VZCZCXYZ0000
PP RUEHWEB

DE RUEHIN #1942/01 2360439
ZNR UUUUU ZZH
P 240439Z AUG 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 6518
INFO RUEAIIA/CIA WASHDC
RUCPDOC/USDOC WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RHMCSUU/FBI WASHINGTON DC
RUEPINS/HQ BICE INTEL WASHINGTON DC

UNCLAS AIT TAIPEI 001942 
 
SIPDIS 
 
SENSITIVE, SIPDIS 
 
STATE FOR EAP/TC, ISN/MTR, PM/DTCC FOR BLUE LANTERN COORDINATOR JUDD 
STITZIEL, AIT/W 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC TW
SUBJECT: TAIWAN: RESULTS OF BLUE LANTERN PRE-LICENSE 050055470 
 
REF: STATE 106998 
 
¶1. (SBU) Per reftel, AIT/T visited the foreign consignee, Yang 
Technology Co., Ltd., and contacted the end user, Taiwan ROC ORDC 
Army Logistics Command.  Based on information gathered and on-site 
interview, the subject business transaction appears to be 
legitimate. 
 
Taiwan Army: 
 
¶2. (SBU) AIT/T contacted Mr. Chung, Cheng-Chen, Commodity Management 
Office of the Taiwan ROC ORDC Army Logistics Command.  Mr. Chung 
stated that he is very familiar with Yang Technology and that Yang 
Technology has been doing business with the Taiwan Army for many 
years.  Mr. Chung further explained that Yang Technology is 
considered to be a recognized/official supplier/contractor for the 
Taiwan Army and the Ministry of National Defense. 
 
¶3. (SBU) Mr. Chung confirmed the type of commodity ordered and 
stated that the Army ordered two of the subject commodity.  Mr. 
Chung further confirmed that the subject commodity would be used for 
maintenance of U.S.-made M48 tanks. 
 
 
Yang Technology: 
 
¶4. (SBU) On August 17, 2007, an AIT/T officer visited Yang 
Technology located at 2-16 Alley 31, lane 581, Yuan-sha Road, 
Chung-ho City, Taipei County, the same location as indicated on the 
license application. We met with Mr. Yang, Chi-Chang, President, and 
Mr. Yang, Y.C., Vice President (collectively referred to as Yang 
Technology officials).  During the visit, the AIT/T officer examined 
the contract between the Taiwan Army and Yang Technology; the 
purchase order from Yang Technology to Flight Source Inc., the U.S. 
exporter; and the end-use statement for the export license.  The 
commodity and the end-use information on these documents matched the 
license application information provided in reftel.  However, the 
quantity under contract with Taiwan Army did not match the quantity 
ordered from Flight Source.  The contract between the Army and Yang 
Technology is for two bearings and the purchase order between Yang 
Technology and Flight Source is for six bearings. 
 
¶5. (SBU) When asked to explain the discrepancy in quantity, Yang 
Technology officials explained that the company ordered the extra 
bearings as spares in case of damage during installation or testing. 
 Extra bearings would be stored by the company for later use.  Since 
the Taiwan Army is conducting a 10-year maintenance program for the 
M48 tanks, the spares would be used for next year's maintenance 
contract.  Yang Technology officials stated that the company ordered 
the extra parts to save shipping costs for this low-value item. 
 
¶6. (SBU) Yang Technology officials explained the storage and 
handling procedures in its warehouse.  According to Yang Technology 
officials, the company has its headquarters in Taipei and has a 
warehouse in Taichung city.  Items imported from the United States 
are shipped directly to Taichung for assembly and then sent to 
end-users.  For low-value and physically small items such as subject 
bearings, the company will store them in a small warehouse that is 
part of its Taipei office. 
 
¶7.  (SBU) For the Taipei warehouse, when an item in the warehouse is 
needed, a delivery slip is prepared by a staff; the President or the 
Vice President then approves the delivery; the item is shipped to 
Taichung for assembly; and an entry made into the computer inventory 
system.  The company also conducts a monthly physical inventory 
which is reconciled with the computer inventory system.  For the 
Taichung warehouse, the processing is similar except for the 
shipment part.  This warehouse is monitored by an electronic 
security system.  Yang Technology officials added that the warehouse 
in Taichung is used to store bulk items and to assemble parts before 
delivery to end-user. 
 
¶8. (SBU) Yang Technology was established on 1984 as a sole 
proprietorship.  Its primary business line was the manufacture of 
hardware, goods, and components for the automobile industry.  Mr. 
Yang, Chi-Chang was the principal of the company.  In 1989, the 
company changed its business line to be a contractor to the Taiwan 
Army.  It also changed its corporate status to a limited liability 
corporation.  The Taiwan Army continues to be its sole customer. 
 
¶9. (SBU) Yang Technology has fourteen employees in its Taipei office 
and eight in Taichung.  It has seven shareholders and four officers: 
a chairperson, general manager, vice president and treasurer. 
 
¶10. (SBU) Yang Technology officials stated they are familiar with 
U.S. rules on munitions controls, especially prohibitions against 
unauthorized re-transfers and re-exports.  They expressed concerns 
regarding the length of time it takes to get a U.S. license and 
requested speedy decision on this license application. 
 
¶11. (SBU) Based on the site visit and information gathered from the 
Taiwan Army, Yang Technology appears to be reliable recipient of 
USML items. 
 
YOUNG