(Huang Lanlan’s post from The GLOBAL TIMES on 28 September 2020.)
Lessons from Toshiba, Alstom: how US suppresses
foreign rival companies to maintain tech hegemony. The continual suppression by
the US of Chinese tech companies including Huawei and TikTok has been a farce
the world has watched ever since Washington started regarding these fast
growing and expanding Chinese tech giants as threats to its domestic counterparts.
People in the know are no longer surprised by the
aggressive treatment of foreign tech companies by the US. In past decades,
companies around the world such as Japan's Toshiba and France's Alstom were
targeted, sanctioned and seriously hurt by the US government that used excuses
like security, anti-dumping and anti-bribery.
There is no essential difference between the suppression of Huawei or TikTok today and Washington's past crackdowns on Toshiba or Alstom, said Zhang Monan, a chief research fellow of US studies with the China Center for International Economic Exchanges. "Washington continues its technological hegemony, placing its laws and administrative instructions above market order," Zhang told the Global Times.
Chinese tech industry and firms can learn lessons
from Toshiba's and Alstom's experiences, Song Guoyou, a deputy director of the
Center for American Studies at Fudan University, told the Global Times.
"It taught our Chinese companies to reduce dependence on US technology and
its market, and to avoid being tied down by a US-led tech war," Song said.
Toshiba: 'national security threat'
Japan's semiconductor industry was in full bloom in
the 1980s with government support before it was ground down by the US. It had
surpassed the US as the world's largest chip supplier, and its market share of
DRAM (dynamic random access memory) products reached some 80 percent in 1987,
according to a Los Angeles Times article in August 1992. Toshiba, Japan's
leading chip producer at that time, was then targeted by the US over
"national security concerns."
After Toshiba and Norwegian military enterprise
Kongsberg Våpenfabrikk, were found in 1986 to be secretly selling sophisticated
milling machines to the Soviet Union, Washington issued a 2 to 5 year ban on
all Toshiba Corporation products , saying the sale to the Soviet Union had
posed a threat to US national security, and Toshiba had violated a Coordinating
Committee for Multilateral Export Controls (CoCom) agreement, which prohibited
members from exporting advanced weapons or machines to the Soviet Union.
Toshiba was reportedly severely hit by the scandal.
Two of its managers were sent to jail and several senior executives resigned.
The company spent some 100 million yen ($0.95 million) on advertising in almost
all major US newspapers apologizing for its actions. The scandal ended up
hurting its reputation and prestige it had established globally. Its many
technical documents were also allegedly seized during a CIA investigation.
(David Knee (C), chairman of the American Conservative Union, and his supporters destroy a Toshiba radio with sledgehammers on July 1, 1987 on the Capitol Hill lawn in Washington, DC. The US Senate voted on June 30 to ban Toshiba from selling products in the US.)
While it tormented Toshiba, Washington seemed to
turn a blind eye to similar "wrongdoings" by its European peers. A
Norwegian Police Service report revealed in 1987 that companies in several
other member countries of CoCom, including France, Italy and West Germany had
also sold the Soviets sophisticated milling machines, reported Los Angeles
Times in October 1987. Few of these firms were specifically sanctioned by the
US.
Obviously, Washington's selective targeting of
Toshiba was not just motivated by so-called national security concerns. Toshiba
was seen as a threat to the development of US tech firms. "The US actually
reached its goal of protecting domestic [chip] industry by suppressing its
biggest rival with some high-sounding excuses," Song said.
oshiba's chip business continued to slide and the
former global chip giant eventually sold its chip unit to US' Bain Capital at
$18 billion in 2018, completely withdrawing from the chipmaking industry.
Alstom: the 'bribery case'
When a copy of The American Trap was spotted on the
desk of Huawei founder Ren Zhengfei during a video interview in 2019, the book
about the US takeover of French power company Alstom caught the attention of
Chinese netizens.
Hailed as "a French industrial jewel,"
Alstom had been a global leader in various power and transportation fields. It
had built power generation stations and transmission lines and railways.
Washington began targeting Alstom as it became a
formidable competitor of US giant General Electric (GE) in many countries and
regions in the early 2010s. In 2013, Frédéric Pierucci, Alstom's executive and
co-author of The American Trap, was arrested by police at a New York airport
for "authorizing bribes to Indonesian officials" to secure a
contract.
Pierucci wrote in his book that his lawyer had been
offered a plea bargain: admit his guilt and be free within months or "risk
up to 125 years in jail," the BBC reported in April 2019.
everal other of Alstom's top managers were
arrested in the US on bribery charges. The company was fined unprecedented $772
million in the bribery case by US judges. In 2014, GE reached an agreement with
Alstom to purchase Alstom's power and grid businesses, dismembering the global
industrial giant.
The Alstom case shows the long-arm jurisdictional
reach of the US, which empowers the country to take legal action against
foreign companies that have business or employees in the US, said Cui Hongjian,
director of the Department of European Studies at the China Institute of
International Studies.
Some people are comparing the US case against
Pierucci and the US using its extradition treaty with Canada to have Huawei CFO
Meng Wanzhou arrested in Vancouver in 2018. They say the US is using the same
tactics as the Alstom case to impose a crackdown on Huawei. Neither the US nor
Canada has offered clear evidence to support the US allegations against Meng.
"If Washington's suppression of Alstom had a
legal basis, what it has done in the Huawei case has jumped its legal
framework," Cui told the Global Times, saying the US has been containing
the rise of its technological rivals through naked political means.
"'China is an enemy, so you can't use its products.' This is the absurd
logic that the Trump administration is using to persuade US allies to boycott
Huawei and other Chinese firms," Cui said.
Lessons for China
Over the past decade, the US' legal and regulatory
authorities "have subjected scores of large foreign companies to
extraterritorial actions," said The Economist in a January 2019 article.
The plight of these firms including Toshiba and Alstom have made many
entrepreneurs, especially Chinese, anxious. They fear the US' big stick may
fall on their heads during the ongoing trade and tech wars between the two
countries.
The US holds a double standard in protecting its business interests, Zhang told the Global Times. "While it keeps screaming about free market and fair competition rules, it resorts to authoritarianism when foreign firms threaten to take the lead from US companies. The government is interfering in the normal business operations and elbowing aside foreign competitors using various means," said Zhang.
(shareholders meeting of Toshiba in Chiba,
suburb of Tokyo, on October 24, 2017.)
his long-arm jurisdiction contravenes the law of
the market economy, which emphasizes technological development through healthy
competition between enterprises, said Shen Yi, a professor at the School of
International Relations and Public Affairs of Fudan University.
"The 'helps' that the US offers domestic
companies by cracking down their foreign rivals will gradually wear down their
will to develop core technologies, making US enterprises less competitive on
the global market," Shen told the Global Times.
Facing US' intensified suppression of China's tech
rise, China must guarantee the security of its industrial supply chain by
working hard to solve the bottlenecks in core technologies, while maintaining
its existing international cooperation in today's globalized economy,
economists and scholars in international relations noted.
For Chinese companies that have explored, or are
planning to explore overseas markets, Cui suggests they fully understand and
comply with related international and local laws and rules. "When the
Trump administration attempts to attack a Chinese firm by riding roughshod over
laws and business rules, it can fight back in the courts to contain the
attacks, or at least win sympathy from the international community," Cui
said.
End of an era for electronics giant Toshiba
(Staff post from the BBC UK on 20 December 2023.)
Toshiba was one of Japan's most successful brands: There
was a time when more than one of your TVs, computers, speaker systems or other
essential electronic goods would have been made by Toshiba.
Once a poster boy for Japan's dominance in
electronics - known as Japan Inc - the company has delisted, ending a 74-year
history with Tokyo's stock exchange. So why did one of Japan's most famous
industrial names have such a spectacular fall from grace?
It all started in 2015 when accounting malpractices
across multiple divisions came to light, with many of them involving top
management.For seven years, Toshiba had overstated its profit by $1.59bn
(£1.25bn).
In 2020, Toshiba found further accounting
irregularities. There were also allegations related to corporate governance and
the way in which shareholder decisions were made. An investigation in 2021
found that Toshiba had colluded with Japan's trade ministry - which saw Toshiba
as a strategic asset - to suppress the interests of foreign investors.
At the time, experts said this made foreign
investors uncertain about investing in Japanese stocks, making it not just a
Toshiba problem, but an issue for Japan's entire stock market.
In late 2016, Toshiba said it would take charge of
several billion dollars related to the construction of a nuclear power plant
that US unit Westinghouse Electric had bought a year earlier. Three months
later, Westinghouse filed for bankruptcy leaving Toshiba facing a collapse of
its nuclear business and more than $6bn in liabilities.
It sold off a slew of businesses including mobile
phones, medical systems and white goods. Then it was forced to put its chip
unit Toshiba Memory up for sale - a deal that was delayed for several months
over a dispute with one of its partners.
Toshiba set to end 74-year stock market history
At a time when companies were investing heavily in
the future of technology and innovation, Toshiba was having to sell off a
prized asset to raise cash. Toshiba managed to secure a $5.4bn cash injection
at the end of 2017 from overseas investors, helping it to avoid a forced
delisting.
But that meant activist shareholders had more say
in the direction of the company. That lead to protracted battles that paralysed
the maker of batteries, chips and nuclear and defence equipment. After a great
deal of back and forth over whether the company should split up into smaller
companies, Toshiba set up a committee to explore whether it could be taken
private.
In June 2022, Toshiba received eight buyout
proposals. Earlier this year, the company confirmed it would be taken over by a
group of Japanese investors led by state-backed Japan Investment Corp (JIC) for
$14bn. It's not clear how the new owners plan to turn around Toshiba but its
outgoing chairman has said high-margin digital services will be a focus.
IP does have a track record in carving out
businesses from big manufacturers including Sony's laptop division and
Olympus's camera unit. After acquiring Sony's Vaio laptop business in 2014, it
helped the company achieve record sales this last year. But Toshiba is a much
bigger company and the stakes are high: Toshiba employs around 106,000 people
and some of its operations are seen as critical to national security.
