CFIUS has repeatedly frustrated Chinese investment in US technology companies

Recently, land-based investment, mergers and acquisitions of US companies Lumileds, and Western Digital have been repeatedly frustrated, mainly due to the Foreign Investment Committee (CFIUS) and the Foreign Investment and National Security Act (FINSA). The bill was officially signed by President Bush in 2007 and is actually a revision of the 1988 Exon-Floria amendment to further strengthen restrictions and censorship of foreign companies investing in the United States. Violet and the global hard disk drive leader Western Digital reached a 15% investment agreement in October 2015, because the US CFIUS decided to enter the investigation stage after the review, indicating that CFIUS continues to review the case. With some demand, the land side considers the difficulty of subsequent development, and terminates the transaction based on the fitting of the original. Looking back at the Exon-Floria amendment's approval for Congress, it was caused by a rebound in Japan's proposed acquisition of 80% of Fairchild Semiconductor in 1986, when Fairchild Semiconductor was an important chip supplier to many US military products. CFIUS is part of the US Treasury Department, but it operates in the form of a committee. Members are expanding in response to the development of the world situation. The overall situation includes the Minister of Finance, the Secretary of State, the Secretary of Commerce, the US Trade Representative, the Director of the National Science and Technology Policy Office, and the Secretary of Defense. The Secretary of Homeland Security, etc., adopts a consensus system, and its decisions and procedures are not subject to judicial review. Although the final veto of the investment case is the power of the US President, in most cases, the investment parties retreat in the process of consulting with CFIUS and withdraw themselves. (withdrawal). Although the investment and the investee's notification of CFIUS is voluntary, because the US President and many members of CFIUS can propose to investigate the foreign investment case involving national security, and CFIUS purchased the American business Lucent from Alcatel in 2006. A special security arrangement has been added to the case, that is, CFIUS can restart the review of foreign investment cases at any time. If it fails to act according to the special security arrangements, it can even reverse the case, indicating that the power of the bill has gradually expanded. At the beginning, the Exon-Floria amendment had 12 recommendations for the assessment of national security. After the September 11th and other incidents, after the completion of the FINSA Act in 2007, the review and restrictions were strengthened, but the unit’s opacity after the expansion. And political considerations have also caused opposition from US and overseas business groups. For example, the plan to acquire Philips' 8-year-old subsidiary of Philips' subsidiary Lumileds, which was cancelled by CFIUS. Although LED is not a cutting-edge technology, while the US government vigorously promotes new energy projects and popularizes LED lighting, it has the meaning of restricting its investment in LED investment. According to CFIUS's annual public report on the US Congress (and a detailed non-public version of Congress), the largest number of notifications to CFIUS from 2012 to 2014 came from the mainland, totaling 68 cases, and 2015. After the year, the overseas acquisition of land and capital has greatly increased the intensity of the trend, which has caused many US governments and the private sector to rebound. In addition, in the 358 cases that were notified to CFIUS from 2012 to 2014, there were 42 cases that were cancelled by themselves and one by the US President. According to statistics from CFIUS, as many as 88% of investment cases can pass smoothly. Therefore, in the near future, the land investment has been informed by two consecutive investments, but the result is to cancel the self-removal. It highlights the attempt of the land capital to expand its influence in the technology industry through capital, and is given the cold nail by the US official. In fact, when Huawei wanted to invest in a US company such as 3Com, it canceled the acquisition application after consulting CFIUS, and even after the acquisition of part of the asset of a bankrupt server technology company 3Leaf, at the request of CFIUS, the cancellation was completed. The transaction can be seen in the influence of CFIUS. In addition, the mainland China Sanyi Group's US-related enterprises will not acquire US wind power companies under CFIUS. Although they have completed the procedures of the EIA review and the US Aviation Administration, they have been ordered by the US President to stop trading and shut down factories. Disciplinary action, as both the US President and CFIUS members can propose to initiate a review of the foreign investment case, so most of the foreign investment cases with more than 10% of the shares will be declared. In general, the bill involving foreign investment, especially FINSA, gives CFIUS a vague and explanation of national security. Its handling procedures are basically not subject to judicial supervision. The results of the review are difficult to reverse, and CFIUS members come from the heads of various US government departments. With great political characteristics, it is even more difficult for land companies to successfully invest in the desired US technology companies during the 2016 US election year.

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