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) 
 
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.