Dan Warnick

China wields coronavirus to nationalize American-owned carmaker

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(edited)

I have written rather extensively about how China forces IP transfer, or outright steals it, from its foreign "partners".  In this case, a government of China forced an illegal takeover of the entire company, 2/3 of which was setup as foreign ownership (which should have been seen as the 1st trap since 49% foreign ownership is the "norm"). 

A second point that this case illustrates is that the foreign partners are not some unsophisticated rubes.  One is the legendary car and engine designer STEVE SALEEN and the other is his company's Chairman and CEO and an international lawyer, Charles Wang

This story seems surreal or even impossible, and Steve admits as much at the end of this article, but it is actually more common than you could ever imagine.  Moves such as those highlighted in this case are beyond most people's or company's wildest nightmares.  Normally if such a scenario were posed to the foreign partners as a risk would be met with a response of "No way!  THAT could never happen, China wouldn't allow it."  But they did allow it to happen and Steve and Charles may find their investment of time, money and name are lost forever.  Now the foreign partners face a legal battle which, even if they can "win" in some international court, will most likely only serve to bankrupt the foreign partners under the burden of an international legal battle against a Chinese government entity or, even more likely, will be dropped as a lost cause before it ever gets started, which is what Steve also alludes to at the end of this article.

Buyer beware (or in this case "partner beware").

China wields coronavirus to nationalize American-owned carmaker

China enticed an American entrepreneur with the opportunity of helping build a cutting-edge automobile company in the world’s largest car market, then used the uncertainty cast by COVID-19 to steal his intellectual property, the businessman says.

Steve Saleen, founder of specialty high-performance sports car manufacturer Saleen Automotive, and his partner Charles Wang, a Chinese immigrant and former attorney at a New York law firm, were approached in late 2015 about forming a joint venture with the city of Rugao to manufacture automobiles.

The deal “offered, I thought, from my standpoint, a great opportunity to help build a global company,” Saleen told FOX Business.

The agreement that was reached called for Saleen to contribute his brand and trademarks, designs for three engineered vehicles and experience, know-how and technology in manufacturing automobiles, he said. Those contributions were valued at $800 million.

Wang, who helped structure the deal, would serve as the company’s chief executive officer.

For their efforts, Saleen, Wang and their partners would receive two-thirds ownership of the newly formed company called Jiangsu Saleen Automotive Technologies.

The city of Rugao’s government, which owned the remaining third, was responsible for providing $500 million of capital and $600 million in subsidized loans over three years to fund the operations and build a manufacturing facility. Rugao, located on China’s Eastern seaboard in Jiangsu province, is about 125 miles north of Shanghai.

“It sounded like a great deal to us, so we went along with them,” Wang said, adding that his experience enabled him to set up the company’s corporate governance and articles of incorporation in accordance with Chinese law.

By early 2020, everything was going according to plan. The initial product, an SUV, was in certification and the employee headcount had swelled from three to nearly 1,000. The factory, armed with 470 state-of-the-art robots, was ready for production.

Then the COVID-19 pandemic struck.

With both Saleen and Wang stuck in the U.S. as flights to China were grounded, the Rugao government seized on an opportunity to “nationalize the company,” according to Saleen.

On June 29, the city sent six police cars with sirens blaring and vans full of private security forces to raid Jiangsu Saleen’s manufacturing facility and offices.

The forces ordered employees to leave and shut off the water and electricity when some refused to do so. Executives, who were Chinese nationals were forced to resign or face consequences from Rugao's government, Saleen told FOX Business. The remaining employees were terminated.

Two employees, Frank Sterzer, a German national who was vice president of manufacturing, and Grace Yin Xu, a Chinese national in charge of corporate affairs, were detained.

While Sterzer was released after six hours when he contacted the German Embassy with a cellphone that wasn’t confiscated, Yin Xu was held for a month after she refused to corroborate the local government’s claims that Wang tried to embezzle money.

Rugao authorities also claimed Saleen’s technology was worthless and false information was given to secure a higher valuation, he told FOX Business.

Without Saleen’s knowledge, officials had previously filed 510 patents for the intellectual properties he developed – 120 of which were already awarded, including his signature supercharger. Many of the filings didn’t even list Saleen as the inventor.

The shareholder who represented the city’s one-third stake held an illegal board meeting and removed Saleen and Wang as directors of the firm, leaving the foreign shareholders without representation, he said. Under Chinese corporate law, a board meeting cannot be held without a quorum of 51 percent of shareholders.

The Rugao government didn’t comment when reached by FOX Business. Efforts to obtain comment from China’s Ministry of Foreign Affairs, located in Beijing, were unsuccessful, and a spokesperson from the U.S. Commerce Department didn't respond to a request from FOX Business.

While chances are slim for a resolution on the mainland, Saleen and Wang have an avenue for arbitration in Hong Kong. Their attorney in the special administrative region said there is a good chance they will win the case, but whether it will be enforceable is “a huge question mark,” according to Wang.

The irony is that as Saleen's company was being taken over, the U.S. and China were putting the finishing touches on a phase one trade deal for which President Trump had been pushing since taking office.

The initial agreement included promises from Beijing to halt intellectual property theft, and a second phase -- now in limbo as tensions between the two countries mount -- was supposed to hone in on those commitments.

Should it come about despite Trump's criticism of China's handling of COVID-19, a highly contagious disease first observed in the country late last year, and its crackdown on civil liberties in Hong Kong, Saleen has some ideas of what it should include.

He says Chinese firms that infringe on intellectual property should be blocked from U.S. capital markets, asset valuations by Chinese companies that operate in the U.S. should be prohibited and that entities and individuals should be held accountable for any intellectual property infringement with both civil and criminal liability.

He also believes Chinese cars should be blocked from the U.S. market unless they are part of a joint venture with an American company.

Saleen, who worries it is “too late” for him and his partners, thinks his experience serves as a warning for anyone who is thinking about doing business in China.

“If it can happen to me, it can literally happen to anyone,” Saleen said. "If this wasn't happening in real-time, you would think that it was actually a Hollywood movie."

Edited by Dan Warnick
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(edited)

9 minutes ago, Dan Warnick said:

I have written rather extensively about how China forces IP transfer, or outright steals it, from its foreign "partners".  In this case, a government of China forced an illegal takeover of the entire company, 70% of which was setup as foreign ownership (which should have been seen as the 1st trap since 49% foreign ownership is the "norm").

Why did you put "American-owned" in the title when it clearly was not.

 

Also no IP theft, the developer sold his rights.

"The agreement that was reached called for Saleen to contribute his brand and trademarks."

 

No crime here, just a stupid man who sold out.

"Never attribute to malice that which is adequately explained by stupidity"

Edited by Enthalpic
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China has now dropped all pretense of being a reasonable global ‘good neighbor’. It is almost as if they are doing everything that they can to isolate themselves again.

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3 minutes ago, Enthalpic said:

Why did you put "American-owned" in the title when it clearly was not.

 

Also no IP theft, the developer sold his rights.

"The agreement that was reached called for Saleen to contribute his brand and trademarks."

 

No crime here, just a stupid man who sold out.

"Never attribute to malice that which is adequately explained by stupidity"

Right....let’s see how the global business community sees this takeover and how it affects future investment in China.

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1 minute ago, Douglas Buckland said:

Right....let’s see how the global business community sees this takeover and how it affects future investment in China.

Do you think the US never does such activities?  Haha.

 

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(edited)

40 minutes ago, Douglas Buckland said:

China has now dropped all pretense of being a reasonable global ‘good neighbor’. It is almost as if they are doing everything that they can to isolate themselves again.

They never have been anything more than a questionable society...and that is being kind beyond human understanding....Actually below is another one Obama's world agenda Nobels Peace prizes...

https://qz.com/594984/the-secret-history-of-gms-chinese-bailout/

https://www.cnbc.com/2019/02/28/1-in-5-companies-say-china-stole-their-ip-within-the-last-year-cnbc.html

Edited by Eyes Wide Open
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35 minutes ago, Enthalpic said:

 

"The agreement that was reached called for Saleen to contribute his brand and trademarks."

 

Brand and trademarks are different than patents and irrelevant to the theft.  I believe you are aware of this and surprised  you would try to argue such an obviously spurious position.  We are talking counterfeit goods versus theft of intellectual property.

 

waltz 

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20 minutes ago, Enthalpic said:

Do you think the US never does such activities?  Haha.

 

WHAT is wrong with you?

Are you suffering so much from insecurity issues, you feel a need to opine on every topic on this board?  Or is it simply "penis envy"? 

This board evidently fills a huge and vast void in your life.  Constant and never ending posts, not worth the bandwidth you leach.  Obviously you are a native Canadian.  Always exuding a massive jealousy for anything remotely American.  Your constant and never ending obsession with the POTUS, has now eroded to a constant obsession with anything American.  Guess what?  Donald Trump will win re-election.  The United States will continue to be the benchmark, and you and your countrymen will continue to feel in twenty eighth or eighty eighth place.  Get over both your Massive TDS and your jealous feelings towards the Greatest Country in the world.  Immigration for you is not an option.

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(edited)

8 minutes ago, waltz said:

Brand and trademarks are different than patents and irrelevant to the theft.

[]

We are talking counterfeit goods versus theft of intellectual property.

 

 

You may be right about that. 

I do know that if you develop something as an employee of a company it is not yours to take away even, if it was your idea and work.

Edited by Enthalpic

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(edited)

9 minutes ago, Richard Snyder said:

WHAT is wrong with you?

Are you suffering so much from insecurity issues, you feel a need to opine on every topic on this board?  Or is it simply "penis envy"? 

This board evidently fills a huge and vast void in your life.  Constant and never ending posts, not worth the bandwidth you leach.  Obviously you are a native Canadian.  Always exuding a massive jealousy for anything remotely American.  Your constant and never ending obsession with the POTUS, has now eroded to a constant obsession with anything American.  Guess what?  Donald Trump will win re-election.  The United States will continue to be the benchmark, and you and your countrymen will continue to feel in twenty eighth or eighty eighth place.  Get over both your Massive TDS and your jealous feelings towards the Greatest Country in the world.  Immigration for you is not an option.

I was in the mountains (Jasper) the last 2 nights with my lady and never visited or posted... zero jealousy of your mess.

You guys are just wrong about so much stuff I have lots to correct.  I post quickly and authoritatively.

Good luck with your election.... feel free to quit the board now, or after the embarrassing loss.

Edited by Enthalpic
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5 minutes ago, Richard Snyder said:

Immigration for you is not an option.

I would never move there; but if I wanted to it would be easy, chemists are basically considered a valuable "free-trade" commodity.

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1 hour ago, Enthalpic said:

You may be right about that. 

I do know that if you develop something as an employee of a company it is not yours to take away even, if it was your idea and work.

Only if you signed away that right upon accepting employment AND if the company actually paid for the R&D.

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1 hour ago, Enthalpic said:

I would never move there; but if I wanted to it would be easy, chemists are basically considered a valuable "free-trade" commodity.

Generic chemists are a dime a dozen!

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1 hour ago, Enthalpic said:

I was in the mountains (Jasper) the last 2 nights with my lady and never visited or posted... zero jealousy of your mess.

You guys are just wrong about so much stuff I have lots to correct.  I post quickly and authoritatively.

Good luck with your election.... feel free to quit the board now, or after the embarrassing loss.

....you mean like the identically media hyped loss last time?

Get ready for ‘Trump, the Sequel!’ 😂

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31 minutes ago, Douglas Buckland said:

....you mean like the identically media hyped loss last time?

Get ready for ‘Trump, the Sequel!’ 😂

 

2 hours ago, Enthalpic said:

I was in the mountains (Jasper) the last 2 nights with my lady and never visited or posted... zero jealousy of your mess.

You guys are just wrong about so much stuff I have lots to correct.  I post quickly and authoritatively.

Good luck with your election.... feel free to quit the board now, or after the embarrassing loss.

I envy your trip to Jasper. I hope it has been great. Covid fear prevented my planned trip. Hopefully we will make it next year.

Sorry you have T.D.S. but I suffered through eight years of Obama and company and four years of his Deep State leftovers. 

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3 minutes ago, ronwagn said:

 

I envy your trip to Jasper. I hope it has been great. Covid fear prevented my planned trip. Hopefully we will make it next year.

This weekends trip wasn't great; a big thunderstorm with painful hail hit us on our bicycle ride and the hotel hot tub was not open due to covid.  The tub would have felt so good after the cold, hard bike ride. Of course, an hour later it was sunny and warm, so we just had hot showers and hit a bar patio.

A "bad" weekend in the mountains is better than one at home.

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(edited)

You must be in great shape bicycling in the mountains! I do love to hike in them or would use an electric bike. I was always a slow hiker but have done one fourteener (14,000 ft mountain). Also some shorter ones. The altitude is now getting to be a problem. 

 

Edited by ronwagn
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4 hours ago, Enthalpic said:

Do you think the US never does such activities?  Haha.

 

No, I do not. If you have examples of such activity, please list them.

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It's not that long ago when European powers wielded smallpox to conveniently depopulate the New World from the original inhabitants. 

Back then, of course, "philosophers" like Juan Ginés de Sepulvéda argued that the natural inability of the indigenous people to ward off these insidious attacks and their inability to defend their territory against the technologically superior arms imported from the Europe made them the "slaves of nature", destined to be ruled by their betters, and that the colonization was therefore the best what could happen to them (being untermenschen and all). 

400+ years before the Angry Moustache Man, yet disturbingly similar conclusion and "justification of convenience of the method". Perhaps there are no new concepts, or perhaps those are just old concepts forgotten long enough. But when a weapon turns against its former wielder, Indians call it "karma". 

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41 minutes ago, Douglas Buckland said:

No, I do not. If you have examples of such activity, please list them.

Cadbury?

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(edited)

2 hours ago, ronwagn said:

You must be in great shape bicycling in the mountains!

I once was a very fast cyclist, I raced and won a few things.  Now I'm 10 years older and 25 pounds heavier.

My lovely partner is 12 years younger, and still races, so I ride with her yelling at her to slow down on every steep uphill part.

Then I stop frequently on the downhills to wait for her to catch up; because experience and weight makes you go down hills much faster.

I do want to try steroids... I don't do registered racing anymore...

Edited by Enthalpic
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5 hours ago, Enthalpic said:

Why did you put "American-owned" in the title when it clearly was not.

 

Also no IP theft, the developer sold his rights.

"The agreement that was reached called for Saleen to contribute his brand and trademarks."

 

No crime here, just a stupid man who sold out.

"Never attribute to malice that which is adequately explained by stupidity"

Drop the excuses. China is just thieving its way to another trillion dollars worth of other people's R&D. In this instance having the provincial government itself act criminally.

It is theft since he sold his rights to the IP under the conditionality of the contract. They took the IP and patented it in their own name. That is outright criminal theft and fraud, and it was conducted by govt.

There is no possible favorable view of these Chinese official sector actions. They are just outright plain criminal.

I am disappointed at your reflexive defense of the Chinese position and the obviously fake claims. You know better.

Yes, Saleen as is the case with many other US businesses including Tesla was stupid to make a deal with China with an expectation of anything other than being fleeced and all his legal protections evaporating.

As pointed out elsewhere in a China thread, they are preparing for total isolation and taking whatever tech they can put their hands on before they unplug from the world.

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22 minutes ago, Yoshiro Kamamura said:

It's not that long ago when European powers wielded smallpox to conveniently depopulate the New World from the original inhabitants. 

Back then, of course, "philosophers" like Juan Ginés de Sepulvéda argued that the natural inability of the indigenous people to ward off these insidious attacks and their inability to defend their territory against the technologically superior arms imported from the Europe made them the "slaves of nature", destined to be ruled by their betters, and that the colonization was therefore the best what could happen to them (being untermenschen and all). 

400+ years before the Angry Moustache Man, yet disturbingly similar conclusion and "justification of convenience of the method". Perhaps there are no new concepts, or perhaps those are just old concepts forgotten long enough. But when a weapon turns against its former wielder, Indians call it "karma". 

So you are proud of your CCP sponsors for their biowarfare against the world at large. Your quotes of the colonial apologist reflect the racist genocidal psychopaths that make up the CCP leadership. They are the modern day's Nazis, good that you understand that is what they are.

So why are you on their side?

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