EXTRANCHECK: PRE-LICENSE CHECK: QUADRANT EPP

UNCLAS HONG KONG 004627

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: QUADRANT EPP
ASIA PACIFIC LTD

REF: A) 05604


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 of the USDOC Bureau of
Industry and Security (BIS),Export Control Officer
Philip Ankel (ECO) conducted a pre-license check (PLC)
at Quadrant EPP Asia Pacific Ltd., 108 Tai To Tsuen,
Yuen Long, Hong Kong (Quadrant Hong Kong). The purpose
of the visit was to determine the suitability of
Quadrant Hong Kong to be a recipient of various
advanced engineering plastics including:
polyetheretherketron (PEE); polyamide-imide, titanium
dioxide and polytetrafluoroethylene (PAI); polyamide-
imide, graphite and polyterafluoroethylene (PI);
polyamide-imide, fibrous glass,
polytetrafluoroethylene; preimidized torlon 4000TF, 739
DC glass fiber, PTFE-F5, Orcon CF linion R32595 carbon
fiber; UIR-P resin and graphite 4735 that are the
subject of license application D364932. The items
(ECCN 0A018) are valued at approximately USD 1.9
million and are all controlled for regional stability
(RS) reasons. The license applicant is Quadrant EPP,
USA of Reading, Pennsylvania.


3. On November 8, 2006, the ECO visited Quadrant Hong
Kong at the address above and met with Mr. Raymond Ho,
General Manager. Quadrant Hong Kong is the Hong Kong
subsidiary of Quadrant Engineering Plastic Products, a
worldwide niche provider of various high-end plastic
products. More information on the Quadrant group of
companies can be found at www.quadrantplastics.com.


4. Mr. Ho provided an overview presentation of the
Quadrant group of companies and then discussed Quadrant
Hong Kong's role in the overall group structure. He
stated that the Quadrant group produces a range of
plastics including general engineering plastics as well
as advanced engineering plastics (the subject of this
check) that are highly corrosion resistant and can
withstand very high temperatures. Advanced engineering
plastics are often used in the place of metals as they
have greater heat and corrosion resistant properties
and are not as abrasive.


5. According to Mr. Ho, Quadrant sells advanced
engineering plastics to semiconductor producers that
require replacement parts for semiconductor
manufacturing machines. These customers are located in
the major semiconductor manufacturing centers in the
region such as Singapore, Korea, Taiwan and Hong Kong.
He indicated that few customers are presently located
in mainland China. Mr. Ho stressed that his company
sells finished and semi finished plastics that cannot
be reformed or changed from their existing state into
items used for other applications (unlike the
underlying resin used to make the plastics).


6. According to Mr. Ho, Quadrant Hong Kong acts as a
stocking facility providing both inventory management
and logistics services for the Quadrant group. The
facility observed by the ECO is a relatively small
warehouse space without local production or apparent
finishing capacity.


7. When asked about prior shipments of the items that
are subject of the PLC, Mr. Ho stated that at least
some of them had already been received by Quadrant Hong
Kong. Mr. Ho was not aware whether licenses had been
obtained for such shipments. The ECO recommends that
further inquiry be made by BIS concerning past
shipments to determine whether licenses were obtained,
as appropriate. Mr. Ho stressed that Quadrant intends
to comply with U.S. export controls. He expressed some
concern that the delays inherent in the licensing
process not undermine Quadrant's ability to serve this
niche market where quick delivery of custom products is
key.


8. At the time visited, Quadrant Hong Kong appeared to
be a suitable recipient of the subject controlled items
since it cooperated fully with the PLC and provided
substantial information on Quadrant Hong Kong's
proposed use of the item in Hong Kong and the region.


In addition, Quadrant Hong Kong operates a line a
business that is consistent with the potential use of
the ordered item. The ECO recommends that any
licensing decision regarding Quadrant Hong Kong take
into consideration the fact that Quadrant Hong Kong is
an intermediary and not the end-user of the items it
receives. The ECO recommends that this PLC be
classified as Favorable.

Cunningham