US blocks Chi­nese bid for Euro­pean firm

Na­tional se­cu­rity re­view process ‘lacks trans­parency’

Global Times - - Business -

By Wang Cong and Zhang Hong­pei

The US, through a se­cre­tive yet pow­er­ful panel, has suc­cess­fully blocked an­other bid in­volv­ing Chi­nese com­pa­nies, this time in­volv­ing a mi­nor­ity stake in a Euro­pean map­ping ser­vices provider, cit­ing na­tional se­cu­rity con­cerns. The move showed that the US, which in­creas­ingly feels its dom­i­nance in tech­nol­ogy and other areas is threat­ened by China’s rapid devel­op­ment, is ex­tend­ing its reach in in­ter­fer­ing with nor­mal, le­gal deals that in­volve Chi­nese com­pa­nies, a Chi­nese ex­pert said on Thurs­day. Com­pa­nies feel that there are daunt­ing hur­dles posed by the US process, which they said lacks trans­parency, one source fa­mil­iar with the process said. Chi­nese map­ping tech­nol­ogy com­pany NavInfo Co on Tues­day an­nounced that a bid pro­posed last year with Ten­cent Hold­ings and Sin­ga­pore’s sov­er­eign in­vest­ment fund GIC to buy a 10 per­cent stake in Nether­land-based map­ping tech­nol­ogy com­pany HERE In­ter­na­tional BV was aban­doned be­cause the plan failed to win reg­u­la­tory ap­proval from the US. An­nounced in De­cem­ber 2016, the deal was to pur­chase the stake in HERE cur­rently in­di­rectly

held by Ger­man car­mak­ers Daim­ler AG, BWM Group and Audi AG But the transr ac­tion faced hur­dles af­ter the Com­mit­tee on For­eign In­vest­ment in the US (CFIUS) launched a re­view of the pro­posal be­cause HERE has busi­ness oper­a­tion in the US.

De­spite ac­tive co­op­er­a­tion with the panork el and a huge amount of work dur­ing a fivee month re­view pe­riod, “the trans­ac­tion still has not been ap­proved,” NavInfo said in a state­ment.

Though the plan was ditched, the com­per­a­tion pa­nies said that their co­op­er­a­tion through oth­erin NavIn­foa state­ment chan­nel­sand Ten­cent­that woulda plan con­tinue. HERE saidto in­volv­ing HERE, form a strate­gic part­ner­ship in China would go ahead and

a planned joint ven­ture be­tween HERE and NavInfo re­mained on track.

The failed Chi­nese bid rep­re­sents an­other vic­tim of the US govern­ment, which ear­lier this month blocked a deal for Chi­nese-backed in­vest­ment fund Canyon Bridge Fund to ac­quire US semi­con­duc­tor pro­ducer Lat­tice.

“I think the pat­tern is very clear that the US is us­ing ev­ery­thing, from a Sec­tion 301 in­ves­ti­ga­tion to these na­tional se­cu­rity re­views, to block Chi­nese cap­i­tal from buy­ing for­eign com­pa­nies in areas they think are sen­si­tive and could help China to chal­lenge them in tech­nolo­gies and other things,” Chen Fengy­ing, a re­search fel­low at the China In­sti­tutes of Con­tem­po­rary In­ter­na­tional Re­la­tions (CICIR), told the Global Times on Thurs­day.

Chen was re­fer­ring to an ear­lier de­ci­sion by the US to ini­ti­ate an in­ves­ti­ga­tion into China’s in­tel­lec­tual prop­erty prac­tices un­der Sec­tion 301 of the Trade Act of 1974.

“This is a full-fledged ef­fort on the part of the US to do ev­ery­thing to stop China from ad­vanc­ing in core tech­nolo­gies such as au­ton­o­mous driv­ing, semi­con­duc­tors and so on,” Chen re­marked.

NavInfo and the Chi­nese com­pa­nies are work­ing to­gether to pro­vide map­ping and lo­ca­tions ser­vices that could help the devel­op­ment of driver­less cars, ac­cord­ing the com­pa­nies.

The tools that the US is us­ing lack trans­parency, ac­cord­ing to a source with di­rect knowl­edge of the CFIUS re­view process for the HERE deal.

“The CFIUS re­view was not very trans­par­ent … they just said that the deal couldn’t go ahead be­cause of US na­tional se­cu­rity,” said the source, who spoke on con­di­tion of anonymity be­cause he was not au­tho­rized to speak pub­licly on the mat­ter.

“I think that maybe it was due to the sen­si­tiv­ity of map data and cit­i­zen data,” the source told the Global Times, de­scrib­ing the re­view a daunt­ing process.

Im­me­di­ately af­ter the CFIUS de­cided to ini­ti­ate a re­view into the deal and posed many ques­tions for the com­pa­nies, the com­pa­nies knew that the deal they felt so con­fi­dent about could be de­railed, ac­cord­ing to the source.

Af­ter go­ing through the process, the com­pa­nies were men­tally pre­pared that the deal might not get ap­proval and they fi­nally scrapped the deal, ac­cord­ing to the source.

Chen from the CICIR noted that such ob­sta­cles from the US for deals that in­volve Chi­nese com­pa­nies would “only in­crease” in the fu­ture.

“The com­pa­nies should find other ways to make deals over­seas such as form­ing con­sor­tiums with for­eign com­pa­nies … but more im­por­tantly, they should fo­cus on im­prov­ing their core tech­nolo­gies,” she said.

Photo: IC

A vis­i­tor walks past the stand of Ten­cent dur­ing the 15th China Dig­i­tal En­ter­tain­ment Expo in Shang­hai in July 2017.

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