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Drowning not waiving

While UK civil liberties are eroded and national lockdown prevails, in the tech world a land-grab is underway.

Submitted by M.A. Richardson…

While UK civil liberties are eroded and national lockdown prevails, in the tech world a land-grab is underway. The British Government and the Civil Service are occupied elsewhere, no wonder MPs are having to take up the slack.

We are in a liquidity crunch. Anyone who tries to get a credit card will tell you this. A mortgage anyone? A business loan for the self-employed to tide over a small or medium sized company during lockdown, anyone? The same goes for the tech sphere.  In these times you must be nimble, mercurial and creative.  Once the dust settles and Covid-19 is behind us, and it will be behind us, many companies all over the UK will have gone into liquidation, unable to survive without trading and starved of funding.

This is already happening, and the large companies and corporates are there to watch them fall and to acquire them.  This will be at the expense of market diversity and innovation, and of the middle classes, who will have been squeezed out of the market. So the corporates get more corporate and the middle class gets pushed down further, making the gap between the relative rich and the relative poor even greater. The virus is a perfect environment for M&A’s.

If the mere mention of the the word ‘China’ sends you into a paroxysm of ‘wokism’ it shouldn’t, because this is not about China. This is about the contempt that neoliberal Western governments have for their own people, products and security, and how the CCP (Chinese Communist Party) have for many years exploited this weakness.

China, already beginning to recover from Covid-19, is looking to expand its tech base further whilst the rest of the world, with few exceptions, is still in lockdown. Cheap labour costs plus direct access to one of the largest and fastest growing tech markets in the world. The Chinese are tech-hungry. It is a surveillance state with a huge market. However, outsourcing of Intellectual Property (IP) will eventually turn the UK into an empty vessel on the periphery of innovation, it will have given it all away.  Even now, it is stuck between a rock and Huawei. The Chinese will take it and run with it, they have been doing this for years, because we let them. With the rest of the world including China under financial stress, this is a good time to work under the radar. Buy cheap, go long.

China is behaving like any other global business corporation.  It is just a little more disciplined and a little less tolerant of dissenters. It has its strategy, and its ideology of acquisition and implementation. The CCP needs to invest in infrastructure to keep growing. It needs to ensure those at the top are in a position to implement that policy and are protected and able to make decisions on a unilateral basis.

This is not China’s fault. It is the fault of the West for letting it happen.  Western governments appear too stupid to make China pay a fair price for IP and tech, and unable or unwilling to see that selling it on compromises it’s own security and that of its people. This is why governments have regulators, to prevent and scrutinise the selling off of strategic assets overseas. But in practice these regulators, at least in the UK, are woefully naive or complicit.

One example of outsourcing that we are all having to deal with is that of our medicines, medical supplies, equipment and component parts to China.  Why would you give one country, one source, one corporate, one body, the power over life and death. In a situation such as Covid-19, China needs those supplies too; it went into lockdown and the West was at the back of the line. This is logical.  If it were your country, everything else would be secondary, the safety of your population comes first. This is what China did.

In the last few weeks the UK has paid China millions for Covid-19 test kits and equipment only to find that they do not give consistent results, that PPE (Personal Protection Equipment) is delayed or is faulty or does not turn up at all. The UK are trying to get their money back.

China has the supply and the rest of the world has the demand. It is the key supplier of the one thing that the world needs. The Chinese people are as much victims as we are,  It is Western governments that have been prolifically myopic, so lacking in judgement, and so naive to have put their nations in this vulnerable position. It’s not as if the West has not had previous warnings, governments just chose to ignore them.

The acquisition of Western assets both intellectual and physical has been going on for years. China have been vacuuming up IPs for decades. In the US, Trump has taken on the monumental task of trying to correct this asset stripping. He ran part of his 2016 election campaign on it.

What are the UK and Europe doing?  They are facilitating the CCP for short term profit without a long term plan at the expense of their nations’ security and prosperity. It’s all about the supply chain. The pandemic has proved that.

Regulators are selling out the British public when the UK needs those jobs, particularly now. That expertise, that innovation should rightly remain in the UK, otherwise it just becomes asset stripping and any other M&A, until the UK becomes China Inc. In an economic and technological war, you don’t give the CCP your big guns.

In September 2017, Imagination Technologies was bought out by Canyon Bridge for £550 million after Imagination’s share price plummeted in April of that year when it was dumped by Apple as it’s GPU (Graphics Processing Unit) IP(Intellectual Property) provider. Apple generated over half of Imagination’s revenue. Imagination Technologies is a British based company whose website says it provides products including ‘Graphics Processors PowerVR, Vision and AI, Connectivity Solutions, and IP’, basically all of the stuff most of us non techies know little about, but are told is essential and security sensitive.

China Reform Holdings, a Beijing backed Chinese global private equity fund specialising in M&A and technology management, is an investment holding company engaging in ‘fund investment, financial services, asset management, equity operations, and overseas investment’. It is also the major investor in Canyon Bridge.  Despite fears the 2017 deal handed too much power to the Chinese, Canyon Bridge acquired Imagination Technologies without regulatory intervention.

Recently, Canyon Bridge attempted a board takeover of Imagination. Chinese investors, no longer prepared to be just ‘passive investors’, saw an opportunity to appoint 4 new board members from China, effectively facilitating a takeover and probable relocation of the company and IP to China. Imagination is not a company you want to relocate to China. It is staggering that just such a deal was about to get under the wire of the UK regulators. This takeover has been averted for now whilst an investigation is held in Whitehall headed by Culture Secretary Oliver Dowden.

In January 2020 Apple signed a new multi-year deal with Imagination Technologies giving Apple access to a wider range of Imaginations IPs.

Imagination came close to being lost this week but for the diligent work of a few MPs. Ron Black CEO, has stepped down from Imagination Tech and been replaced by Ray Bingham, executive Chairman of Imagination. Ray Bingham is also on the board of Canyon Bridge and a co-founder of that company. Isn’t this like giving the fox the key to the hen house?

2017 was clearly a busy year for takeovers in the semiconductor business. A few weeks earlier in the United States, the very same Canyon Bridge was blocked by Donald Trump and the US Committee on Foreign Investments (CFIUS) from buying the US tech company Lattice Semiconductor because of National Security issues and relocation concerns. You would think this would be enough to flag up possible future concerns that the same company, Canyon Bridge, having failed to acquire Lattice, would then make its move on Imagination. Why did UK regulators not take notice of these concerns of the US for their security? Are UK regulators blind to security issues when it comes to China?

In a US 2017 Report to Congress of the US-China Economic Review Commission reported:

“Other Chinese firms attempt to obscure their dealings in the United States via U.S.-based shell companies. One notable example is Canyon Bridge Capital Partners’ failed November 2016 bid to acquire U.S. chipmaker Lattice Semiconductor for $1.3 billion. Canyon Bridge was a newly created private equity firm based in California and funded solely by China Reform Holdings, an investment holding company controlled by China’s State Council with indirect links to the Chinese governments’s space program.

China reform Holdings entered into initial talks with Lattice in April 2016, a few months before Canyon Bridge was created. However, China’s ties to Lattice started as early as 2004, when Lattice paid a $560,000 civil fine for illegally exporting products to China.  in 2012, two Chinese nationals were indicted for violating export controls after trying to smuggle Lattice chips to China. four years later, Chinese state-owned chipmaker Tsinghua Unigroup purchased a 6 percent stake in Lattice – around the same time China Reform Holdings first contacted Lattice about a potential deal – before selling off its shares a few months later, just weeks before the Canyon Bridge deal was announced in November 2016. There Chinese government’s repeated attempts to access Lattice’s technologies raise national security concerns, with the acquisition potentially motivated by political factors (such as furthering industrial policies laid out by the CCP) rather than commercial considerations. Although Lattice does not sell chips to the U.S military, it manufactures a type of military-grade microchip that its two biggest rivals, Xilinx Inc, and Intel Corp’s Altera, sell to the U.S. military, making Lattice’s acquisition a potential national security concern.”

By contrast,  from Canyon Bridge website:

“Canyon Bridge are the ideal partner for Imagination Technologies – strategically minded, astute, and connected to important channels in China to which they have enabled our access. Their support for our investments in R&D, new strategic initiatives, and key partner engagements have been instrumental to our progress.”  RON BLACK, ex CEO, IMAGINATION TECHNOLOGIES

The Culture Secretary, Oliver Dowden sought an urgent meeting with Imagination’s bosses and owners last weekend after concerns over national security were flagged by MPs. Resignations were offered by the board. David Davis and Iain Duncan Smith should be praised for their work and speedy intervention in this matter. They demanded protection of an ‘important British strategic asset.’

In 2018, Arm Holdings, one of Britain’s most successful technology firms went the same way, when Japanese Softbank who only acquired Arm in 2016 with promises to keep the base in Britain, sold off 51% of Arm’s Chinese subsidiary to a group of Chinese led investors. This sale significantly enriched China’s ability to produce tech and chip design in house. At this time, US and China business relations were particularly strained, yet that deal in the UK would make it easier for China to access chip and IP technology.

While the British government are stuck in the quagmire of Covid-19, other forces are at work which, if not dealt with, will undermine all that Brexit was supposed to achieve. Who is looking after the interests of the British people at this vulnerable time? There is no entitlement to freedom, it’s something you have to fight for as previous generations will tell you.

The British public voted for Brexit to, among other things, take control of it’s security and it’s borders.  David Davis and Ian Duncan Smith flagged up Imagination on this possible board takeover, having realised that 600 British jobs could be outsourced to China along with all that expertise and valuable IP.

It is exactly this kind of takeover and outsourcing that Trump has been grappling with for the last 4 years, in an attempt to reverse the disastrous relocation of much of US manufacture and IP to China under previous administrations. Trump’s intention has been to bring industries home, and with them jobs, IP, and to protect national security.

In the UK few government ministers have much experience of management or business, and an education that largely consists of the Oxford Syllabus of PPE, Politics, Philosophy and Economics, so loved by professional politicians as a fast track to Parliament. Covid-19 ensures the centre of British government and the civil service are occupied elsewhere. It has been left to a few vigilant and experienced MPs to be guardians of the state.

While Boris Johnson recovers, the press speculate as to who is really in charge, others are capitalising on Britain’s vulnerability.

In the world of technology and business nothing could be more damaging than uncertainly and a weak hand at the helm. Britain learnt the hard way in the wilderness years, 3.5 of them, between the referendum on Brexit and the implementation of that mandate given to the government by the people. Uncertainty puts jobs at risk, and it puts the growth of an economy already under serious strain into a deep freeze along with it’s citizens.

In the New Year it felt as if the wilderness years were over, and that the UK was ready to capitalise on Brexit opportunities, and gain self-confidence once more.  Covid -19 has put on ice any expansion for months, and when the UK needs to be engaged and engaging with new trade deals, being imaginative and innovative whilst sorting out those Brexit negotiations with Brussels, it seems to be asleep at the wheel. Don’t let the British people be caught in a crash.

The mainstream media have seized control of the narrative in Britain. It is wall to wall Covid, and few are challenging the new powers the police are enjoying and those that are, are vilified for even mentioning the erosion of civil liberties.  Terrifyingly, the government are endorsing a new NHS surveillance tracking app, the government have a fantastic record of inadvertently selling your data.  This appalling erosion of freedoms could go on for months, years or maybe for good. Britain could find itself a surveillance state, even more so than it already is. Just like China. Except the data would be monitored by China because the CCP would have ultimate control of the tech.

None of this should be slipping under the radar, let alone be endorsed by the government or regulators.  British regulators should not be facilitating Chinese dominance of the tech market.

The attempt by Canyon Bridge to take over Lattice was blocked by the US regulator because of the involvement of Chinese investors and CCP links.  That information was in the public domain. Why didn’t our regulators pick up on this, or if they did, why did it not matter to them?

The UK has had over a decade of selling out and selling off it’s assets at bargain basement prices and allowing ill-advised takeovers.  It is shortsighted and immoral.  Don’t let the free trade market fool you into thinking that IP does not matter.

It is easy to forgot there is other news out there. News that will have far more long term effects on our lives and the economies of the world, not to mention the power balance in the sphere of global geo-politics. It is sad that we have to hunt out that news. This virus is a wake up call, it will re-define alliances and supply chains, and it should.

We are now in a position where much of our medicine and medical supplies are manufactured in China. This has had a catastrophic effect. With the lack of access to Personal Protection Equipment (PPE)  in a pandemic, the UK government remain silent on the importance of face mask protection for the general public.  They have to be. They can’t get any face masks. They are mostly supplied by China. The government cannot afford to create a demand because there is no supply. Do you really want that same country that has sold you faulty Covid kits and withheld PPE equipment to produce and own most of your tech?

The UK is part of the Five Eyes (FYEY), but seems not prepared to listen to its other partners, Australia, Canada, US and New Zealand, with regard to Huawei,. These are important trading partners, perhaps the most important. In going up against them the UK risks its own security as well as theirs.

The UK Government needs to decide which block of nations for national security purposes it wants to align itself with. Is it the Five Eyes, all of whom have rejected Huawei on security grounds and with whom the UK have a longstanding commercial and security relationship, or does it wish to align with China and the CCP?  The United Kingdom appears to be ignoring advice and research on purely economic grounds.

With Covid -19 it has been made clear that letting any one country be the sole supplier of goods, technology, manufacturing, and in this case medicines, medical supplies and components, has been catastrophic to life and economically disastrous.

The UK Government seem to have disappeared into a metaphorical bunker.  Wake up Boris, remember who your friends are. China are in acquisition mode and the UK is vulnerable. UK inc is just another commodity and strategically placed too. If you want to shift the balance of world power in favour of China then do so, just be honest with the British people that this is your intention and be prepared for the consequences, I don’t think the British public will be too pleased.

China are in the ascendent. Regulators are selling out the British public when it is their job to protect them from profiteering. Worse, the British tax payer is paying these regulators to protect them.  Regulators, do your job or see the UK turned into a subsidiary of China Corp.

Wall Street and the City of London have facilitated this Chinese business model, and the West’s citizens are paying the price. The UK did not give up its monetary sovereignty, so why give away its assets? It will be a huge fight to wrestle that production, supply and IP back from China, so at the very least stop giving it away.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.

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Sally Snyder
Sally Snyder
April 13, 2020

Here is an article that looks at how two of the world’s largest tech companies are working together to produce software that will allow for contact tracing:

We must remind ourselves about how the authorities have chiselled away much of our privacy in the post-September 11th world, all in the name of “the greater good”.

April 13, 2020

It is the need of hour to stay at home avoid corona virus, but do not sit idol and work online and make full use of this hostage period. I am making $75 per hour on my laptop. Here is link to work no instant expense join for free for more detail …

April 13, 2020

With names like China Reform Holdings this isn’t quite the covert takeover the author makes it out to be. The problem are not the Chinese, the problem is that in today’s corporate environment, companies rely on outside investment and they will take what they can get. There is NO difference if the money comes from France, or Germany, or China, or the US. Outside interests are outside interests. To single out China is turning a blind eye to all other outside interests, especially if such interests are perceived to be so dangerous at a national level. You can’t have it… Read more »

Reply to  Clarity
April 13, 2020

Yes another article on The Duran filled with Sinophobia, good grief give it a rest

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