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China probe finds FedEx may have held back over 100 Huawei packages

Christian Fernsby |
Chinese authorities investigating FedEx suspect the U.S. delivery company illegally withheld more than 100 packages of Huawei Technologies and that it also violated other laws, state news agency Xinhua reported on Friday.

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Beijing started a probe into FedEx last month after Huawei said the U.S. delivery firm had diverted parcels intended for it. It came after Huawei was placed by Washington on a blacklist in mid-May that effectively blocks U.S. firms from doing business with the Shenzhen-based telecoms equipment maker.

“The investigation showed that FedEx was suspected of holding up more than 100 Huawei packages entering China,” Xinhua said. “Investigators also discovered clues to other violations of the company.”

FedEx had no immediate comment on the report. Huawei did not immediately respond to a request for comment.

The report comes a day after Huawei said U.S.-listed company Flex (FLEX.O) “seized” its goods in China.

The developments mark the latest fallout from Washington’s trade ban on Huawei, which has not only rattled the global technology supply chain tied to Huawei’s $105 billion business but also is causing much confusion among companies and organizations well beyond the U.S. borders regarding the limits of restrictions.

FedEx has apologized for multiple incidents of diversion of Huawei packages, which it attributed to “operational errors”, and it sued the U.S. government last month for what it said was an “impossible task” to “police the contents” of export shipments.

Huawei told Reuters on Thursday that its contract manufacturer Flex had withheld some 700 million yuan ($101.81 million) worth of goods in its China factory, confirming a report by Chinese government-backed newspaper Global Times.

Flex kept the Huawei assets in its factory in the southern city of Zhuhai after the U.S. blacklisting and caused losses for Huawei, according to the report.

Huawei told Reuters that it has retrieved some 400 million yuan of goods last month after negotiations and is still trying to take back the rest.

Flex said on Friday in its quarterly earnings statement that it would accelerate a move to reduce its exposure to certain products in China and India after “recent geopolitical developments and uncertainties”, which primarily impacted “one customer in China”. It did not name the customer.

“We have seen a reduction in demand for products assembled for that customer,” it said.


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