EXTRANCHECK: POST-SHIPMENT VERIFICATION: HIKARI

UNCLAS HONG KONG 000227 SIPDIS USDOC FOR 532/OEA/LHINES/MCANNER 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: POST-SHIPMENT VERIFICATION: HIKARI INTERNATIONAL LOGISTICS REF: A) USDOC 00116 ¶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 post-shipment verification at Hikari International Logistics, 3/F, Block D, 4-6 Tsing Tim St., Tsing Yi, Hong Kong (Hikari). The items in question are three shipments containing fiber optic receiver modules, lenses, prisms and mirrors, long wave length single mode fiber optic transmitter modules and diodes exported to Hikari on or about October 31, 2007. According to OEA, the items are classified under Export Control Classification Number (ECCN) 5A991. This ECCN is controlled for anti-terrorism (AT) reasons meaning that these items require a license to a handful of terrorist sponsoring countries and to certain restricted end-users/end-uses. The exporter was PD-LD Inc. of Pennington, New Jersey. ¶3. According to the Hong Kong Companies Registry, Hikari has been in existence since 2001. It has the Hong Kong equivalent of USD 1,200 in share capital. Hong Kong residents Chen, Ching Chi and Fu, Yuk Kwan as well as Hikari International Logistics Limited are listed as directors. According to the Hikari web site (www.Hikari-International.com),Hikari is a US-Japanese-Hong Kong joint venture. It specializes in third party logistics services. ¶4. On January 22, 2008, the ECO, accompanied by Commercial Assistant Carrie Chan, visited Hikari and met with Mr. Kai Yiu Chui, Project Manager and Ms. Helen Fu, Managing Director. Ms. Fu stated that Hikari in Hong Kong provides primarily hub services to the manufacturing facilities in mainland China of U.S., Japanese and European multinationals. Its main business focus is in the electronics inputs arena. In a typical scenario, its international clients will arrange for inputs to be stockpiled at Hikari. Those inputs are then relayed to the manufacturing site in mainland China (typically Shenzhen) when they are needed based on a "call order" from the production facility. ¶5. With respect to the shipments in question, Mr. Chui provided documentation confirming delivery of the items to the Hikari Warehouse on November 3, 2007. He provided further documentation confirming that the items had been turned over to the end-user, Solectron (Shenzhen) Technology Co. Mr. Chiu stated that, as is typically the case, the items were handed over to the Solectron appointed shipping company for delivery into Shenzhen. All information provided by Mr. Chiu and Ms. Fu was consistent with transaction documentation provided by OEA. Mr. Chiu and Ms. Fu were not familiar with the end-use of the items although they stated that Solectron (since acquired by Flextronics) produces telecommunications devices in Shenzhen. ¶6. Ms. Fu stated that this type of logistics arrangement is quite common in Hong Kong particularly for electronics manufacturers in southern China. Note: As in this case, the logistics provider is not necessarily familiar with the end-use of the applicable items. Ms. Fu stated that logistics companies often have as clients the Hong Kong offices of mainland Chinese companies. Mr. Chiu stated that, from time to time, Solectron (now Flextronics) provides Hikari export controls training. Also, when the shipping documents indicate that a U.S. license is required, Hikari obtains the applicable Hong Kong import/reexport license(s). Cunningham