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Chinese Tech Investors Flee Silicon Valley as Trump Tightens Scrutiny (reuters.com)
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.
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).
"That's the way to do it" - Punch
making stuff in red china with poor IP laws is bad as well.
Kick out these fucking spies.
Good. I'm no fan of Trump, but the sooner Chinese hot money is pulled out of the markets, the better. It just drives up prices and causes inflation.
Maybe. But shouldn't a business be able to make that decision for itself?
No -- there should be tariffs on Chinese goods and services to account for their poor environmental and human rights practices. After all, pollution doesn't respect borders.
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.
My Other Computer Is A Data General Nova III.
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.
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.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
By making the goods too expensive to buy and shifting economics in favor of either local manufacture or repair/reuse.
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
Patent trolls and the East Texas court aren't good for business either. Neither are 70+ year copyright terms.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
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 anywhere side stepping the restrictions China has on it's citizens moving wealth out of the country though the banking system.
About the only investment opportunities the Chinese have on the mainland is in real estate, creating one of the most insane real estate bubbles ever seen, that whole house of cards is on its way to crumbling down. If you thought what happened in the US real estate market in 2008 was bad, just wait till what has been brewing in China pops.
https://www.scmp.com/economy/china-economy/article/2167731/desperate-chinese-middle-class-take-big-risks-move-money-and-themselves
orange man bad
Right remind me again why Facebook, Google, and Twitter got hauled into Congress to explain Russia hacking or Cambridge Analytica's access to data?
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.
Hey, it worked for President Obama when he illegally bailed out GM and his college buddy was running the 2nd biggest recipient of the benefits (an investment firm that somehow was the only one to bet that GM would fold and that bond-holders and those with secured loans would lose). Of course, the biggest recipient got most of what they wanted, but when you give $13MM+ to the President's re-election campaign, you get a LOT of favors back...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
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 of adventure in the Middle East, the percentage of people (esp minorities) the US has behind bars which is higher than China, and the list goes on. If you want to delve into our not distant past there is plenty to choose from there too. Hell, it was in living memory for some of us when black people were subject to Jim Crow laws. The US might be better in some ways than China but our hands are FAR from clean on civil rights.
After all, pollution doesn't respect borders.
That's true so the US should stop doing it.
China is facing an economic meltdown of their own making. The only market that's been "hot" in China has been the real-estate market. But the Chinese are waking up to the realization that it's not ownership, just a 75 year lease. And with the inversion in population growth coming, the number of houses on the market will vastly outstrip the demand. They'll end up with more houses than people - and the value of homes will plummet. Taking with it a significant portion of the Chinese wealth.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
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.
It little behooves the best of us to comment on the rest of us.
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.
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.
Your ad here. Ask me how!
Bond holders got shafted in the deal. As did secured creditors. But Obama's investment bank pals and the leaders of the UAW got sweetheart deals...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The less exposure American companies have to the Chinese business culture of speech controls and pro-China mercantilism the better. It'll hurt the bottom line a little now, but it won't be Pearl Harbor twenty years down the line. Now about those 25% tariffs on consumer goods...
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??
Your ad here. Ask me how!
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.
Care killed the cat, but satisfaction brought it back.
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).
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
In the US, you have quite a bit of regulatory capture, which is a whole other ball of wax.
My Other Computer Is A Data General Nova III.
Orange Fan Mad
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."
Your ad here. Ask me how!
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 India in both absolute and per-capita numbers despite have a far smaller population.
Per capita is useful for some things and to get an idea of a broad idea but using it as the end all be all comparison is not accurate in the slightest. It doesn't tell you what is polluting more.
That's true but what it does tell you is how heavy the footprint is relative to the expectations given the number of people. You should expect a country with a larger population to have a larger absolute pollution footprint, all other things being equal. Per-capita numbers tell you when a country is allowing some (or all) of their population to pollute more than is reasonable given the size of the population.
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 stock price appreciation. However, eventually that company will face increased competition from that Chinese company and see decreased revenue in the long-term.
Unfortunately, the compensation structure of almost all US companies incentivizes short-term performance over long-term performance. Because the health of US companies greatly influences societal and national interests in the US, the US government steps in to prevent actions these short-sighted actions. Perhaps what the US government should do instead is to mandate that corporate executive compensation be geared towards compensation based on long-term performance. If executive bonus weren't paid until ten years in the future, short-term cannibalistic decisions to share IP with Chinese companies, to off-shore work to India, to replace US workers with cheaper foreign workers, etc. might be rethought.
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-capita historical output.
The end result is clear: whatever makes the US the big-bad will be treated as the new doubleplusgood truth. Watch sjbe stay at +5 and I stay at 0 or -1. Damn the facts. Damn reality.
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.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
BlueMountain made the counter-bet that bond holders would lose when GM went into bankruptcy. And that was backwards from normal bankruptcy actions. And Andrew Feldstein, who founded BlueMountain, was a college buddy of President Obama, and both Feldstein and BlueMountain were significant donors to the Democrats and President Obama. Not as significant as the $13+MM of the UAW, but still pretty big...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Dec. 19, 2008. The Bush Administration announces plans to bail out Detroit's auto industry, notably General Motors and Chrysler Group. (USA Today)
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 money and the poor just try to survive. Please keep looking for the new place where it can keep up the "western" standards as you claim.
heard NPR at last report on all the Chinese gov't spying going on (although they did not mention that there have been OVER 4 billion hacks into public and private sectors in North America since 2010 (I stopped counting awhile back when it reached over 4 billion). Sadly, when NPR FINALLY reports something, you know it's gotten too late . . .
At the request of President elect Obama. Somehow you neglected to say that...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
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...