ZTE does good business in host countries like RP

SHENZHEN – Zhongxing Telecommuni-cation Equipment, better known as ZTE, is transparent, honest, and observes corporate responsibility.

This is according to Yongcheng Gu, general director of the department created to handle the corporation’s branding and communications.

The brand is badly tarnished in the Philippines, and even the international community has taken notice. Transparency International, in its latest Global Corruption Report, specifically cited the ZTE scandal in warning that some foreign companies undertaking major projects are aggravating corruption in the Philippines.

“We are very honest corporate citizens,” Yongcheng replied through an interpreter when asked here the other day about its $329-million broadband network deal with the Philippine government that was scrapped amid allegations of bribery.

Yongcheng and officials of Guangdong, the southwestern province where Shenzhen is located and where ZTE has its headquarters, skirted the issue of bribery, insisting only that Chinese companies follow the law.

“We abide by local laws in China and foreign countries,” Yongcheng said. “We have a very transparent financial system. We are very honest corporate citizens.”

He said the company, China’s largest listed telecommunications equipment and service provider, pays its taxes properly, is involved in charities and assists people affected by natural disasters.

Founded in 1985, ZTE is now in more than 140 countries and credits that growth – 40 percent in the first six months of this year alone in terms of profits – to its global expansion.

Its foray into the Philippines was snagged by reports that it had tapped Benjamin Abalos, an ally of President Arroyo, to broker a deal for a national broadband network linking all government offices.

Abalos, at the time the chairman of the Commission on Elections, admitted going several times to China on ZTE-sponsored trips, claiming that he was merely playing golf with friends.

Romulo Neri, the director-general of the National Economic and Development Authority when the deal was being negotiated, later told the Senate that Abalos had offered him P200 million in exchange for a NEDA endorsement of the project.

A friend of Neri, Rodolfo Lozada Jr., said the project was grossly overpriced.

By the time the project was signed in Boao, China by ZTE executives and Transport and Communications Secretary Leandro Mendoza in the presence of President Arroyo, the project cost had ballooned to $329 million.

Amid the ensuing scandal, Abalos resigned and the President canceled the deal.

Yongcheng did not comment directly on the bribery allegations, saying only that they thought all along that the deal was recognized by the Philippine government.

No investigation of ZTE was launched in China because there was no formal complaint or request from the Philippines, according to Chinese Ambassador to Manila Liu Jiangchao.

Beijing has gone after erring companies in the past, including large enterprises. It shut down those involved in the melamine-tainted milk scandal and executed officials directly responsible for the mess.

Whether it will go after companies that resort to bribery to bag projects overseas remains to be seen.

ZTE is a source of pride for Guangdong and China. It is listed in the Hong Kong Stock Exchange and employs 62,000 people, with about 10,000 deployed in 107 offices worldwide.

The company is present in 140 countries and aims to become the global leader in its field.

Its headquarters in this city occupies 184,000 square meters of land. The modern complex includes a training center and research and development facilities, plus the golf course made infamous by Abalos, President Arroyo and her husband.

A neon sign in the main building declared ZTE’s “service mission” as “perfect services for our customers.”

Its “service concept,” the sign said, is to “achieve win-win with customers.”

An official in Guangzhou, capital of Guangdong, said enterprises in the province are required by the Chinese government to abide by the laws of the countries where they do business.

Left unsaid was the question: If government officials in those countries are themselves the ones asking for fat commissions or bribes, how should foreign investors respond?

The company will have to clean up its act, if it wants to be a market leader and live up to its own corporate description: “ZTE is now a respected brand name in (the) telecommunications industry.”