back to article Arm China brands itself a 'strategic asset', calls for Beijing's help in boardroom dispute with Brit HQ

British chip designer Arm’s Chinese outpost has called in the Chinese government to “protect” it in an ongoing boardroom dispute with its parent company. In an open letter released on Tuesday and signed by over 200 of its employees, Arm China said it “is a Chinese-controlled joint venture that should abide by Chinese laws and …

  1. Pascal Monett Silver badge

    Well, that does it for Western companies investing in China

    Great idea guys : not obeying orders from HQ because you're in China. Great example to set for the rest. Great way to demonstrate that you're reliable.

    It is common sense that a subsidiary is linked to its parent company. It is the parent company that has authority, period.

    Not respecting that rule means that no company can create subsidiaries anywhere. That means no more multinationals and . . hey, wait a minute, that might not be such a bad thing after all.

    Okay, just kidding.

    In any case, these clowns have completely destroyed their credibility on the international stage. I wonder what the fallout will be.

    1. I ain't Spartacus Gold badge

      Re: Well, that does it for Western companies investing in China

      The fact that they're publicly appealing in this way, might suggest that they haven't got anywhere in private appeals to whoever they know in the Party. Xi Xinping, in particular, has been playing the nationalist card quite a lot in order to maintain some sort of popularity. And of course that can be a double-edged sword, as other people can then appeal to that same sentiment, and use it to put pressure on the government to back them in any dispute with those nasty foreigners.

      China has so far heeded the example of Russia, where foreign companies barely bother to trade now, because they know they'll eventually get their stuff stolen. And so they don't have an independent judiciary either, but have been careful not to just randomly steal all the foreigners' stuff, so that they leave and slow China's growth. Hoping that nobody will notice a bit of intellectual property here and there, so long as the profits are good enough.

      But China are currently shedding their caution on the international stage. They've made a lot of assertive moves of late, so maybe the Communist Party are feeling confident that they can do what they like?

      Personally I think this is what will happen. Either through a feeling that the decadent West will be easily crushed, paranoia that we're out to get them or fear that China's troubles are becoming so great that only a bit of gambling on foreign adventurism will keep Xi in power - I think relations with China are about to take a decided turn for the worse - and that's going to lead to quite a big change in our economic relationship - which I suspect will lead to some onshoring off work that went to China and a lot of nice work moving to Vietnam/Indonesia/India.

      1. Marketing Hack Silver badge

        Re: Well, that does it for Western companies investing in China

        It might just be that they are being encouraged to make this a public issue, so the dispute can be used for the CCP's various nationalist propaganda purposes. Or it could be that the ARM China employees are out of all the other options, and they are hoping for a last minute rescue.

    2. AndyFl

      Re: Well, that does it for Western companies investing in China

      The parent company only has a 49% ownership in the Chinese subsidiary - they sold 51% as explained in the article. That means they cannot sack the head of the subsidiary without agreement of the consortium holding the 51% shareholding.

      It is nothing to do with not obeying orders from the parent company - they are a minority shareholder. This sort of thing is common with Joint Ventures (JVs).

    3. Doctor Syntax Silver badge

      Re: Well, that does it for Western companies investing in China

      "It is the parent company that has authority, period."

      Except according to the article it's a joint venture in which the "parent" company only owns 49%. So the would-be parent is actually the junior partner. No wonder it's not going well.

      1. I ain't Spartacus Gold badge

        Re: Well, that does it for Western companies investing in China

        Doctor Syntax,

        That depends on how the JV was set up, and how the voting rights work. Also there may be provisions in the agreement about objecting to people being appointed over conflicts of interest. I'm assuming that ARM aren't fools, and they haven't just sacked someone and appointed a replacement if they don't have the legal right to, as that would be pretty stupid.

        Although given what both sides are saying, it is likely that someone is being quite stupid. We just can't know which lot yet.

    4. iron Silver badge

      Re: Well, that does it for Western companies investing in China

      > Arm sold a 51 per cent stake in its Chinese subsidiary

      Big mistake, now they don't actually control the subsidiary and Arm China can do what they want.

      1. x 7

        Re: Well, that does it for Western companies investing in China

        And steal whatever technology they want

        1. hoola Bronze badge

          Re: Well, that does it for Western companies investing in China

          Why is it stealing if the subsidiary owns the IP, assuming that must be the case otherwise the what subsidiary doing?

          This is what happens when an innovative company follows the big money regardless of source. Arm wanted to compete as a major designer of compute and the only way to get the money was to borrow or sell. They went down the sell route and as is typical with any sort of innovation in the UK, we let it be sold to foreign "investors".

  2. This post has been deleted by its author

  3. steelpillow Silver badge
    Black Helicopters

    A failing experiment

    The economic revival of China is one of the great social experiments of the modern era: can a nation build and maintain a healthy economy creating massive wealth, while remaining politically oppressive? The West has always said it is impossible and has pinned its hopes on free-thinking markets eating their way into politics. The current Chinese leadership has become "resolute" that this cannot happen, so here we see the Great Experiment approaching crunch time.

    1. Anonymous Coward
      Anonymous Coward

      Re: A failing experiment

      They were only using capitalism as a funding mechanism for a continuation of prior governmental policies. "To get rich is glorious" is what they sold to the Chinese masses. However, to be 'resolute', centralized, and socialist (cough) is paramount above all other considerations.

      Consider this. The coming confrontation with the West will be used as a explanation to the masses as to why the economy tanks and strictures return to the fore. And this was planned in advance. Using outside enemies as "the reason" for inside pain and suffering is a well-honed strategy.

      1. I ain't Spartacus Gold badge

        Re: A failing experiment

        I don't think failure and conflict with the West was designed in. I think that previous generations of Chinese leadership were scared of what one-man rule led to, as most of them had been purged at one poitn or another under Mao. So they built a system that allowed regular transfers of leadership, and decided to keep tight control of the country's politics while modernising the economy.

        The problem with their system was that regular leadership changes kept it from becoming an absolute dictatorship that was dangerous to them - but also increased the pool of people near the top of the party who could steal vast amounts of wealth from the economy. And that has lead to a vast misallocation of capital to companies in the state-owned sector that don't make profits, but do employ lots of people - and keep lots of good Party members and their families in gravy. So they can't be allowed to fail. But if they don't, they're starving the actually productive bits of the economy of investment.

        I don't know if Xi Xinping wanted to be dictator for life because he's a nutter, or if he genuinely believes the communist bullshit. But having taken over maybe he doesn't believe that system can be reformed? Or he's looked at the demographics, where China is soon going to be losing 10 million people a year from the workforce, due to an ageing population. But without the wealth that Western countries have built up to cushion the shock (also China is ageing at a faster rate than even Italy - due to the One Child Laws). Or maybe he's just up for a scrap - maybe he's not pretending to be hyper-nationalist just to win popularity, maybe he's a Fascist not a Communist?

        But I don't think he's thought through the effect of confrontation with his major markets - if he also wants to keep his economy booming.

      2. Doctor Syntax Silver badge

        Re: A failing experiment

        Using outside enemies as "the reason" for inside pain and suffering is a well-honed strategy.

        And deployed by nationalists everywhere - or deployed under the flag of nationalism.

    2. mevets

      Re: A failing experiment

      At what point did "the west" become non oppressive? From involuntary enslavement through wold wars, resource wars, systemic racial division, "the west" is far from a flag bearer of tolerance.

      They/we can't even lay claim to "free-thinking markets", since the reality has been more of a russian doll: free-thinking markets within militarily constrained boundaries.

      I think that the crunch you are perceiving is the sound of a group of western leaders driving their respective countries into a wall.

      1. I ain't Spartacus Gold badge

        Re: A failing experiment

        "The West" have created the finest societies that any humans in history have ever been privileged to live in. Which doesn’t mean they’re perfect, but in terms of freedom and opportunity to do stuff, there is no comparison. Particularly as all other options involve much higher poverty and chances of dying early of something awful.

        Why is slavery regarded as evil? Because more modern societies decided that I it is. Remember that slavery has been constant throughout recorded history. It had pretty much died out in Western Europe as feudalism evolved in the 12th/13th Centuries. And was taken up again with enthusiasm as Europeans met African and Arab slave traders in the 15th. In fact Europeans were the victims of slavery in the intervening times, villagers from as far north as Ireland and Cornwall were taken by North African slave traders and sold off in places like Turkey. What made the Atlantic slave trade so uniquely awful was the industrial scale of it. I doubt the cruelty or disregard for life was unique at all. I don't think slaves had been taken or moved in those numbers since the final days of the Roman Republic.

        The West being a meaningless term now, as it includes Australia, Japan, South Korea, Taiwan, Singapore etc. But if you want to live somewhere prosperous, free and tolerant, you couldn’t do much better than Western Europe.

        1. hoola Bronze badge

          Re: A failing experiment

          The trouble is that short term capitalism has meant that we have sold our souls to China. Much of Western society is built on goods manufactured in places like China because it is cheaper. The fact it is cheaper is largely due to cheap labour, poor working conditions & vastly inferior environmental legislation but it is convenient to ignore that as they are not immediately obvious.

          It is a classic case of NIMBYism, just on a global scale.

          1. I ain't Spartacus Gold badge

            Re: A failing experiment


            Is it? Or is it a classic case of everyone being a winner? The thing about economics (and in particular trade) is that it's not a zero sum game. If someone else is getting richer, that doesn't have to mean I'm getting poorer. So, for example, extreme poverty has plummeted globally in the last 20 years of globalisation. More people are better off, and also therefore healthier, than have ever been in human history. This is down to freer markets and globalisation - and is something we need to think clearly about before reversing that process.

            You may claim that I'm exploiting someone in the developing world by buying their stuff - I'd suggest that I'm actually helping both of us. And that's why a bunch of manufacturing jobs have gone off to China.

            But it doesn't have to be made in China, and in fact some production was already moving out of China before the lastest problems in the relationship - as their wages increase. Which is a process that I think will be accelerated by Covid-19 and the increasingly authoritarian Chinese government.

      2. steelpillow Silver badge

        Re: A failing experiment

        @mevets. You ask, "At what point did "the west" become non oppressive?"

        There has been no single point, it is a slow process over time and it is not yet over. Did the UK drive tanks over the protesters who pulled down slave-trader Colston's statue in Bristol? No, our police didn't even fire teargas. Have we been changing the law to tie Scottish or Northern Irish law closer to London? No, we have been loosening their ties. Did the EU send in the riot police to prevent Brexit? Do we have any equivalents to the Uighur concentration camps so graphically leaked to TV? Do Trump's attempts at dictatorship feel like Situation Normal or a wild anomaly compared to recent American presidents?

        Sure, we still have a way to go, some of us further than others. But your pro-China bullshit is wholly belied by modern history. You are talking crap and you know it. The only question is, why?

  4. Peter Danckwerts

    The British Government should never have allowed the sale of ARM to SoftBank. If ever there was a strategic asset, this was it.

    1. Snobol4

      Well said, the most relevant comment here. If you (UK government) allow a UK company like this to be sold to a foreign buyer you lose all power or right to criticise what is done by that entity in the future. Softbank bought if for profit, no question. Who knows, maybe they had a secret agreement already lined up to flog the Chinese arm before they did the deal? Wouldn't surprise me, as China knows it would never be able to buy Arm directly. But what if someone less controversial bought it first and then found a way to hive off to you what you want.....? We all know how desperate China is to free itself from reliance on the West. What better way than to have guaranteed access to the dominant CPU architecture? Or am I just being too suspicious??? Whatever, the UK government made (amongst countless others) a huge mistake allowing this sale to proceed, on numerous grounds.

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