Chinese state media and pundits have called the Dutch government a \u201cpirate\u201d and even threatened it with a ban on rare earths, following its seizure of control of the Chinese-owned semiconductor maker Nexperia in late September.\u00a0<\/p>\n
On September 29, the United States Department of Commerce\u2019s Bureau of Industry and Security (BIS) issued an interim rule<\/a> extending its Entity List and Military End-User List to cover affiliates of the sanctioned entities. Any company at least 50% owned by a listed entity now automatically inherits the same restrictions.\u00a0<\/p>\n On September 30 this year,\u00a0having failed to persuade the Chinese owners to yield control over key decisions or go public in Europe, the Dutch government acted. The Dutch Minister of Economic Affairs invoked<\/a> the Goods Availability Act to take over\u00a0Nexperia, citing its \u201cserious governance shortcomings.\u201d\u00a0<\/p>\n \u201cThe decision aims to prevent a situation in which the goods produced by Nexperia would become unavailable in the event of an emergency,\u201d said the Minister. \u201cThe company\u2019s regular production process can continue.\u201d<\/p>\n Nexperia stated<\/a> in a press release on October 14 that, although the BIS did not explicitly mention it, it was affected due to its status as a wholly owned subsidiary of Wingtech Technology, which was added to the US entity list in December.\u00a0<\/p>\n It also said that it and its subcontractors have been banned by the Chinese Ministry of Commerce from\u00a0exporting\u00a0specific finished components and sub-assemblies manufactured in China.<\/p>\n \u201cThis series of actions attempts to seize the capital and technological achievements that Chinese companies have built up over many years,\u201d the Global Times, a state-owned media outlet in China, said<\/a> in its editorial. \u201cMany have described such actions as \u201921st-century piracy.’\u201d<\/p>\n \u201cThe Dutch government\u2019s actions against Nexperia are extremely egregious, going far beyond normal commercial regulation and carrying blatant political coercion and discriminatory overtones,\u201d it said.\u00a0<\/p>\n The editorial noted that some people have recalled memories of dark chapters in the Netherlands\u2019 history and\u00a0wryly observed that a few Western countries now treat \u201cnational security\u201d as a privateering license, a reflection of \u201ccolonial genes\u201d awakening in the 21st century.<\/p>\n In the 17th Century, the Netherlands colonized what is now Indonesia and parts of Malaysia, Taiwan and Sri Lanka and established trading posts in Japan, its trade monopoly earning the country the nickname \u201ccoach driver of the sea.\u201d However, its maritime supremacy was surpassed by Britain after the latter went through the Industrial Revolution in the late 18th Century.\u00a0<\/p>\n \u201cThe Netherlands still sees itself as the \u2018coach driver of the sea\u2019, but it is behaving more like a pirate in the modern economy,\u201d\u00a0Shen Yi,\u00a0a professor of international politics at Fudan University, told<\/a> ThePaper.cn in an interview. \u201cBy forming a coalition of semiconductor allies in Europe, the Netherlands had effectively turned itself from a single pirate to a fleet of pirates.\u201d<\/p>\n He warned that once China launches retaliatory measures, the Netherlands will find itself becoming a chicken for slaughter. The Netherlands is\u00a0the second-largest poultry exporter in the European Union, after Poland.\u00a0<\/p>\n \u201cThe Dutch action was clearly coordinated with Washington\u2019s tightening of export controls,\u201d a Guangdong-based columnist writes in an article<\/a>. \u201cChina still holds several strong cards, such as its dominance in rare earth production\u00a0and its large market share in sectors like new energy and industrial machinery. If China retaliates, Dutch companies won\u2019t withstand the pressure.\u201d<\/p>\n Rising scrutiny<\/p>\n Since being acquired by Wingtech Technology for US$3.6 billion in 2018, Nexperia has come under growing attention<\/a> from European authorities.<\/p>\n In 2022, the UK government compelled Nexperia to sell<\/a> its Newport wafer plant, citing national security risks. The following year, German regulators barred the company from accessing public funding for battery-efficiency research.\u00a0<\/p>\n \u201cTo navigate increasing scrutiny, the company established a government relations office in late 2023 and hired a diplomatic expert to liaise with Dutch officials on issues of compliance, investment, and corporate governance,\u201d\u00a0Wingtech\u2019s Chief Financial Officer\u00a0Zhang Yanru\u00a0sai<\/a>d after the company\u2019s shareholder meeting on October 15.\u00a0<\/p>\n \u201cThe Dutch Ministry of Economic Affairs had asked Nexperia to establish a supervisory board, in which it could have veto power over more than 20 major business decisions in the company, including those related to intellectual property, technology transfer, investment planning, and the recruitment of research staff in China,\u201d she said, adding that\u00a0Wingtech rejected this suggestion.\u00a0<\/p>\n She said Dutch authorities also urged Wingtech to sell part of its equity in Nexperia\u00a0to European investors and explore an eventual public listing within the European Union, citing \u201csecurity\u201d and \u201ctransparency\u201d considerations.<\/p>\n She said\u00a0Wingtech and some senior Nexperia executives remained open to this idea, but progress was slow due to complex procedural requirements and political sensitivities. She said, Windtech will take all possible measures to protect its shareholders\u2019 interests.\u00a0<\/p>\n Nexperia said<\/a> the original Chief Executive, Zhang Xuezhang, was suspended by the Dutch Enterprise Chamber as a director on October 7. Stefan Tilger, Chief Financial Officer, is now acting as interim Chief Executive.\u00a0<\/p>\n According to the Dutch court filings<\/a> released on October 14, US\u00a0officials had\u00a0informed the Dutch government that Zhang would have to be replaced if the company were to be exempted from the US list of companies considered threats to national security or foreign policy interests.\u00a0\u00a0<\/p>\n On October 16, Chinese Commerce Ministry spokesperson He Yongqian stated<\/a> that the Dutch court filings indicated that the United States\u2019 \u201cpenetrating rules\u201d were the original cause of harm to Chinese enterprises. She said Beijing hopes the Netherlands will maintain an independent and autonomous stance in handling the issue.<\/p>\n Read: China tightens rules to block Pakistan rare earths exports to US<\/a><\/p>\n Follow Jeff Pao on Twitter at\u00a0@jeffpao3<\/a><\/p>\n \t