EXTRANCHECK: PRE-LICENSE CHECK: HANG TAT

UNCLAS HONG KONG 000915

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: HANG TAT
ELECHANG TAT ENTERPRISES CO

REF: A) USDOC 02122

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),accompanied by Commercial
Assistant, Sandy Lai, conducted a pre-license check
(PLC) at Hang Tat Electronic Enterprises Co., Room
2608, Technology Plaza, 29-35 Sha Tsui Road, Tsuen
Wan, Hong Kong (Hang Tat). The items in question are
nine CMOS 8-Bit microcomputer/microcontrollers valued
at USD 405. The export control classification number
(ECCN) for these items is 3A001. According to Reftel
A, these items are controlled for nuclear
nonproliferation (NP) and national security (NS)
reasons and require a license for export to Hong
Kong. The license applicant is Falcon Electronics,
Inc. of Commack, New York.


3. According to the Hong Kong Inland Revenue
Department Business Registration Office, Hang Tat has
been in existence since 1991. The company is a sole
proprietorship (as a result, it is not listed in the
Hong Kong Companies Registry). Hong Kong identity
holder Sau Luen Chan is listed as owner. A Hong Kong
Trade Development Council profile of Hang Tat lists
Mr. Cho-Man Wong as manager. It states that Hang Tat
is a trading company specializing in electronics
trade.


4. The ECO, accompanied by Commercial Assistant
Sandy Lai, visited Hang Tat at the address referenced
above on March 29, 2007 and met with a Mr. Wong. The
meeting had taken some time to schedule as Mr. Wong
claimed, for two weeks, to be tracking down the name
of the end-user and the projected end-use of the
items. Mr. Wong stated that Hang Tat is a trading
company with a long history of operations in Hong
Kong. Hang Tat's business model consists of sourcing
electronic components for mainland Chinese trading
companies. When asked for background on typical end-
users for his items, Mr. Wong stated that because he
receives so many orders, he cannot verify end-uses or
end-users for every order. When asked again, in more
general terms, about the eventual end-users of Hang
Tat's products, Mr. Wong demurred.


5. When asked for a business card, Mr. Wong stated
that the office of the company had recently moved and
he was in the process of obtaining new business
cards. When asked for a business card listing the
old address, Mr. Wong stated that he had thrown them
all away. Mr. Wong stated that Hang Tat did not have
any company brochure or other marketing information
to provide to the ECO.


6. Mr. Wong stated that when U.S. vendors or Hong
Kong agents for suppliers request end-use or end-user
information, he provides it. At the same time, he
stressed that his trading company customers in
mainland China have close relationships with
manufacturers and are not willing to disclose
proprietary information about potential customers.
Even when mainland Chinese trading companies provide
end-use/end-user information, Mr. Wong stated that he
cannot vouch for the accuracy of such information.


7. As to the transaction that is the basis for the
license application, Mr. Wong stated that he had no
purchase order or related documentation. He stated
that the buyer is a regular customer but Hang Tat
does not have a purchase order, as yet. Mr. Wong
pointed to a page of an Intel Purchase catalog (dated
1996-1997) to indicate the type of items he had
ordered (Intel 12 MHZ-MIL-STD 833). He stated that
his customer believes Atmel now manufactures the
items (www.Atmel.com).


8. When asked for the name of Hang Tat's customer,
Mr. Wong declined to provide it, stating that this is
confidential information. The ECO stressed that all

SIPDIS
information would be held in confidence and further
that it would prove difficult to approve an export



license without more information on the end-user/end-
use. Mr. Wong stated that it is not uncommon for his
orders to be cancelled because his buyers are
unwilling to provide further background on the end-
use and end-user. He eventually stated that the
items would be used as part of a mud logging unit in
oil exploration and drilling. This information is
inconsistent with the stated end-use noted in reftel

A.


9. At the conclusion of the meeting, Mr. Wong
stressedthat Hang Tat complies with Hong Kong export
conrol regulations and conducts his business in full
compliance with applicable laws. He also stressed
thathe is familiar with Hong Kong export contro
rules and with TID (the entity that implement'sHong
Kong's export control system). The ECO proided
information on U.S. reexport controls (BIS
publication 'Guidance on the Department of Commerce's
Reexport Controls').


10. Mr. Wong provided only cursory information about
Hang Tat and the eventual end-use of the items. He
provided no information about the eventual end-user
of the items or the intermediate buyer in mainland
China. The ECO recommends that this PLC of Hang Tat
be considered Unfavorable.
Cunningham