Summary: Cybersecurity expert Emilio Iasiello discusses China’s acquisition of America’s knowledge, technology, and skills by acquiring America’s companies.
By Emilio Iasiello
Posted at Dead Drop (of the LookingGlass Cyber Threat Intelligence Group)
7March 2016. Posted with his gracious permission.
Since 2012, there has been increased interest in Chinese companies purchasing U.S. businesses. In the recent report published by the Committee on Foreign Investment in the United States (CFIUS). According to the report’s findings, CFIUS reviewed 147 transactions in 2014, which was a 52% increase over the number of notified transactions in 2013. Fifty-two of these cases were subject to follow-up investigations in order to determine if they posed a risk to U.S. national security interests. Unsurprisingly, for the third consecutive year, China led all foreign countries in filings, with 24 transactions reviewed, an increase from 21 the previous year. Two months into 2016, China shows no signs of slowing down its acquisition requests.
- State-owned China National Chemical Corporation offered to purchase Swiss pesticide Syngenta AG for $43 billion. Syngenta maintains chemical facilities in the United States deemed potential terrorist targets by U.S. officials.
- In late January 2016, China’s Zoomlion Heavy Industry Science and Technology Co., Ltd., made an offer for the U.S. crane manufacturer Terex Corporation. In addition to being a state-owned enterprise, Zoomlion, a construction machinery manufacturer, has a longstanding relationship with China’s People’s Liberation Army, calling into question if providing a supplier of critical infrastructure equipment to U.S. government agencies poses a risk to U.S. national security.
- As recently as February, the Chicago Mercantile Exchange announced that it would be sold to a consortium led by the Chongqing Casin Investment Group of China, and
- Fairchild Semiconductor recently rejected a takeover bid by China Resources Microelectronics and Hua Capital Management out of concern that CFIUS would reject it.
There were notable purchase attempts in 2015 as well. Tsinghua Unisplendour Group, China’s largest state-owned chip design company, proposed to buy a 15 percent stake of Western Digital Corporation, one largest computer hard disk drive manufacturers in the world. The deal ultimately fell through when the Chinese company backed out once CFIUS intended to conduct a second-stage investigation.
The potential acquisition of these companies can certainly be interpreted as being driven by Beijing’s national interests. The targeted companies bear closer inspection as the fields that they represent coincide with the strategic industries outlined in China’s Fifth 12 Year Plan (2011-2015); namely, environmental protection; new generation information technology; biological; high-end equipment and manufacturing; new energy; new materials; and new energy automobile. This raises alarm particularly as some security professionals have intimated that the China’s 12th Five Year Plan provides almost a blueprint for Chinese cyber espionage operations, the intent of which has been the theft of secrets and intellectual property to gain competitive advantage.