Government making plans to shield UK tech base, says Johnson
Image credit: UK Parliament/Jessica Taylor/Handout via REUTERS
The Prime Minister Boris Johnson has referred to measures to protect the UK’s technology companies from Chinese buyouts during the coronavirus pandemic.
Johnson made his comments during Prime Minister’s Questions in response to Tory MP Richard Plunkett-Ernle-Erle-Drax, who used his question to express concern about Chinese companies snapping up struggling British companies amid the coronavirus pandemic.
“The defence select committee heard recently that France is conducting a root and branch review of its defence supply chain, following concerns that China is buying up defence-related companies that are going bust during this pandemic,” he said. “Does [Johnson] think it might be wise to consider doing the same thing here, in addition to rowing back from his plans to allow Huawei to roll out 5G?”
Shenzhen-based Huawei has been permitted a limited role in providing equipment for the non-core parts of the UK’s 5G infrastructure, a decision which has provoked anger and rebellion among backbench Tory MPs.
Johnson confirmed that the government will bring forward measures to protect UK technology companies and that MPs would hear more about these plans in the coming weeks.
“He’s absolutely right to be concerned about investment, to be concerned about the buying up of UK technology now by countries that […] may have ulterior motives and we are certainly bringing forward measures to ensure that we protect our technological base,” Johnson said. “He’ll be hearing a lot more about that in the next few weeks.”
The Prime Minister’s spokesperson clarified that Johnson was referring to legislation included in the Queen’s speech; namely, the National Security and Investment Bill. This legislation could address acquisition of businesses and other valuable assets (such as intellectual property) and put in place new mechanisms to block transactions with serious national security implications.
The government recently intervened over an attempt to seize control of Hertfordshire-based Imagination Technologies by Beijing-based private equity firm Canyon Bridge (primarily backed by state-owned China Reform Holdings). Former Imagination CEO Sir Hossein Yossaie had warned the government that China Reform Holdings was using the fog of the coronavirus crisis to seize control of the company. After the alleged coup failed, MPs summoned Imagination executives to explain its investor’s behaviour.
Manfred Weber, who leads the influential European People’s Party in the European Parliament, has called for a ban on Chinese investors buying struggling European companies in the near future, stating: “We have to see that Chinese companies, partly with the support of state funds, are increasingly trying to buy up European companies that are cheap to acquire or that got into economic difficulties due to the coronavirus crisis. We have to protect ourselves.”
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.