EXTRANCHECK: PRE-LICENSE CHECK: NEIL

UNCLAS HONG KONG 003592 SIPDIS USDOC FOR 532/OEA/LHINES/DFARROW USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS SIPDIS E.O. 12958: N/A TAGS: BMGT BEXP HK ETRD ETTC SUBJECT: EXTRANCHECK: PRE-LICENSE CHECK: NEIL PRYDE LIMITED REF: A) USDOC 3132 B) EXP.LIC. D360750 ¶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 pre-license check at Neil Pryde Limited, 10/F YKK Building - Phase 2, No.2 San Lik Street, Tuen Mun, Hong Kong (Neil Pryde). The purpose of the visit was to determine the suitability of Neil Pryde to be a recipient of 1000 sheets of TFF-CN6, an AS4 carbon fiber reinforced prepreg that are the subject to export license application D360750. The items (ECCN 1C010) are valued at USD $32,500 and are controlled for national security (NS) and nuclear nonproliferation (NP) reasons. The license applicant is Hexcel Corporation, 7200 West South Gate, Building 8185, Salt Lake City, UT (Hexcel). ¶3. On August 25, 2006, the ECO visited Neil Pryde at the address above and met with Mark Elkington, Division Manager, Hard Goods Division of Performance Manufacturing (the manufacturing division of Prydegroup - www.pryde-group.com). Neil Pryde is a well-known sporting goods manufacturer and brand manager founded in New Zealand some 40 years ago. The corporate headquarters are now based in Hong Kong although production for various Neil Pryde brands occurs in several locations in China and Thailand. The company's various brands (Flow, DXL, JP Australia, Neil Pryde and Cabrina) are focused on a range of sports including snowboarding, windsurfing, kite surfing and others. ¶4. The items in question (sheets of carbon fiber prepregnated with resin) would be used in the production of snowboarding helmets. The carbon fiber sheets lend stiffness and support to the helmet with less weight and space than traditional plastic molded helmets. Neil Pryde uses European sources of carbon fiber sheets for current production of the helmets but would like to broaden its base of suppliers to include Hexcel (www.hexcel.com). ¶5. The actual production of the helmets is set to occur in mainland China. Neil Pryde does not produce the helmets in Hong Kong meaning that all of the items that are the subject of the license would be shipped to China for incorporation into helmets for eventual export from China to various markets around the world. ¶6. Elkington noted that Neil Pryde's production licenses do not allow them to sell any of their production in China. He further stated that Chinese customs rules are very strict and that all imports of raw materials into China must be reflected in corresponding exports of finished goods from China. ¶7. Neil Pryde appears to be a suitable recipient of the subject controlled items since it cooperated with the PLC and provided information reflecting appropriate controls over the items. In addition, the consignee operates a line a business that is consistent with the potential use of the items ordered. The ECO recommends that this PLC be classified as Favorable. Cunningham