Identifier
Created
Classification
Origin
09HONGKONG484
2009-03-17 00:05:00
UNCLASSIFIED
Consulate Hong Kong
Cable title:  

EXTRANCHECK: POST SHIPMENT VERIFICATION: PO YUEN TECHNOLOGY

Tags:  BMGT BEXP HK ETRD ETTC 
pdf how-to read a cable
VZCZCXYZ0004
RR RUEHWEB

DE RUEHHK #0484/01 0760005
ZNR UUUUU ZZH
R 170005Z MAR 09
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 7151
RHMFIUU/HQ BICE WASHINGTON DC
UNCLAS HONG KONG 000484 

USDOC FOR 532/OEA/MNICKSON/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: PO YUEN TECHNOLOGY
COMPANY AND GALAXY TECHNOLOGY COMPANY

REF: A) USDOC 00082 B) USDOC 00083 C) HK 00913 (2008)
UNCLAS HONG KONG 000484

USDOC FOR 532/OEA/MNICKSON/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: PO YUEN TECHNOLOGY
COMPANY AND GALAXY TECHNOLOGY COMPANY

REF: A) USDOC 00082 B) USDOC 00083 C) HK 00913 (2008)

1.Unauthorized disclosure of the information provided below is
prohibited by Section 12C of the Export Administration Act.


2. As per reftels A and B requests 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 post shipment-verifications (PSVs) at Galaxy Technology
Company, Room L, Flat D, 2/FL., Sun Industrial Center, 16 Shing Yip
Street, Kwun Tong, Hong Kong (Galaxy) and Po Yuen Technology Company
(Po Yuen) at the same address. ECO has combined these two PSVs into
one cable as the companies are related and collocated.


3. The items in question for the Galaxy and Po Yuen checks are
various electronic integrated circuits exported to Galaxy on August
26, 2008 and Po Yuen on July 31, 2008 respectively and valued at USD
38,000 and USD 11,500. 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 in the case of both shipments was America II Electronics of
St. Petersberg, Florida.


4. According to the Hong Kong Companies Registry, Po Yuen is not
registered as a corporate entity in Hong Kong. It is, in fact, the
sole proprietorship of Mr. Ye Xiaoling (no identification
documentation is provided at the applicable registry suggesting that
Mr. Ye is a mainland Chinese national). This entity was established
in 2004. Galaxy, established in 2006 is likewise a sole
proprietorship. It is owned by Han, Dexuan (also a likely mainland
Chinese national).


5. According to Po Yuen's web site (www.py-tech.com),Po Yuen is an
independent distributor of electronic integrated circuits that has
been in existence in 2002. The web site lists a range of products
carried by Po Yuen. ECO could find no web presence for Galaxy.


6. On February 13, 2009, ECO, accompanied by Commercial Assistant,
Carrie Chan, visited Po Yuen and met with Gary Zhu, General

Director. The office was very small (barely large enough to hold
the meeting). Mr. Zhu stated that the company's business model
involves sourcing various electronic components from major suppliers
(such as America II and Converge) and reselling those components to
various mainland China, Singapore and U.S. customers. Mr. Zhu
further stated that the company had recently moved to a new location
but that he preferred to meet at this location because it is the
location listed in the transaction documentation for these
shipments.


7. Mr. Zhu further stated that Galaxy and Po Yuen essentially
operate as one company. Zhu stated that the two companies service
different geographic areas and they use different names to
differentiate different lines of business. ECO believes it is
likely that two names are useful when interacting with customers and
suppliers as a way of getting better prices or sale terms. Mr. Zhu
went on to state that he tries to avoid servicing military customers
and that he requires customers to sign civil end use statements.
Mr. Zhu stated that when dealing with mainland Chinese Customers, he
does business only with the Hong Kong affiliates or designees of
those companies so as to avoid export documentation and other
related issues (ECO note: presumably also export control issues).



8. Mr. Zhu was able to provide to ECO two Hong Kong Trade and
Industry Department (TID) strategic goods import licenses for the
two shipments. Mr. Zhu stated that Po Yuen/Galaxy apply for Hong
Kong licenses when the items in question fall on Hong Kong's
strategic commodities list (that he searches on the TID web site).
In both cases, Mr. Zhu stated that the end-user for these two
shipments was Shenzhen Two Wing Technologies Ltd. in Shenzhen,
China.


9. Consistent with his statement about his business practices, Mr.
Zhu subsequently provided documentation showing delivery of the
items (for both the Galaxy and Po Yuen shipments) to China Star
Logistics Ltd. in Hong Kong. ECO notes that China Star Logistics
Ltd. is related to Hong Kong company Wing Lee Trading Co. Ltd. Wing
Lee was the subject of an unfavorable PSV that is the subject of
reftel C. Mr. Zhu stated that he personally went to Shenzhen to be
sure that the customer was legitimate (ECO assumes after he received
the request for a PSV). Mr. Zhu stated that the end-user
manufactures routers and other internet equipment. Commercial
Assistant Carrie Chan conducted a web search for Shenzhen Two Wing
Technologies Ltd. and was able to locate a company registered in
Shenzhen that apparently corresponds to this company with registered
capital of the RMB equivalent of USD 400,000. The company does not
appear to have any other web presence. Another company is located


at this same address (transliterated as Shenzhen Yinhe Huigu
Technology Company Ltd.). This company apparently manufactures
computer and telecommunications products.


10. Mr. Zhu stated that Po Yuen and Galaxy are committed to
compliance with export control rules. ECO subsequently provided
additional guidance on reexport controls.


11. Based on the information noted above, ECO believes that both
shipments were, in fact, delivered to China Star Logistics Ltd. ECO
can make no firm determination whether the items were subsequently
delivered to Shenzhen Two Wing Technologies Ltd. ECO is likewise
unable to make any conclusive determination of whether the items
were put to civil end use in mainland China. While Mr. Zhu appeared
credible, ECO has relatively little information to make a final
recommendation on whether Po Yuen or Galaxy are reliable recipients
of U.S. origin controlled technology.