Chinese Tech Investors Flee Silicon Valley as Trump Tightens Scrutiny (reuters.com) 105
New Trump administration policies aimed at curbing China's access to American innovation have all but halted Chinese investment in U.S. technology startups, as both investors and startup founders abandon deals amid scrutiny from Washington. From a report: Chinese venture funding in U.S. startups crested to a record $3 billion last year, according to New York economic research firm Rhodium Group, spurred by a rush of investors and tech companies scrambling to complete deals before a new regulatory regime was approved in August. Since then, Chinese venture funding in U.S. startups has slowed to a trickle, Reuters interviews with more than 35 industry players show. U.S. President Donald Trump signed new legislation expanding the government's ability to block foreign investment in U.S. companies, regardless of the investor's country of origin. But Trump has been particularly vocal about stopping China from getting its hands on strategic U.S. technologies.
The new rules are still being finalized, but tech industry veterans said the fallout has been swift. "Deals involving Chinese companies and Chinese buyers and Chinese investors have virtually stopped," said attorney Nell O'Donnell, who has represented U.S. tech companies in transactions with foreign buyers. Lawyers who spoke to Reuters say they are feverishly rewriting deal terms to help ensure investments get the stamp of approval from Washington. Chinese investors, including big family offices, have walked away from transactions and stopped taking meetings with U.S. startups. Some entrepreneurs, meanwhile, are eschewing Chinese money, fearful of lengthy government reviews that could sap their resources and momentum in an arena where speed to market is critical. This comes at a time when Chinese investors have visibly become more active in emerging markets such as India.
The new rules are still being finalized, but tech industry veterans said the fallout has been swift. "Deals involving Chinese companies and Chinese buyers and Chinese investors have virtually stopped," said attorney Nell O'Donnell, who has represented U.S. tech companies in transactions with foreign buyers. Lawyers who spoke to Reuters say they are feverishly rewriting deal terms to help ensure investments get the stamp of approval from Washington. Chinese investors, including big family offices, have walked away from transactions and stopped taking meetings with U.S. startups. Some entrepreneurs, meanwhile, are eschewing Chinese money, fearful of lengthy government reviews that could sap their resources and momentum in an arena where speed to market is critical. This comes at a time when Chinese investors have visibly become more active in emerging markets such as India.
Anti-Business (Score:4, Insightful)
Seems very anti-business and it will hurt us. Perhaps not immediately, or much a year from now, but we're eating the seeds of business that could be giant cash crops over the next 5 to ten years (and everyone will blame the stuttering economy at that time on whichever poor fool happens to be president then).
making stuff in red china with poor IP laws is bad (Score:5, Insightful)
making stuff in red china with poor IP laws is bad as well.
Re: making stuff in red china with poor IP laws is (Score:4, Insightful)
Maybe. But shouldn't a business be able to make that decision for itself?
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Re: making stuff in red china with poor IP laws is (Score:5, Insightful)
Part but not all of the reason Chinese goods are cheaper is that they don't have to worry about polluting the environment or workers rights (not that the USA is very hot the latter either). As such a tariff on goods manufactured in China to account for this will put the price up and make it more attractive to manufacture elsewhere. The trick is to target the tariff at any manufacturing not to western standards.
Re: making stuff in red china with poor IP laws i (Score:1)
orange man bad
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Orange Fan Mad
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That's not true in the EU, the environmental costs of outsourced pollution are factored in to the environmental taxes that EU companies have to pay.
Plus China is actually cleaning up quite rapidly now, rather than using poor environmental standards to its advantage (like the current US administration wants to).
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The trick is to target the tariff at any manufacturing not to western standards.
And that is just kicking a can down the road. What make you think that moving manufacturing out of China to somewhere else where the cost can be low would force the new place keeping up the "western" standards? The only place where you can keep the manufacturing cost low is in a 3rd world country. What make you believe that the country will hold the moral of the 1st world country? Why do you think those 3rd world countries don't become 1st world countries? I will give you a hint, the rich has power and mone
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Right, but that's not what the tariffs are about. If the tariff was implemented with the reason "poor worker rights, poor environmental record, abuse of IP", then that would send a specific message. However with the current tariffs to China the message is "we had the worst deal ever in the history of mankind, so unfair, sad, so tariffs until you agree with me!"
Ie, the message that China has been given is that the US is a bit unstable and unpredictable so just hold out for another election or two...
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Hypocrisy (Score:3, Insightful)
No -- there should be tariffs on Chinese goods and services to account for their poor environmental and human rights practices.
Ummm you are aware that the US is the biggest polluter per-capita in the world of any major industrialized country, right? The only reason China exceeds us on some measures in absolute numbers is because they have 4X the number of people. You are aware that our current administration is right this moment doing everything they can to permit companies to pollute their greedy little hearts out right?
And the US human rights record is nothing stellar either. I point you at Guantanamo Bay, several recent wars
Per capita (Score:2)
The number of poor in China that have access to nearly zero electricity probably skews their per capita measure that doesn't address anything other than "they are a developing nation".
Doesn't matter because China's absolute pollution numbers in many cases barely exceed those of the US despite having 4X the population. Sure their per-capita numbers are skewed somewhat but not in the way you are implying. The US punches FAR above its weight in producing pollution even in spite of substantial amounts of regulation aimed at curbing it. The US is the second largest producer of carbon emissions right behind China despite having 1/4 the population. The US produces far more carbon than Indi
Re:Per capita (Score:5, Informative)
Here's the CO2 numbers for US, EU, and China, as of 2017: https://www.forbes.com/sites/r... [forbes.com]
Over the past decade, the US and EU reduced their footprint. Meanwhile, China tripled theirs, and now emits more carbon dioxide than the U.S. and EU combined.
According to eia.gov https://www.eia.gov/todayinene... [eia.gov] "Coal accounts for most of China's energy consumption, and coal has maintained an approximate 70% share of Chinese consumption (on a Btu basis) since at least 1980, the starting date for EIA's global coal data. By way of comparison, coal was 18% of U.S. energy use and 28% of global energy use in 2012."
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I don't get why people keep pushing this "per capita" meme. Pollution is still pollution: it won't care about your population density, land area, or how rich your people are.
Re: Hypocrisy (Score:1)
The US is still number two. Maybe the rest of the countries should start applying the same measures on American goods...pollution knows no borders after all.
The narrative is all. (Score:2, Interesting)
Ummm you are aware that the US is the biggest polluter per-capita in the world of any major industrialized country, right?
Didn't know Canada and Australia weren't major industrialized nations.
First it was most polluting, but the facts eventually entered public perception.
Now the goalposts have moved to per-capita, because the facts have not yet entered public perception. Even as the US is one of very few countries in to have ever decreased their greenhouse gas output while the strong talking Paris agreement signers steam on ahead with increasing theirs.
Watch the goalposts shift again to total historical output, then total per-
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You're off topic.
Bring Hitler in next, OK?
China is fed up with the US and is in a position to go out on its own and replace America as the world's leader.
China doesn't give a rat's ass about IP any more than US businesses care about doing business in the US.
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Depends on...
1. Is that Business making products that will be used in the US government or US defense.
2. Will that business seek redress from the US Government after the Chinese steal their intellectual property and then run that business..out of business?
The Chinese government is a bad actor and they are NOT our friends. Their people may be, but not the government.
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The U.S. government often over sees areas of technology when it feels national security or interests are at risk. The U.S. government restricted sales of Apple's computers to certain countries.
This is par for the course.
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No. That's too much pressure to comply with China for the huge market. If everyone cannot comply unless they respect IP, then everyone outside China wins. Similar to the concept of a union preventing "voluntary unpaid overtime."
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Maybe. But shouldn't a business be able to make that decision for itself?
The answer depends on whose interests are important: short-term vs. long-term, corporate vs. societal/national interests . The actual decisions of a company in the absence of governmental interference are based on short-term stock price appreciation, even if such decisions eventually lead to the demise of the company. For example, if a US company partners with a Chinese company and is forced to share trade secrets, the executives and stockholders of that US company benefit based on increased revenue and
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Patent trolls and the East Texas court aren't good for business either. Neither are 70+ year copyright terms.
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seems? Feels over reals? These are spies. They should be in gitmo.
Markets (Score:5, Insightful)
The issue here is you are dealing with a country without an open market system. China's economy has market mechanisms for some things, but mostly, it's tightly controlled by the state. The state has direct influence and control over nearly every aspect of the economy. If they decide your business is too important for you to run it, the state will simply take it over and there is absolutely nothing you can do about it. China's government doesn't see their economy as thousands of self-regulating parts. They see it as one large machine that they control. The problem is, as with any large entity, that management becomes impossible, and any mistake you made at a high level is amplified a thousand times greater than if a single company made an error.
You can see how fragile and fundamentally screwed up their economy is by the rescinding of the American ZTE ban. If left in place, the ban would have essentially crushed China's economy, because the expansion of ZTE was built into China's economic plans. Factories were built. Apartments were built for the workers. Capacity expanded at suppliers. Supply chains were set up ahead of time. Everything was prepared. If ZTE failed, a chunk of China's economy would freeze. In a normal market economy ZTE would go out of business and it's competitors would absorb the lost business. That's not what was planned for, though.
This is whom the investors are representing. China is trying to spend and expand it's way out of it's problems instead of fixing them. It's what Japan tried to do in the 80's, and the result was a crashed economy with a decade of stagnation. We shouldn't be encouraging this type of behavior.
Re:Markets (Score:5, Insightful)
The issue here is you are dealing with a country without an open market system..
The interest rate is the price of money, and it is the fundamental price in any free market. No nation whose government (or central bank) controls its interest rates has a free market. The very idea is utterly ridiculous.
Moreover, the USA has very little in the way of free markets, precisely because it is controlled by capitalists. Capitalists loathe and detest free markets and competition, and always do their level best to eliminate them.
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So, similar to how some US companies like General Motors and certain financial institutions are too big to fail, and the government makes sure they don't fail.
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Sounds like the US should be accepting China's money then, letting them crash.
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So what you're saying is ZTE is Too Big to Fail [wikipedia.org]? Except last I remember that term was used to describe some American companies which nearly caused the entire economy of the greatest nation on earth to implode.
Regulation (Score:2)
In the US, you have quite a bit of regulatory capture, which is a whole other ball of wax.
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The issue here is you are dealing with a country without an open market system. China's economy has market mechanisms for some things, but mostly, it's tightly controlled by the state. The state has direct influence and control over nearly every aspect of the economy.
what many people do not realise about china is that the state is not in control: the "old families" are. these are the descendents of the warlords you may recall from chinese history. there are five families, and they're each responsible for unbelievably enormous areas of land and the associated population. they own the banks. they basically own and indirectly run *everything*.
once you understand this, the way that china operates becomes a bit clearer.
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Nice boost for China though, bring home some of that investment.
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https://en.wikipedia.org/wiki/... [wikipedia.org]–Hawley_Tariff_Act
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For some reason it didn't take my link correctly and I can't figure out how to change it. :P
It's suppose to be the article for the Smoot–Hawley_Tariff_Act
Good (Score:5, Insightful)
Kick out these fucking spies.
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China has devolved into what all socialist states fall into. An authoritarian government that makes all the capitalistic economic decisions for you.
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LOL if I were tolerant left I would say all cultures are the same. REEEEEEEEEEEE.
The reality is that Chinese that emigrate are reminded that they have family members still in China. They use that to coerce "hacking" (ie usb sticks) to get corporate information. No Chinese friends? Ply them with a few drinks and ask them.
GOOD!!! (Score:2)
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DEEERRRRRRRP!
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Keep living the illusion, pal.
You're all missing the point... (Score:1, Flamebait)
+ Find a problem.
+ Make the problem 10x worse than it actually is.
+ President takes action.
+ Investors disappear.
+ Companies panic.
+ New investors save the day.
+ Pay 50% (or less) what they should have.
+ Find out investors are friends of President.
Funny how that worked out.
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So, according to you, Obama (a) used lots of money to bailout GM illegally, because (b) his friend bet that GM would fold and be unable to pay off bondholders. I have no idea how bailing out GM makes it more likely that the bondholders would lose.
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You said that "Obama's investment bank pal" made money because he bet on GM to default on their bondholders and "lose". How does bailing GM out make that more likely??
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Definitely. My posting was NOT trolling. This is exactly what happened to Boing. The President spoke out against them, stock dropped, friends of his bought the stock, and then he said, "Great guys, everything's fine." And those friends then sold off the stock and made a bundle.
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https://www.cnbc.com/2017/08/07/chinas-crackdown-on-money-fleeing-the-country-looks-like-its-working.html
http://www.loc.gov/law/foreign-news/article/china-new-rules-increase-restrictions-on-overseas-cash-withdrawals/
https://www.forbes.com/sites/ralphjennings/2018/02/05/chinas-grip-on-money-outflows-shake-up-malaysia-and-vancouver/#5117228065b1
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Just another example of leftist media blaming things on "bad orange man" that have nothing to do with him. Their sheep have no clue what is going on in the rest of the world and just lap it up like flies on shit.
Fact is China is a hot mess right now. Those that have wealth in China are looking for every possible way to get it out of China ASAP. I would not be surprised if the surge in crypto currencies last year was caused by this, seeing as once the Chinese had bought bitcoin they could have moved it anywh
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There are many ways for rich Chinese to move money out. Macau lets them move out their 'winnings'. So they buy a bunch of chips, play for a while, then cash their chips out for foreign currency.
Bitcoin lets Chinese that don't have relatives on the central committee move their money out. Which the Chinese don't like one bit.
Re:More Anti-Trump BS (Score:4, Insightful)
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It's not just that. To meet the housing demand in the cities, rapid and shoddy construction has become the norm. Those are not houses that will remain reasonably habitable for more than a couple of decades, making investing in them downright dangerous. Fractures in concrete for example are a norm in such building after 5-10 years.
Good. (Score:1)
FINALLY, finally . . . . (Score:2)