The U.S.-China tech battle from inside ZTE

Business & Technology

Ashley Yablon, the former general counsel for ZTE, discusses how he uncovered an illegal scheme at the Chinese technology company to sell billions of dollars’ worth of surveillance equipment to embargoed countries.

Photo by China Stringer Network via Reuters Connect.

Below is a complete transcript of the China Corner Office Podcast with Ashley Yablon.

Chris: Hi everyone. Thanks so much for joining us today on China Corner Office, a podcast powered by the China Project, the New York-based news and information platform that helps the West read China between the lines. I’m Chris Marquis, a professor at the Cambridge Judge Business School.

And today, we are joined by Ashley Yablon, an attorney with over 20 years of experience and also the former general counsel for the U.S. business of Chinese technology company ZTE. Ashley is also the author of Standing Up to China: How a Whistleblower Risked Everything For His Country, a book that came out this April that recounts his time at ZTE. We started by discussing how Ashley, a U.S. citizen, acquired such a senior level position for a Chinese state-owned firm, and also his experience working as a general counsel there before the U.S. government identified ZTE, as well as Huawei, as national security threats in 2012. Ashley was the center of this investigation and scandal, and we discuss in detail how he uncovered an illegal scheme selling billions of dollars’ worth of equipment to embargoed countries such as Iran. With the FBI and the Chinese state involved, his experience has aspects of a true to life thriller. Ashley gave vivid details of reactions from his family and his coworkers, a series of events that led to a period of personal and professional chaos.

We then moved on to discuss the current political environment and its effects on Chinese tech companies, with Ashley commenting on the CHIPS Act in particular. He explained why, in his belief, sanctions don’t work and why he is in favor of this new approach because it takes away U.S. dependency on China. With Huawei and ZTE being featured in the news recently, again, as national security concerns, we touched upon how these companies have shown a lack of respect for international laws. Ashley provided an interesting metaphor when he compared the legal approaches of Huawei and ZTE to water, always being able to find a crack to run through what seems like a solid wall, or a way to go around things. We concluded our discussion with Ashley offering legal advice on how to safeguard U.S. interests when interacting with Chinese companies.

Thanks so much for listening, and enjoy the show.

Chris: Ashley, welcome to China Corner Office.

Ashley: Chris, great to be here. Thank you so much for having me.

Chris: Really looking forward to learning about your experience, particularly at ZTE. ZTE and Huawei are such iconic Chinese government-owned or controlled entities in China. I’d love to just hear some of your experience working for these companies.

Ashley: Sure, that sounds great.

Chris: So, you worked for Huawei first and then next at ZTE. How did those jobs come about?

Ashley: Interesting. I guess it was in 2010, I had a friend of mine who had an opportunity, knew some people there at Huawei, and I had just left McAfee, the antivirus software company. And a friend of mine knew people there at Huawei, and it was an opportunity to kind of expand my career and be the assistant general counsel. So, that role for Huawei U.S.A., which is based here in Piano, Texas. I got the opportunity to work there and handled just a number of matters for all of mobile and what they called device, which was phones at the times, modems, towers, and anything for telecommunications, and just handled a number of things. It was a great opportunity for me because it was completely different learning a whole different culture, which was the eastern culture in Chinese. And that took some getting used to, to say the least.

Chris: What were some of the initial challenges you had or some of the insights around what the key cultural differences are between a Chinese firm and a U.S. firm?

Ashley: I always try to describe to people here in the West, we’re very linear. We think A plus B equals C. And in Chinese culture, it doesn’t work that way. What we would call meandering or wasting time is part of the process, and it’s about getting to know someone that they call “face.” I talk about that quite a bit in my book, but it’s really about getting to know someone. And it’s very rude if you come across in business and immediately start talking about business. They want to get to know the person. It really isn’t until the eleventh hour that we really start discussing business. Gifts are very important, formalities are very important, business cards are very important. Showing deference is very important. So, those are real things that you really learn and pick up on. In my case, I had to pick up on those relatively quickly.

Chris: So, you were at the Huawei U.S. headquarters. And how many non-Chinese were working there?

Ashley: Typically, and it’s both at Huawei and at ZTE when I was there, 80% of the staff are Chinese nationals that are here on visas, but only 20% of the office is U.S. citizens. It’s quite a learning curve because you are the minority as a Western or a U.S. citizen.

Chris: So, ZTE, I know you were the general counsel for them. So, their headquarters is also in the Dallas area, is that right?

Ashley: It is. It’s in Richardson. It’s a suburb, but it’s about 10-minute drive from Piano, and it’s in what they call the telecom corridor. There’s a number of telecom companies right there in Richardson, Texas. And ZTE had a building, had a number of floors, and had obviously their logo on the building as being the main tenant. And it was the same type of setup. I was the first ever general counsel for ZTE U.S.A. that they had ever hired. 80% of office, including all executives, other than myself, were Chinese nationals.

Chris: So, you mentioned this telecom corridor. Why does ZTE and Huawei, why did they both locate in Dallas? It doesn’t seem like an obvious choice to me.

Ashley: Great question. I don’t know. What’s interesting, I know about ZTE, they’re actually… Our headquarters are here in the Dallas area here in Texas, but our business is, or corporation is, actually of New Jersey. So, it’s a New Jersey corporation that’s based here in Dallas, Texas. I don’t know if that has something to do with these two companies that are such bitter rivals. And if one was here, the other one’s going to be right there. And it’s the same thing in their headquarters back in China. Both are in Shenzhen.

Chris: And then how did you come to work at ZTE after Huawei? It does seem, like you mentioned, these are fierce competitors. I thought maybe having a Huawei background would be a strike against you, but maybe the opposite was the case.

Ashley: It’s actually, and I learned this, this is a real cultural thing. It’s a real, what we say here in the U.S., a feather in your cap, a real great thing to steal away employees from each other. Immediately when I started work at Huawei, they were looking for first ever general counsel for ZTE, and I was immediately courted by them to apply. And like I said, stealing away employees from each other is quite the boon. I think that probably had a lot to do probably with me getting the position at ZTE.

Chris: After you joined ZTE, the reason why you wrote the book is because you uncovered some illegal activities, which you were then sort of a whistleblower. Can you say, just describe sort of your early days at ZTE? You mentioned the cultural difference. Were there red flags or were there things that you saw and you said, “well, this is a new environment, I’ll just go with it,” but it just didn’t sit with you well? Can you discuss a little bit about your early days at ZTE?

Ashley: I was so excited to get the job, and I think this kind of goes to your question of red flags, and did I see them. This was my dream job. And I’m 39 years old and I worked years and years to get this, and here I am at 39 to be the general counsel of a multi-billion-dollar international company. It’s everything I wanted and everything I worked for. But I guess the… Like I talk about in the book, be careful what you wish for because you just might get it. And I was, in a way, I guess blinded by my, whatever ambition, probably blind ambition, best way to describe it. And so, a lot of the red flags I didn’t see.

As an example, here we are coming close to Thanksgiving, and I always call this the Thanksgiving meeting. It was the Wednesday before Thanksgiving. And they brought in all the executives. And like I mentioned earlier, all the executives were Chinese except for myself. And we, meaning ZTE, as well as Huawei, were under the U.S. House Intelligence Committee investigation as being a threat to U.S. national security. And they looked at me and said, “Hey, what are we going to do?” And I said, “Well, we need to hire a lobbying law firm to assist us.” And they kind of looked funny and they looked and they said, “Well you’re our attorney, why can’t you handle this?” Again, had to explain, being a general counsel versus a specialty, something as big as a lobbying firm with a House Investigation Committee going on. And so, red flags started to appear then, because they agreed that we needed to hire someone, but this whole idea of being under House investigation, I had no idea when I was looking and interviewing, but was a huge deal, and becomes the real pivotal part of my whole experience there and really about the book.

Chris: What was the issue that you uncovered and how did you uncover that?

Ashley: Part of what happened, the House investigation was… That started, like I said, right when I started actually, in October in 2011. And it started immediately and then it culminated with them coming out in November, like I said, before Thanksgiving. But the big bomb that hit was a few months later in March of 2012 when Reuters got a copy of a contract between ZTE and the country of Iran. And, of course, it’s ZTE China. So, I want to differentiate that. Obviously, ZTE is in Shenzhen, China, and that’s the parent company. I was the general counsel for ZTE U.S.A., affiliate or a subsidiary of it. But what Reuters got was a copy of a packing list and a contract. And the contract was ZTE selling hundreds of millions of dollars of spying technology. And not only did they have the contract, but they had the packing list.

And we all know a packing list. You get that at Ikea. This, imagine an over 900-page packing list that lists out not only one spying cell tower, but all the U.S. component parts. And what became problematic was, I’m not going to bore you with legalese, but any contract where you’re selling component parts has a provision in there very pronounced that says you will not re-export. Meaning, “Hey, I’m going to sell you this component part, but you agree not to sell it to the embargoed countries.” And what ZTE had done was they had created an elaborate scheme of shell companies and entities where they were buying hundreds of millions of dollars of U.S. component parts, which are obviously U.S., are the best parts. And then, through different shell companies, getting those back to ZTE China, putting them into ZTE equipment, and then selling it, like I said, for hundreds of millions, if not billions of dollars, to all the embargoed countries. And Reuters just got its hands on one of those contracts that being with Iran.

Chris: And then how did you discover that?

Ashley: What happened was obviously we had two kinds of parallel tracks going on. You had the House Intelligence Committee Investigation, and then the moment that article came out, I, the very next day, as general counsel for ZTE U.S.A., I was served with the subpoena from the Department of Commerce. And what did they want? Well, they wanted that packing list and they wanted that contract. So, they were trying to get it through ZTE U.S.A., and me being the general counsel, that subpoena was served on me personally. Not to bore you again with more legalese, but from a jurisdictional perspective, our government doesn’t have jurisdiction to claw back any type of contracts from ZTE China. It has only jurisdiction over ZTE U.S.A. But under those laws, ZTE U.S.A. isn’t required to give over those agreements. So, the Department of Commerce knew that, but was trying to strong-arm ZTE into compliance.

And what happened was that very next month, obviously the article came out in March, but in April, the House Intelligence Committee wanted to go to Shenzhen, China, and meet with, both ZTE and Huawei, and have them explain why they were not a threat to U.S. national security, and that they were not state-owned and state-run. And so, I flew there, I brought the large law firm that I had hired that was going to help us, the lobbying firm from DC, but I was brought into a room and I was showed the contract. They wouldn’t give it to me as a paper version, but I was brought into a room with no windows, completely black, something out of a movie, and they projected the contract up on the wall through a projector and gave me 15 minutes to scroll through it. And in that contract, I stumbled upon the section of the contract that was titled “How we will get around U.S. export laws.” That was the name of the section, “How we will get around U.S. export laws.”

And it listed out the companies. It listed out the shell entities, it listed out what each company would do. And it actually had a chart. It was actually a chart showing this one would buy it, this one would sell it, this one would service it. That’s how it was. And what I stumbled upon was that obviously, but then ZTE then later said that they wanted to basically, they were going to destroy all the evidence that the Department of Commerce wanted, and they were going to destroy it. And then they wanted me to be the scapegoat. That’s when everything went haywire, obviously in my life, but that’s what I uncovered.

Chris: Why do you think they showed it to you in that way, and did they need to show it to you necessarily, given it was a ZTE China versus ZTE U.S.A. contract?

Ashley: I demanded to see it because, as being their lawyer, I needed to know what we were going to be up against. I think the reason they didn’t want to actually give me a physical copy is they knew that they were wrong and they refused to give it to me. And I kept demanding, “We need to hand this over to our government, we need to comply and we need to get out of this situation.” I remember, right when that Reuters article came out, our office was going crazy, and they’re running around and running around like nuts. Finally, I stopped one of them again, she was a Chinese attorney who worked for me, she was a Chinese national, and I said, “Why are you so worried about how they got it?” And she said, “Because now we can’t hide anything.” Again, you talked about red flags, that was certainly one of them. Again, I didn’t see that at the time, but I certainly should have, looking back now.

Chris: Yeah, it’s so interesting, and I think that really plays well into my next question. And that’s sort of your decision to actually inform the U.S. government about this. In some ways, you wanted to see that because you were their attorney, and if you have to defend them, they did that in the past. I mean, that’s sort of past behavior that you as the attorney can defend them. But if it’s something where it’s ongoing and you’re trying to advise them and they’re still doing it, then that’s, I guess, where more of a responsibility to actually alert law enforcement. Can you say a little bit about your decision to actually let the U.S. government know about this? And then also I’m interested in hearing about the process through what you did there.

Ashley: Yeah, you’ve hit the nail on the head. As an attorney, you have what they call a duty of attorney-client privilege. That’s a duty you have. In other words, and I’m sure a lot of people have heard that phrase, but what that means is if your client comes to you, think of if you’re like a criminal defense attorney, and your client comes to you and says, “Hey, I committed this crime in the past,” you as an attorney have a duty of attorney-client privilege not to share that. Now, there is an exception to that, and it’s called the crime fraud exception. And what that means is if your client tells you of a crime they’re going to commit in the future, then you have a duty to report that. So, that’s the difference between the attorney-client privilege. What ZTE was telling me was that they were going to lie, and this wasn’t a small lie, this wasn’t a small crime they were gonna commit. This is a crime against our country regarding, not only billions of dollars, but our intelligence and our safety as citizens.

So, I felt compelled to do something. Now, it’s easier said than done. I struggled for about two weeks. And again, I’m an attorney. My former wife is an attorney. All my best friends are attorneys. But I ended up hiring five different lawyers that I was paying out of my own pocket to represent me. And one of them was a criminal lawyer. And when I explained everything of what was going on, he told me I had that duty, that duty to report them. And so, for about two weeks, I struggled with it, but I did go and I met with the FBI, and I sat down for two days and gave the FBI all the information that I just shared with you, but in greater detail. So much so that they took it for two days and created a 32-page affidavit listing out all those shell companies, all those entities, and all those persons. That’s how we got the process started, by going to the FBI.

Chris: So, you go to the FBI, FBI interviews you, writes up an affidavit. Do they file this in a court? What happens after that?

Ashley: My understanding was that they did two things. They took all that information from me and then they also asked me if they could have my laptop. They wanted to make what they call a preservation copy. And so, they took my laptop to preserve it. And my understanding on the two things was, number one, they wanted the laptop preservation copy in case something ever happened to me, or if ZTE ever tried to, down the road, change anything, they had the actual original laptop to compare it to. And then, as far as the affidavit and all that information that I gave to them, my understanding was that they were going to use all that information to present an affidavit to a judge, a federal judge, again, all this in what they call under seal, meaning confidential, no one’s to ever know. But the goal was, my understanding, was for them to be able to do a raid on the ZTE office. In other words, come in with a warrant and just do a raid on the ZTE office for documents, et cetera. And again, all based on all the information that I gave in that affidavit to the FBI.

Chris: And you mentioned a couple times that was your understanding, is that what happened?

Ashley: Well, as you read in the book, no, that’s not what happened. What happened was a couple of months later I received a phone call as I was walking into the office one morning, and it was from a reporter. And he had gotten a copy of the affidavit. He was doing a story on it and wanted to know if I wanted to comment. And you can imagine my heart drops because I knew what was going to happen, and that was here, this article’s going to come out, and it’s going to name me as the person who basically whistleblowed and ratted out ZTE and this elaborate billion-dollar scheme. I’m spilling the billion-dollar beans. I knew that I was in real trouble and called my attorney in a panic, and “we’ve gotta stop this, we’ve gotta stop it.” Needless to say, freedom of the press. You can never find out how they got a copy of it.

But the bottom line was the article came out. And I remember at the time my, as you read about in the book, my wife and I are sitting there hitting the refresh button on the computer waiting for that article to hit, knowing when it was going to hit. And the moment it popped up on our screen, we jumped up, my wife looked at me and said, “We have 30 minutes to get out of this house or we’re going to be killed.” And we scrambled around. It was really something out of a movie, but yeah, that’s how it started.

Chris: You mentioned you never found out who leaked it, but any guesses or theories about that?

Ashley: Two things come to mind. Number one, I was immediately contacted by what I like to call someone who was a kind of a conspiracy theorist, kind of a grassy knoll conspiracy theorist who had come up with all kinds of crazy scenarios of how they got it. And he had been tracking how certain information had been leaked and was trying to draw comparisons. But the other thing I thought about was got to remember this was filed in our court system, the district clerk and the clerk’s office. And it had to be leaked at that point because that’s where again, it was what they call filed under seal and no one was to ever see it. So, I wonder if it was leaked there in the clerk’s office by someone who got paid some kind of money by somebody to leak stuff, of juicy things like that because that certainly was juicy.

Chris: What year was that again?

Ashley: This is 2012.

Chris: The case is put forth against ZTE, that’s a couple of years later, is that right?

Ashley: What happened was you had the House Intelligence Committee Investigation going on. Like I said, you had that subpoena from the Department of Commerce. The Department of Commerce and the Department of Justice are all working together, starting at this point putting this massive lawsuit against ZTE. And obviously that continued on until 2017. That’s when ZTE finally admitted to everything. I was long gone from ZTE by that point, but in 2017, ZTE was not publicly traded here in the U.S. on our stock exchange, but they are traded in China, as well as, at the time, Hong Kong, which was in its own country. But the U.S. somehow was able to get ZTE to not be traded on the Hong Kong Exchange. The moment that happened, that’s when ZTE threw up his hands and said whatever we need to do, we’ll pay whatever fine. And they did. They ended up paying the largest penalty that’s ever been assessed.

Chris: How much was that?

Ashley: Well, the total amount was $1.2 billion. And $900 million was to be paid immediately, 300 million was to be kind of held in almost like an escrow. And basically, if ZTE was good, and on good behavior, that $300 million would be returned back to them. Unfortunately, within less than a year, ZTE broke even more rules, and the U.S. not only clawed that $300 million, but tacked on, through a series of other events, another $1.2 billion penalties against ZTE. So, ZTE ended up paying almost $2.5 billion in penalties just to keep being a company here in the U.S.

Chris: I want to actually go back to 2012. What happens to you at ZTE? I mean, does your boss contact you or your employees contact you? That must have been a little bit uncomfortable, I guess.

Ashley: Yeah, it was very crazy. Like I said, that night that that article came up, my wife and I are scrambling around the house. My cell phone is just blowing up with phone calls from every news agency in the world. And we’re scrambling and trying to find a place to hide. We hide in a hotel room. I’m calling my criminal lawyer. Bottom line, he sets up a meeting with the FBI, and we, after a couple days of hiding, I go with my attorney and we meet with the FBI at their office, here in Dallas. And it’s really something out of a movie. I’m led into a huge conference room, and my attorney and I are standing there by ourselves, and then the door opens, and 12 suits, men and women, come in, and each hand me their business card, and it’s people from the FBI, and they sit on one side of the table.

Then the door opens again, and another 12 men and women hand me their business cards, and they’re from the Department of Commerce, and they sit on the other side of the table. The top person with the FBI sits up at the top of the table, and my attorney and I are at the other end, and my attorney says, “You have destroyed Ashley’s life. Here he is, he’s going to lose his job, he’s going to lose his career. Because think about it, what company is gonna want to hire him, the whistleblower, to come work for them anymore? And you’ve probably destroyed his life, his life is threatened.” And I’ll never forget this, a person from the FBI at the other end said, “We apologize, we don’t know how this got leaked. We don’t know any of that. But as far as Ashley’s threat to his life, if this was the Mexican Zetas, the gang, the Mexican Zetas, he’d already be dead. If this was the Russian Mafia, he would already be dead. And about third on the list would be the Chinese.”

I jumped up at the other end of the table, and I said, “Is that supposed to make me feel better?” And they all kind of gave a nervous laugh. And then that’s when they offered me the Witness Protection Program. They offered all kinds of protections. They would do a sweep of my home to see if it was bugged. My wife and I weren’t even back at our house because we were concerned it was bugged. They gave me a number to call it any time, and the FBI would be there within three minutes if I ever felt unsafe. And as you read about in the book, all those events came to be where I did end up using the phone. We were followed. My house, they did do a sweep. So, I don’t know if there was ever a bug. They would never tell me that. But yeah, that was part of the fallout from me giving that information to the FBI.

Chris: How about your co-workers? There must have been some reaction from them.

Ashley: Probably the scariest part was when my employment lawyer said, “You need to go back to work.” And I said, “Are you kidding?” And he said, “Well, to keep your employment claims, to preserve those, you need to go back to work.” So, we scheduled for me to go back to work. We had three or four FBI agents at the building, plain clothes. And I had the phone to call in case there was an issue. But remember, I get to the office and badge in, and I can see the receptionist as I walk in. She’s again, a Chinese national, she has the phone in her hand, and she said, “Oh my god, it’s him.” Drops the phone as I walk in. And it was something out of a movie, because I turned the corner to go to my office, and my office is at the very other end of the floor, and it’s just a sea of cubicles, where I mentioned 80% of them are Chinese nationals.

And the moment I turned that corner to make my way to the office, all of the Chinese nationals, you could hear a pin drop, they all stood up in unison as I made my way to my office. And my office door was covered with police crime scene tape, and I had to tear that off. And then I opened the office door. And on my huge whiteboard, everything was erased and written in all caps with three exclamation points was the word “Die.” So, again, my boss, the moment I sat down, the secretary said he wants to see you, and this is the CEO of ZTE U.S.A. I go in his office, and he’s like, “Why are you making up these lies?” And I said, “These aren’t lies, but I can’t talk about it. I’m here to work.” And at this time, my computer was gone, my phone was gone out of my office. And the Chinese attorneys who worked for me down the hall or across the hall from me, they were gone. Their office was completely empty.

And a Chinese gentleman was brought in, and his job was to watch me. His office was catty-cornered to mine, and all he did was stare at me from the moment I got there to the moment I left, just sitting at a desk, and his job was just to stare at me. In fact, the door to his office was taken off the hinges so he could stare and watch me. And that went on for a month before my wife said, “Do you realize you’re in a hostile work environment?” And here I am an attorney who’s dealt with this for all the companies I work for, and employees are always saying that, but it sure is different when it’s you. It was just a crazy, crazy time for about 30 days before I was finally put on administrative leave.

Chris: And so, if you didn’t have a computer or phone, what did you do all day?

Ashley: Yeah, it was hard. I told the CEO, I said, “My computer’s gone, my phone is gone.” And you got to remember this is 2012, so not as really advanced technologically as we are today obviously. But I said, “Hey, I need a laptop to do my job. Mine’s missing.” And he said, “Well, we can’t afford that.” And I said, “are you kidding me? We make 700 and something billion dollars a year in revenue, and you mean to tell me the general counsel can’t get a laptop? I can’t go down to it and just get one that’s used?” “No, we can’t afford that.” I said, “This is ridiculous.” I said, “Well, I need a phone.” “No, we can’t afford that either.” I said, “Well, I’m here to work.”

And so I figured it out. I used my phone to, obviously my cell phone, to look at email. I would do it old school. I would go to one of my co-workers and say, “Can you print this off?” I would literally print it off at the printer, take a red pen, and make red lines to agreements. Because you have to remember I’m still the general counsel, still the employee of the company, managing all their legal issues. So, I’m reviewing agreements, I’m handling outside litigation and matters. So, I’m trying to work as best I can, but imagine without a computer and without a phone. It became a challenge, but I was dead set on continuing to work.

Chris: And you mentioned your employment lawyer had recommended you do that. Why is that? I’m curious why you would need to go back in?

Ashley: Basically, if I didn’t go back in, it’s almost as if I resigned. And what he wanted to say was, you need to still be employed. In other words, make them do something to you. Make them take an action, make them fire you, make them terminate you, put you on leave. But if you just resign, then you kind of waive any type of claims that you might have in a potential lawsuit. So, that was his advice. Obviously looking back and talking to other employment lawyers now, they’re just dumbfounded that was the advice, but it was a crazy situation. And looking back, going back to that office that morning was literally one of the scariest things I’ve ever had to do. That’s saying a lot after the whole experience with the FBI, and as you read about in the book, being followed and all that, death threats, we’re going to kill you and your family. Those were scary, don’t get me wrong, but something about heading back to that office and that unknown was really one of the most scary things.

Chris: I think I can imagine, but I’m sure I really can’t, just how awkward and just really horrible that would be. So, we’ve caught up with your story, I think, and you leave after a month, and then fast forwarded to ZTE getting all these 2.5 billion fines. I’d like to talk in sort of our remaining minutes about the current day. I mean, one of the reasons why it’s really interesting to talk to you is that once again, Huawei, ZTE, telecom chips are in the news. Also, that Trump’s sanctioning of ZTE, it might have been somewhat related to your case but I think it was a totally separate situation, is that correct?

Ashley: Yeah, it was. So, President Obama actually was the president obviously during the time that I was there at ZTE, and he came out with some executive orders really targeted towards ZTE and their ability to buy U.S. component parts, which kind of ties in a lot to some of the things that you’re alluding to. But yeah, President Trump talked about having some real stiff sanctions against China, but did save ZTE quite a bit of slack, saying that that was just part of a bigger negotiation with China. So, he did allow trade etc., with component parts for U.S. manufacturers with ZTE and did say that that was part of the bigger plan.

Chris: And how about the current legislation executive actions in this broader telecom and chip space? I mean there’s a CHIPS Act and a variety of executive actions. Do you think those are appropriately tough? Should they be tougher, looser? What’s your assessment of those?

Ashley: I was impressed. People have been asking me quite a bit about more sanctions, or do sanctions work. And my thought and belief is sanctions have just proven not to work. That’s why I really do like the CHIPS program that’s come out. I think that’s a great strategy in the sense that we, as the West, and basically the whole world is so dependent upon China for trade. As my dad used to say, sanctions and all that with China, it’s like talking out of both sides of your mouth. On one side you’re saying, “Hey, we’re going to sanction you, we’re going to put all these stiff penalties.” And then on the other side of your mouth we’re trading at unbelievable levels, and we’re so dependent upon them. With that being said, sanctions don’t work. This idea of new program with CHIPS is very smart. Taking away our dependency upon, not only China, but trade in general in technology and the need we have, and then putting a lot of those resources for chip manufacturing here in the U.S., I think it’s a great strategy.

Chris: I’m also curious, Huawei was also recently in the news around their attempts to influence legal processes around some of the sanctions on them. Are you familiar with that?

Ashley: I am, yes.

Chris: It’s not exactly the same thing that you were dealing with, but it does actually reflect, on both of these companies, a lack of respect of international laws and norms. I’d love to hear any comments you have on that case as well.

Ashley: I will say this, when the Department of Commerce was doing its investigation, the whole House Intelligence was doing its investigation, they thought that both ZTE and Huawei were a threat to U.S. national security. The main issue they said was that both were state-run, meaning that whatever they say, the government of China is actually running those companies. And ZTE goes out of its way to say that it is not, but it is. But Huawei makes no qualms about it. They make no effort to try to deflect or defuse that they are state-run. So, it’s interesting to me, people have been asking, “Hey, do you think that Huawei or ZTE learned its lesson after the whole fiasco?” And I said no. And it’s not just Huawei or ZTE. We saw Ericsson a few months ago getting in trouble for paying off terrorists.

I think that the profit is so great, but as far as Chinese companies and Huawei, to me, it’s like water is running to find a way to get through a crack. And while ZTE or Huawei maybe stopped in one area, they’re just going to find a way to build a better mousetrap and find different ways around it. I think that’s what we’re seeing. I remember, and I think it’s in my book, I talk about it, when I would say, because you just alluded to it, hey they don’t really have much respect for laws. And it’s true. When I worked there, I was saying, “We have to do this, it’s the law.” And one of the Chinese attorneys leaned into me and said, “No, that’s merely a suggestion.” And that really is how they look at things, not as law or something that needs to be followed, but merely a suggestion. And again, a difference in culture, and something we as Westerners need to understand.

Chris: My final question then is, given that, from a legal perspective, what’s your thoughts or recommendations on how the U.S. should work to constrain or manage that? Because we are in a world of global trade, even though certainly there’ll be various restrictions, we’re going to have to continue to still interact with companies from China. And so, what’s your sense of how to actually try to put in place some safeguards so that the U.S. is protecting its own interests in light of this?

Ashley: That’s a great question. I think time will tell, and I hate to say that, that seems like a cop-out, but I think, like you said, we’re in a global type of time and trade is inevitable. I think the lessons learned are that we need to better understand our partners, because they’re doing a better job of getting to understand Western culture. We need, desperately need to understand, and do a better job of understanding their culture and meeting them halfway. Like I said before, I don’t think sanctions work, especially like I mentioned, when we’re so trade dependent upon each other. The CHIPS program, like you had mentioned, is a great starting point. Again, are we ever gonna be able to completely eliminate our need for trade? No. Nor should we want to. I want to make that clear.

I think it is good and important to have trade globally, but I think our complete reliance upon it, which has been the case here in the U.S., or certainly for Western culture, needs to be tempered down. And I think we’re making progress in that regard. Back to your question, what do we need to do? I think we’re starting to do that with certain types of programs, and I think by lessening the amount of sanctions, I think the key is getting to know our partners and how they operate better because they certainly are learning how we operate.

Chris: Ashley, thank you so much for joining us here on China Corner Office.

Ashley: Chris, appreciate it. Thank you so much for having me.