VZCZCXYZ0004
RR RUEHWEB

DE RUEHHK #0766/01 1170915
ZNR UUUUU ZZH
R 270915Z APR 09
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 7480
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 000766 
 
USDOC FOR 532/OEA/MHAMES/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: HANG TAT ELECHANG 
TAT ENTERPRISES CO 
 
REF: A) BIS request e-mail dated March 12, 2009 B)HK 00915 (2007) 
C)HK 01070 (2008) 
 
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, Carrie Chan, conducted a post 
shipment verification (PSV) 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 various integrated 
circuits shipped to Hang Tat on or about September 23, 2008 and 
valued at USD 33,236.  The export control classification number 
(ECCN) for these items is 3A001.  If properly classified by the 
exporter,these items are controlled for and national securiy (NS) 
reasons and would not require a license for end use in Hong Kong but 
would, in almost all circumstances, require a license for reexport 
to mainland China.  The exporter was Easy Gray Technologies of 
Gloucester, Massachusetts. 
 
¶3.  As further detailed in reftel B, Hang Tat was the subjectof a 
previous unfavorable end use check in 2007.  That check also 
involved electronic components controlled for national security 
reasons. 
 
¶4.  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. 
 
¶5.  On April 14,2009, the ECO, accompanied by Commercial Assistant 
Carrie Chan, visited Hang Tat at the address referenced above and 
met with a Mr. Wong and Mr. Bako Cheung (the person listed as the 
contact person on the shipment's airway bill). The offices of Hang 
Tat are modest (roughly 5 desks in a one room office with a 
partitioned space for Mr. Wong's office).  The meeting had taken 
some time to schedule as Mr. Cheung stated that Mr. Wong wanted to 
participate in the meeting and he was traveling in mainland China 
when Ms. Chan made the initial call.  As in 2007, 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 
demurred (as in 2007), stating that he typically deals with trading 
companies in Shenzhen.  Mr. Wong stated that his customers (other 
trading companies) do not want to divulge end users to him as they 
fear he will approach those end users directly.  When pressed about 
the types of products that might use the components he sells, Mr. 
Wong stated that he and his staff are really not familiar with the 
items they sell but only source based on item numbers. 
 
¶6.  ECO asked Mr. Wong how customers find him.  Mr. Wong replied 
that most of his customers are long-term customers while new 
customers come to his business as a result of advertisements he 
places in mainland catalogues and journals.  Mr. Wong showed ECO one 
of those advertisements (from 2005).  This advertisement referenced 
Shenzhen company Heng Hui Denzi and listed a Shenzhen retail office. 
 The advertisement stated that Heng Hui specializes in various 
electronic components including military grade components.  Based on 
internet research, it appears that this retail office is located in 
a larger Shenzhen electronics related shopping mall.  The phone 
number for this company is listed as (755) 8301-3216 and the e-mail 
is listed as henghui@tom.com.  As noted in further detail in reftel 
C, another company that was the subject of an unfavorable end-use 
check in Hong Kong (Wing Fat) also appears to have a Shenzhen 
affiliate in this same shopping mall. 
 
¶7.  When asked about the specific order, Mr. Wong provided ECO with 
a copy of a Hang Tat invoice.  The invoice lists the buyer of items 
as Yuning Electronics Ltd., Rm 4710 SEG Plaza, Shenlan Middle Road, 
Futian, Shenzhen.  The telephone contact number is listed as 
755-83234169.  The invoice includes a signature from the purported 
customer confirming that the items had been picked up by the 
customer.  The invoice also includes a large stamped box in which it 
is stated that it is the obligation of the customer to obtain the 
required export licenses and customs clearances.  Mr. Wong stated 
that Yuning is a long-time customer (10 years) and it is also an 
electronics trading company.  When asked why this Shenzhen trading 
company is buying from a Hong Kong Trading company (and not directly 
from suppliers), Mr. Wong stated that it is easier for mainland 
customers to purchase from Hong Kong companies than from 
international sources. 
 
¶8.  Mr. Wong stated that when he orders items from abroad on behalf 
of mainland customers, he does not inform the exporter that the 
items are destined for mainland China.  Mr. Wong stated that he 
typically tells his suppliers that any resale of items he purchases 
will occur in Hong Kong.  As for the buyers, Mr. Wong stated that he 
is not responsible nor aware whether they apply for Hong Kong export 
licenses.  Mr. Wong stated that this is why he includes the language 
on his invoices stating that it is the buyer's responsibility to 
obtain any required export/reexport licenses. 
 
¶9.  ECO informed Mr. Wong that he needed to take into consideration 
applicable U.S. export and reexport rules and that Hong Kong export 
control rules may be applicable to his transactions.  ECO, by 
subsequent e-mail, sent Mr. Wong additional information on U.S. 
reexport controls.  ECO recommends a thorough review of all 
shipments to Hang Tat as he does not find Mr. Wong's explanations to 
be credible.  ECO suspects that Hang Tat exists primarily as a means 
of acquiring electronic components for mainland buyers that are 
difficult to obtain in the mainland (likely because of export 
control restrictions).  In addition, ECO requests that OEA provide 
him with a commodity classification for the items in question so 
that he may provide the Hong Kong government information about this 
potential violation of Hong Hong law. 
 
Donovan