Huawei and 3 Com. Gone.

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While the trend for Chinese overseas direct investment can only go in one direction (if market forces are to be believed), it is not without the odd (politically-inspired) mishap, as Dan Harris at China Law Blog reports (quoting a Wall Street Journal article that quotes him…) in relation to Huawei’s failed bid for 3 Com:

    “My favorite part of the article, for obvious reasons, is the following:

    “There will be tremendous repercussions in China because of this,” said Dan Harris, a Seattle lawyer who represents U.S. clients in China. “We should not be ignoring the impact that this might have on our own companies trying to do business over there.”

    Since the article does not explain the “repercussions,” I will do so now.

    Many (most?) in China believe the rest of the world (the United States, in particular) do not want China to rise. China (probably rightly) perceives the US government as behind this deal’s not going through. China (probably wrongly) perceives the US government’s blocking this deal to keep China business down. I expect China will retaliate against US companies, but I am not yet sure how. My guess is that it will eventually block some big US deal in China, but it is possible there will be an overall tightening of law enforcement against all US companies.

    We will see.”

It can only be hoped that (in a US election year) China can take a leadership position, and keep its eyes on the long term and the big picture. We will indeed see. But clearly it is not only China that will look at issues of national security when evaluating “sensitive” foreign investment.

One Response to “Huawei and 3 Com. Gone.”

  1. Archive » Protectionist Cocktail: FDI + ODI + M&A. Mix with Global Recession. Add Dash of Espionage.| China Business Blog Says:

    […] As protectionist sentiment grows in the face of global recession, it is perhaps not surprising that stories like this start appearing. Of course China has denied the allegation – hardly surprising! But is does raise questions for Chinese multinationals in waiting, and for international M&A (Huawei already had its bid for 3Com blocked last year). […]

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