EXTRANCHECK: POST SHIPMENT VERIFICATION: KAI'S TECHNOLOGY

UNCLAS HONG KONG 000319

USDOC FOR 532/OEA/LHINES/ADYSON
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR PATRICK SANTILLO
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: KAI'S TECHNOLOGY
DEVELOPMENT LIMITED

REF: A) USDOC 00129

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(PSV) at Kai's Technology Development
Limited, Unit 2506, 25/F, Skyline Tower, 39 Wang Kwong Road, Hong
Kong (Kai's). The items in question for this PSV are various
electronic ICs exported to Kai's on or about August 27, 2008. On
the applicable shippers export declaration (SED),these items are
classified under export control classification number (ECCN) 3A001
and, if properly classified, would be controlled for national
security (NS) reasons. The exporter was America II Electronics of
St. Petersberg, Florida.


3. According to the Hong Kong Companies Registry, Kai's has been in
existence since 2004. Its paid up share capital is the Hong Kong
equivalent of USD 250. The Hong Kong Companies Registry lists two
Hong Kong residents as directors, namely Cheung, Fei Pang and Ho,
Hon Kai.


4. A review of the company's web site (www.kais-tech.com) reveals
that Kai's specializes in the distribution of electronic components.
It is an affiliate of Winstep Technology Limited. Winstep is a
manufacturer of DVDR, CDR, DVD players and other similar electronic
devices. The company has factories in mainland China and Hong
Kong.


5. On February 13, 2009, ECO accompanied by Commercial Assistant,
Carrie Chan, visited Kai's and met with Joanne Wong, Purchasing
Manager. She stated that Kai's is a sourcing company for companies
in the United States and Europe. In particular, Kai's sources
electronics in China for shipment to companies in those
destinations. Ms. Wong stated that direct customers are typically
other trading companies and Kai's is not generally aware of the
final end-user of its products. When asked, Ms. Wong appeared
unaware of Hong Kong licensing requirements for certain ICs (such as
this one).


6. As to the specific shipment in question, Ms. Wong stated that it
was a return from America II Electronics. In particular, America
II's customer had returned them as they were not in good working
order. Ms. Wong provided the relevant documentation of the return.


7. Ms. Wong was open and cooperative during the meeting and
answered ECO's questions without hesitation. ECO found Ms. Wong's
answers to be credible. ECO provided Ms. Wong with information
about U.S. export controls.


8. Based on the information noted above, ECO recommends a review of
past shipments to Kai's as it is not apparent that Kai's has taken
into account U.S. or Hong Kong export controls in its past
activities. Likewise, while ECO does not have specific evidence of
any actual violations of the Export Administration Regulations by
Kai's, based on information obtained during this PSV, ECO recommends
that future shipments of controlled commodities to Kai's should be
closely reviewed.