Chinese authorities have charged a Shenzhen-listed firm and its chairman over smuggling restricted “dual-use” optical lenses out of the country, in a case that lawyers said underscores the growing risk of criminal prosecution for export control violations as Beijing tightens restrictions on strategic materials and technologies. Nanjing Wavelength Opto-Electronic Science & Technology, which manufactures optical components used in infrared thermal imaging, and chairman Huang Shengdi were among five defendants charged with smuggling goods prohibited from import or export, according to a company filing on Thursday.

The other three were a former director and former employees of the company’s international business department. The total value involved in the case was 20.1 million yuan (US$3.0 million). Prosecutors in Shanghai alleged that the company and the individuals exported controlled optical lenses without obtaining the required export licences for dual-use items, which can serve both civilian and military purposes, between August 2023 and April 2025.

The case underscores the compliance risks facing Chinese manufacturers as Beijing expands export controls of dual-use items and the materials used to make them amid intensifying tech rivalry with the US.

Since August 2023, China has imposed export controls on gallium and germanium, two important materials used in semiconductor manufacturing. It later also added graphite, rare earths and other materials to its export restrictions.

According to Wavelength’s latest half-year report, its infrared thermal imaging lenses are made from optical materials such as germanium and silicon.

Chen Yao, a Shanghai-based lawyer and senior joint partner at Beijing DHH Law Firm, said the case was unusual because violations involving dual-use items had often resulted in administrative penalties rather than criminal prosecution.

The case also highlights how export control violations could become a major unexpected risk for companies listed on China’s A-share market, Chen added.

The investigation began in April 2025, when customs authorities in Shanghai started reviewing the company’s exports over the preceding three years. They later concluded the company was suspected of exporting germanium-containing lenses under falsely declared material descriptions before referring the matter to anti-smuggling investigators.

Wavelength said in June that it had suspended the export business related to the investigation. The business accounted for a relatively small share of annual revenue and formed part of its infrared optics operations.

The precise lens models, declared materials and export destinations involved have not been publicly disclosed.

The company’s misdeclaration of the material composition of its goods took the case beyond an administrative violation for failing to obtain an export licence and into the realm of criminal smuggling, where the potential consequences are far more serious, said Li Fan, a Hefei-based lawyer and partner at the Lantai Partners.

“For businesses, export control compliance is no longer just a legal paperwork exercise,” he said. “It must be built into every stage of the export process, from product classification and order screening to customs declarations, to help guard against criminal liability.”The case is not the first in which Chinese companies have faced penalties or criminal proceedings over the unauthorised export of controlled materials.

In May, superhard-material producer Monte-Bianco Diamond Applications said it had been fined 910,000 yuan for shipping state-controlled dysprosium in April 2025 without the required export licence.

In April, Puyang Refractories said prosecutors had indicted the company and several executives for smuggling after finding that management had mislabelled more than 1,240 tonnes of natural flake graphite as general graphite powder to bypass export controls between April 2024 and March 2025. Wavelength said Thursday that its case had yet to go to trial, leaving its outcome and potential impact on profits uncertain, but the proceedings were not expected to have a material impact on its ability to continue operating.