China calls for more US transparency

09:30, February 18, 2011      

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China hopes the United States will make the approval process for Chineseenterprises seeking to invest in the US more transparent, the spokesman for the Ministry of Commerce (MOFCOM) said Thursday.

Yao Jian, the ministry spokesman, made the remarks during a news briefing when a question was raised about Huawei Technologies Co's troubled bid to acquire US server technology firm 3Leaf Systems last year.

The comments are the first official response from the ministry concerning Huawei's purchase of 3Leaf for $2 million last May.

Citing "security concerns," the US government rejected several previous bids by Chinese companies to acquire US firms, such as Huawei's attempt to purchase US technology firm 3Com in 2008, and Northwest Nonferrous International Investment Co's bid for mining company First Gold in 2009, Yao said.

"Those obstructions and interruptions impact cooperation between China and the US to some extent," said Yao.

In May 2010, when Huawei purchased the assets of 3Leaf Systems, the company initially failed to disclose the deal because it did not think it was necessary, because it only purchased some of 3Leaf's assets, like intellectual property rights.

However, in November of last year, the Pentagon retroactively requested a review of the acquisition by the Committee on Foreign Investment in the United States (CFIUS).

According to the Associated Press, a group of US lawmakers appealed to both Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke in a letter last week, asking the officials to examine the 3Leaf deal closely.

The lawmakers are concerned the Huawei deal could transfer sensitive technology to China.

On February 11, the Committee on Foreign Investment suggested Huawei cancel the deal with 3Leaf, but Huawei refused, saying it would await a final decision from US President Obama.

In an email reply to the Global Times, the world's No. 3 seller of telecom network equipment said it will still stick to its business in the US, no matter what the final decision will be, while continuing to cooperate with the US government.

"Huawei has faced many obstacles in the US," Yao said. "We hope the US security laws and regulations can treat Chinese companies fairly, whether they are a listed firm, a State-owned enterprise or a private company."

Last Saturday, the State Council said it would review merger and acquisition (M&A) deals that involve foreign firms to ensure they do not endanger China's national security,

Yao said on Thursday that such a review is "necessary" as M&A deals are expected to increase significantly in the future.

He said those M&A deals accounted for three percent of China's total foreign direct investment.

Source: Global Times
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