The chair of an influential Westminster committee has urged Business Secretary Grant Shapps to review the takeover of fledgling semiconductor firm Flusso – amid growing concerns of China’s influence over strategic assets.
The company was acquired by a Shanghai subsidiary with ties to the Chinese state last year.
Tory MP Alicia Kearns, who heads both the Foreign Affairs Select Committee and the China Research Group, has called on Shapps to investigate the deal under the National Security and Investment Act.
She has argued the £28m acquisition “represents a significant economic and national security concern”.
In a letter to Shapps shared on her Twitter account, she said: “This deal sees a British company, critical to our economic security and future prosperity, falling into the hands of an entity that was set up to serve the needs of a systemic competitor.”
Commenting on the need to be trusted by allies which are putting up a robust response to Chinese influence in key assets, she warned the UK can’t afford to “become a free world laggard in tackling strategic dependence on hostile states.”
Takeover follows Nexperia clampdown
Flusso develops flow sensing technology and was snapped up by special purposed vehicle Shanghai Sierchi Enterprise Management Partnership in August, – as first reported by tech publication UKTN.
Companies House documents filed in January reveal Shanghai Sierchi Enterprise Management Partnership took 100 per cent ownership of Flusso on 11 August 2022.
Kearns argued: “In waving through this transaction, we are granting the Chinese Communist Party direct access to one of our leading tech startups in an area of vital strategic importance.”
Flusso’s ties to China are both convoluted and definitive – as Sierchi was incorporated in Shanghai at the end of 2021.
It it is 80 per cent owned by Zhenxin Equity Investment Partnership, according to the South China Morning Post.
In turn, Zhenxin Equity is a subsidiary of Baoding Investment, which is a Shanghai-based investment giant that has Chinese “state-owned backers”.
The takeover comes at a time when Downing Street is putting more and more deals between UK and Chinese tech companies under the spotlight.
Last year, the Government vetoed Nexperia’s takeover of Newport Wafer Fab and scuppered attempts from a Beijing-based company to buy robot technology developed at the University of Manchester.
The Government has been approached for comment.