According to Reuters, two Hong Kong companies owned by Warren Buffett’s investment flagship, Berkshire Hathaway, will be added to the U.S. Treasury Department’s list of companies with business ties to China’s People’s Liberation Army (PLA), two companies that have denied links to the PLA and military uses. However, Radio Free Asia found that the subsidiary of Arrow Electronics in question had signed a cooperation agreement with the Chinese military and civilian enterprise Sichuan Changhong in 2007. Arrow Electronics has not responded positively to the relationship with Sichuan Changhong, but has reiterated that the company does not supply to military applications.
It has been reported that two Hong Kong-based companies under the auspices of Baxun, “TTI Electronics Asia PTE Hong Kong Ltd” and “Arrow Asia Pac Ltd”, have been listed by the Trump administration as “TTI Electronics Asia PTE Hong Kong Ltd” and “Arrow Asia Pac Ltd”. The list was drawn up with the Chinese military in mind. U.S. companies are required to obtain an official U.S. license to supply the listed companies.
“Arrow Asia Pac Ltd, founded in 1935, is one of the world’s largest semiconductor distributors of electronic components and computer products, with 19,300 employees worldwide and annual sales of $28.7 billion in 2019. Arrow Electronics denies the allegations, “After careful analysis of the regulations, Arrow Electronics is not a military end-user and does not engage in any military terminal services as defined by the regulations.
However, the online press release database of PR Newswire shows that Arrow Asia Pac Ltd. announced in 2007 that it had signed an agreement with Sichuan Changhong Electronics, one of China’s four largest TV manufacturers, which is also a military-industrial enterprise. Arrow will provide “supplier inventory management” supply chain services to Changhong’s manufacturing facilities in Sichuan and Guangdong.
Arrow’s “supplier inventory management” service will give Changhong easy access to Arrow’s “semiconductor, passive, electromechanical and connector products” stored in the Mianyang Free Trade Zone, according to a press release from Yu Minhong, then senior vice president for North Asia. Mr. Yu is also one of the Hong Kong directors of the listed “Arrow Asia Pac Ltd”. However, Arrow did not comment directly on whether that year’s agreement is still in effect, or on its current relationship with Sichuan Changhong.
Ross Feingold, a U.S. political risk management consultant, said in an interview that the U.S. action is clear: if you have a relationship with Chinese authorities or official Chinese suppliers, you will be blacklisted to restrict exports. The U.S. is also quite concerned about the role of Hong Kong companies as intermediaries,” Feingold said.
Over the past year or so, the U.S. has begun to target companies that sell to Hong Kong, and then whether the Hong Kong buyer is also a trading company that resells to China,” says Fanger. It’s clear that the U.S. is also stepping up to look at this behavior. If a company is found to be playing this role, the U.S. will blacklist it.
In addition to electronic screens, there are also surveillance lenses, “smart city” platform systems, “smart public security” systems, and so on. The power supply system for the Chinese fighter J-10 is also developed and produced by Changhong.
According to a 2017 report by mainland Xinhua, Sichuan Changhong has owned the “0.881 Electronics Group,” “state-owned 780 Plant,” “state-owned 756 Plant,” and the “0.881 Electronics Group. “State-owned 796 Factory”, “State-owned 799 Factory” and many other military industrial entities. Zhao Yong, chairman of Changhong Holding Company, has said, “The market-based operation mechanism is our foothold to promote the development of military-civilian integration, and is an advantage we have over traditional military enterprises.”
Liu Ruishao, a Hong Kong-based commentator familiar with Chinese politics, told the station that China’s military interests have been expanding their economies by running civilian businesses, such as trading with or taking stakes in foreign companies. He explained that Chinese domestic companies with ties to the military generally fall into three broad categories: the first is directly controlled or even wholly owned by the military; the second is the military’s participation in equity, which influences the business direction of certain companies; and the third is military alliances, which are business ties to the military.
Liu Ruishao said: “Arms control, military participation, and military alliances are all common (in the Chinese Communist Party). These institutions not only help the mainland to improve its military technology, but also are a huge source of profit, so that he (the CCP) can use them to control other enterprises on the mainland or outside the country to see if they can be exploited by the CCP.
Liu Ruishao described this as a long-term technology war. The U.S. is now using a “click-and-mortar” approach to identify target companies that they believe have ties to China and to deter U.S. companies from working with Chinese military-industrial firms.
Recent Comments