCIENTIFIC
TECHNOLOGY CO.

REF: A) BIS e-mail request dated January 22, 2010 (01210110)

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 Hwadar Scientific Technology
Co (Hwadar). The item in question for this PSV is a Symmetricom
Timeprovider high precision clock exported to Hwadar on or about
February 26, 2009. According to information provided by OEA, this
system is likely classified under Export Control Classification
Number 7A994 and controlled for anti-terrorism reasons, meaning that
it can be shipped license free to virtually all destinations and
end-users worldwide without a license. Based on the 7A994
classification, a license may be required to ship this item for
military end use in mainland China. The exporter was Symmetricom,
Inc. of Puerto Rico.

3. According to the Hong Kong Inland Revenue Department Business
Registration office, Hwadar has been in existence since 1998. Li,
Yiu Sun is listed as the proprietor of the company (it is a sole
proprietorship).

4. According to the web site of Rock Electronic (www.rockelec.com),
Hwadar is the Hong Kong affiliate of Rock Electronic which is
located in Shenzhen. Rock Electronics markets itself as a total
solution provider for customers that need timing frequency products
or technology. According to its website, Rock Electronics is an
authorized distributor for Symmetricom in China although the
Symmetricom website does not list Rock Electronic as a distributor.
Additional web research reveals an additional web site for Rock
Electronic which lists a range of customers including the Xian
Institute of Navigation Technology, the Shanghai Astronomical
Observatory, China Shipbuilding 722, Chengdu 10 and Chengdu 29.

5. On February 8, 2010, ECO and FCS Commercial Assistant Carrie
Chan visited the company at the address noted above and met with Yan
Ming, General Manager of Rock Electronic and Zhang Jun, V.P. Sales
Manager for Rock Electronic. Mr. Yan Ming's business card also
lists Rock Electronic (H.K.) Co., Ltd., and Hwadar Scientific
Technology Co. According to Mr. Yan Ming, Hwadar is a subsidiary of
Rock Electronic and acts as its shipping and receiving affiliate in
Hong Kong. Rock Electronic is a trading company active in the area
of timing related electronics. The company's typical customers
include the Chinese Academy of Science, ZTE and the Shanghai
Astronomy Observatory. Mr. Yan Ming mentioned, at this point, that
a license to sell a cesium clock to the Shanghai Astronomy
Observatory had been denied in 2009. He inquired whether future
applications would likewise be denied.

6. As to the specific shipment in question, Mr. Yan Ming stated
that the item was destined for ZTE in Hong Kong. According to Mr.
Yan Ming, ZTE is a global telecom equipment and systems provider.
In this case, the item is being combined with other ZTE items (that
it cannot itself manufacture) for shipment to Ethiopia for use in a
civil telecommunications project there. Mr. Yan Ming provided
documentation indicating that the item had been delivered to ZTE
(H.K.) Limited.

7. Mr. Yan Ming was open and forthcoming during the interview. He
indicated that he was keen to keep the company's reputation clear so
as to continue to be able to obtain U.S. origin technology.

8. Based on the information at hand, ECO finds Hwadar to be a
suitable recipient of U.S. origin technology (as consolidator and
freight forwarder for Rock Electronic and not necessarily as end
user). ECO recommends that BIS may wish to consider Rock
Electronic's apparent customers in future licensing decisions.

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