Chinese state media and pundits have called the Dutch government a “pirate” 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.
On September 29, the United States Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim rule 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.
On September 30, having 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 the Goods Availability Act to take over Nexperia, citing its “serious governance shortcomings.”
“The decision aims to prevent a situation in which the goods produced by Nexperia would become unavailable in the event of an emergency,” said the Minister. “The company’s regular production process can continue.”
Nexperia stated 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.
It also said that it and its subcontractors have been banned by the Chinese Ministry of Commerce from exporting specific finished components and sub-assemblies manufactured in China.
“This series of actions attempts to seize the capital and technological achievements that Chinese companies have built up over many years,” the Global Times, a state-owned media outlet in China, said in its editorial. “Many have described such actions as ’21st-century piracy.’”
“The Dutch government’s actions against Nexperia are extremely egregious, going far beyond normal commercial regulation and carrying blatant political coercion and discriminatory overtones,” it said.
The editorial noted that some people have recalled memories of dark chapters in the Netherlands’ history and wryly observed that a few Western countries now treat “national security” as a privateering license, a reflection of “colonial genes” awakening in the 21st century.
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 “coach driver of the sea.” However, its maritime supremacy was surpassed by Britain after the latter went through the Industrial Revolution in the late 18th Century.
“The Netherlands still sees itself as the ‘coach driver of the sea’, but it is behaving more like a pirate in the modern economy,” Shen Yi, a professor of international politics at Fudan University, told ThePaper.cn in an interview. “By forming a coalition of semiconductor allies in Europe, the Netherlands had effectively turned itself from a single pirate to a fleet of pirates.”
He warned that once China launches retaliatory measures, the Netherlands will find itself becoming a chicken for slaughter. The Netherlands is the second-largest poultry exporter in the European Union, after Poland.
“The Dutch action was clearly coordinated with Washington’s tightening of export controls,” a Guangdong-based columnist writes in an article. “China still holds several strong cards, such as its dominance in rare earth production and its large market share in sectors like new energy and industrial machinery. If China retaliates, Dutch companies won’t withstand the pressure.”
Rising scrutiny
Since being acquired by Wingtech Technology for US$3.6 billion in 2018, Nexperia has come under growing attention from European authorities.
In 2022, the UK government compelled Nexperia to sell its Newport wafer plant, citing national security risks. The following year, German regulators barred the company from accessing public funding for battery-efficiency research.
“To 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,” Wingtech’s Chief Financial Officer Zhang Yanru said after the company’s shareholder meeting on October 15.
“The 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,” she said, adding that Wingtech rejected this suggestion.
She said Dutch authorities also urged Wingtech to sell part of its equity in Nexperia to European investors and explore an eventual public listing within the European Union, citing “security” and “transparency” considerations.
She said Wingtech 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’ interests.
Nexperia said 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.
According to the Dutch court filings released on October 14, US officials had informed 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.
On October 16, Chinese Commerce Ministry spokesperson He Yongqian stated that the Dutch court filings indicated that the United States’ “penetrating rules” 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.
Read: China tightens rules to block Pakistan rare earths exports to US
Follow Jeff Pao on Twitter at @jeffpao3
