Cablegate: Extrancheck: Post Shipment Verification: Sanmina-Sci

VZCZCXYZ0003
RR RUEHWEB

DE RUEHHK #2480 2680229
ZNR UUUUU ZZH
R 250229Z SEP 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 3015
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 002480

SIPDIS

USDOC FOR 532/OEA/LHINES/DFARROW
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: SANMINA-SCI
SYSTEMS ENCLOSURE

REF: A) USDOC 05667 B)HK05511

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),
accompanied by Commercial Officer Brock Wilson, conducted a post
shipment-verification (PSV) at Sanmina-SCI Enclosure Systems (Asia)
Limited (Sanmina), Enclosure 5, FK Ader Bldg., 22 Kai Cheung Road,
Kowloon Bay, Hong Kong. The items in question are fifty pieces of
polyurethane foam valued at USD 3,633. The exporter's shippers
export declaration (SED) lists the export control classification
number (ECCN) for the items as 1C001. If properly classified by the
exporter, these items are controlled for national security (NS) and
missile technology (MT) reasons and would most likely require a
license for export or reexport to Hong Kong and mainland China. The
exporter is Cuming Corporation of St. Avon, Massachusetts. Sanmina
was the subject of a previous, favorable, PSV referenced in reftel
B.

3. According to the Hong Kong Companies Registry, Sanmina has been
in existence since 1992. Its paid up share capital is the Hong Kong
equivalent of approximately USD eight million. Its two directors
are U.S. nationals. A review of the company's website
(www.sanminasci.com) indicates that the company is an affiliate of
Sanmina-SCI Corporation, a San Jose California based electronics
contract manufacturer in the communications, defense and aerospace,
industrial and medical instrumentation, multimedia and consumer,
computer and server and automotive technology sectors. The company
has worldwide operations including several manufacturing locations
in mainland China.

4. The ECO, accompanied by Commercial Officer Brock Wilson, visited
Sanmina at the address referenced above on August 28, 2007 and met
with Ms. Eva Ng, Shipping Officer. She stated that the company
conducts electronics manufacturing in five locations in mainland
China for various multinational corporations. Hong Kong acts as the
regional headquarters for the company. Imports and exports for the
China market are conducted through Hong Kong. Ms. Ng stated that
Cuming is a regular supplier for Sanmina. She further stated that
Sanmina does not apply for Hong Kong strategic commodities licenses
because Sanmina does not import or export strategic items.

5. As to the specific items in question, Ms. Ng stated that they
are used in the production of metal casings for servers. The items
will be used to reduce the noise levels of such servers. The
casings are being produced for Ciena (www.ciena.com), a U.S. network
hardware company. Initially, Ms. Ng promised to provide shipping
documentation confirming receipt of the items in Hong Kong and their
subsequent on-shipment to mainland China. ECO later obtained those
documents from a colleague of Ms. Ng as Ms. Ng had apparently left
the company two days after the PSV.

6. In light of the totality of the circumstances of this check, ECO
suspects that the exporter misclassified this items as falling
within ECCN. ECO therefore recommends that BIS complete a commodity
classification before reaching a final decision on how to classify
this PSV. If the ECCN is as stated by Cuming, the ECO may reach out
to Hong Kong TID for follow-up by Hong Kong Customs since this ECCN
would most likely require a license for import into and export from
Hong Kong.

7. At the time visited, Sanmina appeared to be a suitable recipient
of the commodities shipped since Sanmina cooperated with the PSV and
operates a line of business consistent with its use. Nonetheless,
the items, as classified by the exporter, require an export license
to both Hong Kong and mainland China, which license was not
obtained. Subject to the outcome of the recommended action in
paragraph 6, the ECO therefore recommends that this PSV be
classified as Unfavorable.

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