Japan to limit foreign investment in its technology companies as fears over Chinese ownership escalate
HTLibrary | May 29, 2019 | Comments 0
Japan has said it will restrict foreign ownership of its technology and telecoms businesses in a move widely seen as an attempt to block China from gaining access to its trade secrets.
The country will introduce new rules from August 1 which require foreign investors to report themselves to the Japanese government if they plan to purchase more than 10pc of the shares of Japanese technology and telecom firms.
The investors would then undergo inspection by the government, and could be forced to change or drop their investment plans if they are deemed to be a national security concern.
The Japanese government has identified 15 new restricted sectors, including mobile phone and computer manufacturing. It has also strengthened restrictions on five existing protected sectors, which includes telecoms businesses.
A spokesman for the government said that “based on increasing importance of ensuring cyber security in recent years, we decided to take necessary steps, including the addition of integrated circuit manufacturing, from the standpoint of preventing as appropriate a situation that will severely affect Japan’s national security.”
The decision by Japan comes after the US government imposed increased trade restrictions on Chinese technology business Huawei, blocking the company from buying goods and services from key American suppliers including chipmakers and Google.
The US has expressed concern that Huawei’s close relationship with the Chinese government could be exploited to force the company to use its devices to conduct espionage. Huawei has consistently denied this suggestion.
Last year, the Japanese government barred the use of computers and smartphones produced by Huawei and ZTE, another Chinese business, in its government.
US President Donald Trump held trade talks with Japanese Prime Minister Shinzo Abe in Tokyo on Monday, and said that he expects to make announcements about trade between the two countries in August.
“We’ll get the balance of trade, I think, straightened out rapidly,” Mr Trump said.
Japan has sought to charm Trump to avoid costly tariffs and retain positive relations with an ally that ensures its security against neighboring China and North Korea. At the same time, Trump is looking to reach a deal with Japan quickly as he escalates his trade war with China.
Filed Under: Technology
