VZCZCXYZ0004
RR RUEHWEB

DE RUEHHK #1070/01 1650810
ZNR UUUUU ZZH (CCY ADA37974 MSI6526-695)
R 130810Z JUN 08
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 5081
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 001070 
 
SIPDIS 
 
C O R R E C T E D COPY SIGNATURE 
 
USDOC FOR 532/OEA/LHINES/ADYSON 
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT 
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS 
 
E.O. 12958: N/A 
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT WING FAT TRADING CO/SHENZHEN 
XINYUE CORP 
 
REF: A) USDOC 03522 B) USDOC 03524 C) USDOC 03613 
 
1.Unauthorized disclosure of the information provided below is 
prohibited by Section 12C of the Export Administration Act. 
 
¶2. As per reftels A to C 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 
three post shipment-verifications (PSVs) at Shenzhen Xinyue Corp. 
(two checks), Rm 2302, 23/F, Pitt St, Hip Kwan Commercial Bldg 38, 
Hong Kong (Xinyue) and Wing Fat Trading Co. (same address) (one 
check) (Wing Fat). The items in question are three shipments of 
semiconductors.  Two shipments of EAR99 semiconductors were shipped 
to Xinyue on June 19, 2007 and November 1, 2007.  Items classified 
as EAR99 can generally be exported/reexported to all destinations, 
end-users/uses worldwide except to certain heavily restricted 
destinations and certain proliferation related or other restricted 
end-users/uses.  The third shipment to Wing Fat was exported on 
August 14, 2007.  The semiconductors in this shipment were 
classified by the exporter under export control classification 
number (ECCN) 3A001a.2.c.  This ECCN is controlled for national 
security (NS) reasons and most likely requires a license for export 
to mainland China but does not require a license if shipped to Hong 
Kong.  The exporter for all three shipments was Rochester 
Electronics of Newburyport, Massachusetts. 
 
¶3.  According to the Hong Kong Inland Revenue Department Business 
Registration Office, Win Fat Trading Co. has been in existence since 
¶1998.  It is a sole proprietorship (and is therefore not registered 
in the Hong Kong Companies Registry).  The owner is listed as Mr. 
Khoo, Cheng Yan with Hong Kong identification number D1667409.  The 
company has no apparent web presence.  Xinyue does not appear to be 
registered as a corporate entity or sole proprietorship in Hong 
Kong.  It likewise does not appear to have a web presence. 
 
¶4.  On June 2, 2008, ECO, accompanied by Commercial Assistant, 
Carrie Chan visited the two companies at the Pitt Street address 
referenced above and met with Mr. Lu Yan of Xinyue and Mr. Khoo 
Cheng Yan, Managing Director of Wing Fat Trading Co.  Mr. Lu Yan 
stated that he had forgotten his business cards and so was unable to 
share one with the ECO.  The meeting was held in a small, one room 
office containing a desk, a small couch and various boxes apparently 
containing shipments received by Wing Fat (one from Lattice 
Semiconductor).  Multiple additional boxes were delivered during the 
meeting. 
 
¶5. According to Mr. Khoo Cheng Yan, Wing Fat acts as the receiving 
agent for Xinyue.  In particular, when Wing Fat receives shipments, 
Mr. Khoo Cheng Yan either ships the items to Xinyue customers in 
Hong Kong or the customers collect the items from his office. 
According to Mr. Khoo Cheng Yan, no purchase orders or other 
transactional details are conducted from the offices of Wing Fat. 
Mr. Khoo Cheng Yan stated that the two companies are not related and 
that Xinyue has merely hired Wing Fat to act as its agent. 
 
¶6.  According to Mr. Lu Yan, Xinyue generates all purchase orders 
from its office in Shenzhen (there are additional Xinyue employees 
at its offices in Shenzhen). Xinyue issues purchase orders to 
companies, including U.S. suppliers, and arranges for the items to 
be shipped to the Hong Kong address of Wing Fat.  Mr. Lu Yan stated 
that he knows that some of his customers resell the items to other 
countries but he stated that he does not know what countries those 
might be.  He stated that his business is focused on electronics 
components for the communications industry. 
 
¶7.  As to the shipments in question, Mr. Lu Yan stated that all were 
destined to the same customer, an electronics store in Shenzhen.  He 
provided documentation on the shipment (by FedEx) to Wing Fat 
confirming receipt by Wing Fat as well as an Invoice from Wing Fat 
Trading Co. dated August 21, 2007 listing a buyer address (but no 
company name).  This is the transaction referenced in reftel A.  Mr. 
Lu Yan stated orally that the customer is an electronics store with 
the name Shenzhen Duo Hue Dian Ze.  Subsequent research indicated 
that the address on that invoice corresponds to a company called 
Shenzhen Shi Xin Er Ye Ltd. (this is a transliteration of 
information at web site www.hqew.com/homepage/ sply).  The web 
information on this company includes Mr. Lu Yan as the contact 
person and a contact number for the company that corresponds to the 
Shenzhen Xinyue phone number in purchase order documentation 
provided by OEA.  The web site of this company states that the 
company specializes in the military industry and aerospace 
electronics. 
 
¶8.  Mr. Lu Yan stated that delivery was confirmed by the initials of 
the person picking up the shipment at the bottom of the invoice (a 
USD 17,000 transaction).  By subsequent phone call, ECO attempted to 
obtain the underlying purchase order for these transactions but has 
not yet had any success (ECO will inform OEA if such purchase orders 
 
are received although ECO is doubtful they will ever be received). 
ECO asked whether Xinyue or Wing Fat had generated this order.  Mr. 
Lu Yan stated that it had been generated by Xinyue. When confronted 
with a purchase order from Wing Fat (provided to ECO by OEA), Mr. Lu 
Yan amended his answer somewhat by stating that he had generated the 
order out of Shenzhen using Wing Fat's name.  Mr. Khoo Cheng Yan did 
not seem surprised or perturbed by the use of Wing Fat's name in 
this way.  When ECO asked who had filled in the Rochester 
Electronics End User Statement listing Qiu Qing Yuan (another 
transliteration of Khoo Cheng Yan) as signatory (though the name was 
typed and not signed on the form), Mr. Koo stated that he had 
passed the statement to th customer who had filled it in.  Neither 
Mr. KhooCheng Yan nor Mr. Lu Yan could (would) state who the real 
end-user was in this circumstance.  The sated end-user was 
Sinlecory Electronics Engineerng Co., Ltd. of Hong Kong.  That 
company has no eb presence and is not listed in the Hong Kong 
Copanies Registry. 
 
¶9.  As to the first shipment t Xinyue (exported on June 19, 2007 
and noted in eftel B), Mr. Lu Yan stated that neither he nor Mr 
Khoo Cheng Yan were able to provideshipping documentation 
confirming receipt of the items. However, they provided an invoice 
listing the buyer's address (described above).  That invoice 
included the items exported by Rochester and referenced in the 
documentation provided by OEA. In this case, Xinyue issued the 
purchase order and apparently Mr. Lu Yan prepared the end-user 
statement for Rochester Electronics.  When questioned, however, Mr. 
Lu Yan stated that while he filled in the form, the customer filled 
in the names and other details of the end-users and he merely 
attached to the statement for Rochester.  He stated that he knew 
little about the customers listed, although he believes some may be 
involved in communications. 
 
¶10.  As to the later shipment from Rochester to Xinyue (shipped on 
November 1, 2007 and referenced in reftel C), Wing Fat/Xinyue were 
unable to provide any documentation relating to this shipment.  Mr. 
Lu Yan stated that in this circumstance, the End Use Statement 
provided to Rochester Electronics had purportedly been signed by the 
end user (Xian Yong Da Co.).  In particular, Xinyue's customer had 
arranged for the signature of the document by the purported end 
user. 
 
¶11. Mr. Lu Yin stated that he worked with one usual contact at 
Rochester (listed on documentation as Jennifer) in ordering the 
items and that Rochester was unaware of the final destination 
(mainland China) of the items. 
 
¶12.  ECO provided information concerning BIS reexport controls to 
the representatives of Xinyue and Wing Fat.  Mr. Lu Yan asked what 
products were restricted to mainland China.  ECO noted that further 
information could be found on the BIS web site but that certain 
electronic components require a license to mainland China 
(particularly radiation hardened devices and those rated for 
operation at a wide range of temperatures).  Mr. Lu Yan stated that 
he seldom dealt in those types of items. He further stated that he 
tries to avoid trading in items that require export licenses.  When 
asked whether he was aware that Hong Kong places similar licensing 
requirements on shipments of certain electronic components, Mr. Lu 
Yan repeated that he tries to avoid transactions involving items 
requiring a license. 
 
¶13.  Both Wing Fat and Xinyue are entirely unsuitable recipients of 
U.S. origin technology. ECO did not find the answers of Mr. Lu Yan 
and Mr. Khoo Cheng Yan to be credible.  In fact, ECO strongly 
suspects that Mr. Lu Yan uses the Wing Fat corporate information 
when ordering items that may require a license for export to 
mainland China and where a license is not required for shipment to 
Hong Kong.  ECO recommends a thorough review of all shipments to 
Wing Fat, Xinyue and their respective addresses. ECO also recommends 
that BIS reach out to Rochester to determine what information it had 
on hand when it shipped the items.  Further, ECO requests that OEA 
confirm the 3A001 classification of the Wing Fat shipment so that 
ECO may reach out to Hong Kong TID concerning a potential violation 
of Hong Kong's export control rules in connection with this 
shipment.  Finally, ECO recommends that these two companies be added 
to the BIS Unverified List. CUNNINGHAM