Seizure breaks law & relations

While clearly shooting itself in the foot with its decision, the Netherlands government also risks violating international law and turning the whole exercise into a farce, experts say.

Sun Nanxiang, an associate researcher at the Institute of International Law, Chinese Academy of Social Sciences, raises the fundamental question of legitimacy.

"Under any pretext, so roughly taking over a foreign company is illegal," Sun said. "This is expropriation of private property, especially of a third-country entity, and clearly breaches basic international-law norms."

He points out a government might normally only seize a private company in such a way during wartime, and that doing so while economic relations are active is unprecedented.

Social-media influencer Lord Bebo asked: "What level of democracy and capitalism is that? A state taking control of a company because it is deemed at risk of mismanagement?"

Jian Junbo, director of the Center for China-Europe Relations at Fudan University, described the case as "historic and without precedent" and warned: "In Europe, both state and enterprise normally respect international rules and operate under strict regulation, but now a legitimate multinational enterprise can be taken over by a national government. That damages Europe's market credibility and will make firms fret they might be next."

Michael Borchmann, a former senior official at the German federal state of Hessen, added: "To justify the nationalization of Nexperia on that basis seems absurd to me — one can only shake their head. A German news magazine suggested that the real background lies in the US-China trade conflict, and that the US exerted pressure on the Netherlands to take this action. I find it deeply concerning that European countries allow themselves to become mere followers of US orders, for in doing so, they harm their own interests."

Van Ufford adds: "Many European companies rely on both the US and Chinese markets and will be asking: what if we too are forced to choose between America and China? Indeed, this case calls for broader assessments, including understanding what the Europe-wide implications are of either losing access to the US market or facing Chinese retaliation."

The Netherlands takeover is not running smoothly. Although a Nexperia news release on Oct 14 said that "as an immediate measure, Zhang Xuezheng has been suspended as a director" while other key posts were reorganized, its Chinese branch announced on Oct 23 that they would retain Chinese-national John Chang as deputy vice-president of sales and marketing, despite the Netherlands headquarters directive.

In its Oct 13 statement, Wingtech claimed that some foreign senior managers at Nexperia had attempted legal action to change the company's ownership structure in direct alignment with Netherlands government orders, essentially alleging a politically-driven shareholder rights assault. A day later, the China Semiconductor Industry Association issued a statement backing its member companies in defending their legal rights, maintaining a fair, non-discriminatory business environment, and stabilizing global supply-chains.

In a separate phone call on Oct 21 between China's Commerce Minister Wang Wentao and Netherlands Minister of Economic Affairs Vincent Karremans, Wang told Karremans the Dutch measures against Nexperia had seriously affected global industrial and supply-chain stability, while Karremans said the Netherlands valued its economic and trade relations with China and stood ready to communicate closely in search of a constructive solution.

"The new Dutch coalition government that comes in after the general election on Oct 29 should think in a clear-eyed way about the implications of such a European industrial policy," van Ufford wrote. "The new government program should reflect the view — increasingly gaining traction in the Netherlands — that economic and job security are not for free but come at a European budgetary price."

In a written statement sent to China Daily on Tuesday, Nexperia wrote: it "remains committed to our Chinese activities and we stand by our employees and customers in China. We will continue to actively engage with all relevant parties and government authorities and we will strive to find a solution that resolves any disruption to our operations, people, customers and partners."

Contact the writer at zhangzhouxiang@chinadaily.com.cn