VZCZCXYZ0003
RR RUEHWEB

DE RUEHHK #0032/01 0060859
ZNR UUUUU ZZH
R 060859Z JAN 10
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 9339
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 000032 
 
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: LEADGO LIMITED 
 
REF: A) BIS e-mail request 01210098 dated December 15, 2009 
 
¶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 Leadgo Limited, 12 Wang Tai 
Road, Room 612, Wing Fat Industrial Building, Hong Kong (Leadgo). 
The items in question for this PSV are various electronic components 
exported to Leadgo on or about June 20, 2008.  These items are 
likely classified under Export Control Classification Number (ECCN) 
3A001a2c and are controlled for national security (NS) reasons. 
This ECCN is eligible for shipment to Hong Kong license free but 
would, in virtually all circumstances, require a license for 
shipment to mainland China. The exporter is Arrow Electronics of 
Reno, Nevada. 
 
¶3.  According to the Hong Kong Companies Registry, Leadgo has been 
in existence since 1993.  It has the Hong Kong equivalent of USD 1 
in share capital.  Yiu, Ka Chung, Yiu, Ka Yue, and Yiu, Yee Pak are 
listed as the company's directors (with corresponding Hong Kong ID 
numbers H417489(7), K401830(3) and H388226(A).  Yiu, Ka Chung is 
also a director in Euro China International, Faster International 
and Million Bright International Holdings Limited.  Yiu, Ka Yue is 
also a director in Fultex Apparel Limited and Euro China 
International Limited. 
 
¶4.  Background research on the internet reveals that Leadgo markets 
itself as a electronic components reseller.  It states that its 
emphasis is in the area of high-tech products for commercial, 
industrial and military applications (www.leadgo.com.cn).  The 
company lists additional contact details in Shenzhen, Shanghai and 
Xiamen. The Leadgo web site also includes a picture of a plaque 
Leadgo apparently received from the China Electric Technology Group 
(50th Research Institute) stating that Leadgo is a top supplier. 
According to the 50th Research Institute's web site (www.50.sh.cn), 
this research institute focuses on military communications 
development for the various mainland China military branches. 
 
¶5.  On December 23, 2009, ECO and Commercial Assistant Carrie Chan 
visited the company and met with Ms. Dorothy Ho, Sales Assistant. 
She was quite open during the interview.  The company is located in 
a warehouse and offices building and operates as a small office and 
warehouse.  According to Ms. Ho, Leadgo is a electronics trading 
company.  Its customers are in mainland China.  Ms. Ho is unfamiliar 
with the end uses of the items Leadgo sells.  She stated that 
Leadgo's mainland salespeople are likely more familiar with this 
information.  According to Ms. Ho, shipments to Leadgo in Hong Kong 
are routed to Leadgo in Shenzhen. 
 
¶6.  As to the specific transaction in question, Ms. Ho stated that 
the buyer was a trading company in Shanghai, namely Shanghai Shijie 
Electronics Limited.  Ms. Ho also provided an invoice documenting 
this transaction.  Shijie Electronics has a Hong Kong affiliate as 
well (Hong Kong Shijie Electronics Co., Limited). Ms. Ho was not 
certain why the shipment had not gone to that company's Hong Kong 
address.  She surmised that its operations in Hong Kong are quite 
limited and so Leadgo was used for this logistics purpose.  Separate 
documentation provided by Ms. Ho indicates that another company is 
listed as the buyer, namely Hua Ke Electronic (H.K.) Co., Limited. 
According to Ms. Ho, this company was the freight forwarder that was 
responsible for getting the items to the customer.  The purported 
invoice indicating sale to this company and issued by Leadgo shows a 
much lower price than was apparently paid by Leadgo to the exporter 
(Arrow). Ms. Ho stated that this was designed to reduce VAT when 
importing these items into mainland China. 
¶7.  When asked by ECO for information concerning the end user, Ms. 
Ho left the room and apparently called Shijie in Shanghai. 
According to Ms. Ho, most of the items are still with Shijie while 
some has been sent to the factory floor.  Ms. Ho claimed not to be 
able to provide any additional information about the end user. 
 
¶8.  When asked whether Leadgo had obtained the required Hong Kong 
licenses for import and reexport of the items, Ms. Ho stated that 
Leadgo had not.  She claimed that she often checks the Hong Kong 
Trade and Industry Department web site to determine whether a 
license is required.  ECO later checked the HKTID web site and 
determined that one of the applicable items (AT28C010-12FM/883 ECCN 
3A001a2c) requires a Hong Kong strategic commodities license for 
import into Hong Kong and export from Hong Kong. 
 
¶9.  ECO provided Ms. Ho with additional information about U.S. 
export controls and separately sent her links to the BIS website 
regarding export controls.  Ms. Ho indicated during the meeting that 
she understood that some items were controlled. 
 
¶10.  Hong Kong Shijie Electronics Co., Ltd. has been in existence 
 
since 2004.  It has the Hong Kong equivalent of USD 10 in share 
capital.  Its director is listed as mainland Chinese national Ruan, 
Minqiang (PP#W06411528).  The company does not appear to have an 
operational web site although web address www.sj-ic.com appears to 
be registered to Shanghai Shijie International Trading Co., Ltd. 
ECO has received additional contact information regarding Shijie 
that he may share with OEA if requested.  According to information 
provided separately by Arrow Electronics in 2008, Shijie in Hong 
Kong has also been an Arrow customer of 3A001a2c items. 
 
¶11. Hua Ke Electronic (H.K.) Co., Limited (the transport company 
that acted on behalf of Leadgo) has been in existence since 2002. 
It has the Hong Kong equivalent of USD 125,000 in share capital. 
Its directors are listed as mainland Chinese nationals Chen, Shao 
Qing and Peng, Shao Duan.  Its registered address is listed as Unit 
A, 5/F, Niche Centre, No. 14 Wag Tai Road, Hong Kong. 
 
¶12.  According to Ms. Ho, other companies listed in the Leadgo 
entrance (Million Bright, Goodreach International, Euro China) are 
all trading companies operating in other lines of business, namely 
travel adaptors, clothing or light bulbs. 
 
¶13.  ECO finds Leadgo to be an unsuitable recipient of U.S. origin 
technology.  ECO recommends that OEA conduct a thorough review of 
all shipments to Leadgo, Shijie, Hua Ke and the other companies 
mentioned herein and their respective addresses. ECO also recommends 
that BIS consider pursuing legal action against Leadgo for the EAR 
violations that appear to have taken place in respect of this 
shipment.  ECO intends to meet separately with Arrow Asia (the 
exporter's Hong Kong affiliate) to discuss its business with Leadgo 
and will report the results of that meeting separately.