VZCZCXYZ0004
RR RUEHWEB

DE RUEHHK #0033 0060859
ZNR UUUUU ZZH
R 060859Z JAN 10
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 9341
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 000033 
 
USDOC FOR 532/OEA/ MCANNER 
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: LEADER MUTUAL 
FREIGHT SYSTEM 
 
REF: A) BIS e-mail request dated November 19, 2009 (01210097) 
 
¶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 Leader Mutual Freight System, 
1 Sheung Hei Street, San Po Kong, Hong Kong (Leader Mutual). The 
items in question for this PSV are three shipments of SRAM and 
memory cards exported to Leader Mutual on or about September 4, 2009 
and July 23, 2009 (two shipments).  These items are likely 
classified under Export Control Classification Number EAR99, meaning 
that they are likely eligible to be shipped license free worldwide 
except to sanctioned destinations and certain restricted 
end-uses/users.  The exporter was Dane-Elec Corporation of Irvine, 
California. 
 
¶3.  According to the Hong Kong Companies Registry, Leader Mutual has 
been in existence since 1997.  Its paid up share capital is the Hong 
Kong equivalent of approximately USD 650,000.  The Hong Kong 
Companies Registry lists one Taiwanese national, one U.S. national 
and two Hong Kong residents as directors. 
 
¶4.  According to the company's web site (www.Leader-Mutual.com.hk), 
Leader Mutual is an international freight forwarder with offices 
throughout China and the United States. 
 
¶5.  On December 22, 2009, ECO and FCS Commercial Assistant Carrie 
Chan visited the company at the address noted above and met with Ms. 
Karen Chu, Logistics Manager.  She provided additional background 
about the company (consistent with information on its web site). 
Ms. Chu stated that Leader Mutual is as a freight forwarder and also 
acts as a type of consolidator/warehouse for companies in Hong Kong 
or for overseas companies that don't have a physical presence in 
Hong Kong. According to Ms. Chu, Leader Mutual ships worldwide. 
 
¶6.  As to the specific shipments in question, Ms. Chu stated that 
Leader Mutual acts as the warehouse and consolidator for the 
exporter's Hong Kong operations (Dane-Elec Memory Asia Limited) 
pursuant to a written agreement with Dane-Elec.  According to Ms. 
Chu, Dane-Elec requires that Leader Mutual hold product for 
Dane-Elec's customers (whether in Hong Kong or abroad).  Those 
customers then come to Leader Mutual to pick up the items or direct 
Leader Mutual to ship the items to their location in Taiwan or 
elsewhere.  Ms. Chu stated that one reason for such an approach to 
sales is that it makes the customer responsible for any tax or 
similar payments when shipping to mainland China and other 
destinations (Hong Kong, conversely, is a free port and does not 
impose import duties, VAT or similar levies). 
 
¶7.  As to the particular shipments in question, Ms. Chu stated that 
they had been received and disbursed to various Hong Kong customers 
at the direction of Dane-Elec.  Ms. Chu provided documentation 
confirming delivery to Dane-Elec customers including Nexus 
Technologies (H.K.) Ltd. and Koh Electronic Technology Pte. Ltd. 
(www.kohelec.com).  These companies appear to be further Hong Kong 
and Singapore based resellers of computer memory.  As the items are 
not highly controlled and may be shipped license free to virtually 
all destinations and consignees, ECO did not contact the resellers 
to frther determine their eventual customers.  ECO maydo so if OEA 
so desires. 
 
¶8.  ECO provided Ms. hu with information about U.S. export controls 
(including the BIS brochure on reexport controls).  By follow-up 
e-mail, Ms. Chan provided additional information about BIS lists to 
check and other export control information.  Ms. Chu promised to 
review the information closely and share it with her colleagues. 
 
¶9.  ECO believes Leader Mutual to be a suitable recipient of U.S. 
origin technology (as freight forwarder).  Nonetheless, given what 
appears to be relatively limited knowledge of U.S. export controls 
at a company with a significant U.S. presence, ECO recommends that 
BIS conduct an outreach at Leader Mutual's U.S. operations to 
provide information about export controls to those operations as 
well.