EXTRANCHECK: POST SHIPMENT VERIFICATION:

UNCLAS HONG KONG 004550 SIPDIS USDOC FOR 532/OEA/LHINES/DFARROW USDOC FOR 3132/FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS SIPDIS E.O. 12958: N/A TAGS: BMGT BEXP HK ETTC SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: HANGLI INTERNATIONAL HOLDINGS REF: A) USDOC 04721 ¶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 Bureau of Industry and Security (BIS),Export Control Officer (ECO) Philip Ankel conducted a post shipment verification (PSV) at Hangli International Holdings (Hangli) on November 9, 2006. This PSV concerned a solid state recorder system DSRS 400B exported by Ampex Data Systems of Redwood City, California (Ampex),classified as 7A994 and valued at $295,214. This 7A994 item is most likely controlled only for anti-terrorism (AT) reasons. ¶3. An extract from the Hong Kong Companies Registry provides that Hangli has been registered as a company in Hong Kong since May 1996. The registered address matches the address where the check was conducted. Hangli's Hong Kong corporate registration lists one director by Chinese passport number and without Hong Kong identification card number (PRC national Ai Ping Song). One director is listed by reference to a Hong Kong I.D. card number(Ping Sung). ¶4. On November 9, 2006, the ECO visited Hangli at Room 901, Keen Hung Commercial Building, 80 Queen's Road East, Hong Kong and met with Ping Sung, Director. Ms. Sung noted that Hangli had recently moved from the location listed as Hangli's address in Reftel A because rents had increased substantially at that location. The ECO walked by the former offices and a new tenant is now at that location. The current Hangli office is quite modest (one large room). A meeting with Ms. Sung had been requested in early October but delayed for some time as Ms. Sung had been on travel visiting Ampex in the United States as well as in Zhuhai, China for the Zhuhai air show. ¶5. Ms. Sung was open and cooperative during the PSV. Ms. Sung stated that Hangli is a trading company with offices in Zhuhai, mainland China and Hong Kong. Ms. Sung showed the ECO a certificate stating that Hangli is the exclusive distributor for Ampex products in Hong Kong and China. Ms. Sung stated that Hangli is likewise a distributor for U.S. companies Herley (Herley.com) and Orbit. Promotional material provided by Ms. Sung states that Hangli can provide a complete set of software and hardware devices utilized in manufacturing, scientific research and testing by civilian or military manufacturers as well as research institutes in aviation, aerospace, ship building, vehicles and oil prospecting. The cover of the promotional materials includes a military helicopter and fighter aircraft (as well as a civilian airliner). When asked by the ECO whether Hangli's customers include the military, Ms. Sung stressed that the item that is subject of the check is used only for testing purposes. ¶6. In reference to the transaction that was the subject of the check, Ms. Sung provided copies of two airway bills. The first airway bill referenced the shipment from Ampex to Hangli. The second, dated July 21, 2006, referenced the onward shipment of the item to Shenyang Aircrafts Industry Group, No. 1 Lingbei Street, P.O.328-27, Shenyang China. A web search reveals that Shenyang Aircraft Corporation produces, among a wide range of items, Chinese fighter aircraft, but also produces parts for Boeing planes pursuant to agreements between Shenyang Aircraft Corporation and Boeing. ¶7. The items in question were classified by the exporter as 7A994 and could therefore, absent EPCI concerns or misclassification, be exported or reexported to China. BIS may wish to reach out to the exporter to determine why it chose to list Hangli as the ultimate consignee and Hong Kong as the country of ultimate destination when the underlying Ampex Purchase Contract lists the end-user as Shenyang Aircraft Corporation located in mainland China. ¶8. It is apparent to the ECO that Hangli is a trading company that does not engage in production or manufacturing of any kind. Ms. Sung was open and cooperative and her answers were consistent with the information in documents provided by BIS. Therefore, in accordance with guidance on reporting of PSVs where the items cannot be physically inspected, the ECO recommends that this PSV be classified as Limited. Cunningham