Analysis of Business and Governments Responses to Security Clearance through a Case Study Approach

Abstract

With the ongoing trade disputes between China and the US in recent years, Chinese companies have struggled with their acquisitions in the US. Some studies have mainly focused on how Chinese companies should respond to US national security reviews, while there is a lack of unified recommendations on the responses of the two governments. Therefore, based on the case of the acquisition of Snapdragon by Asymchem, a case study approach is used to explore the tripartite role of Chinese companies, the Chinese and US governments in the national security review system. The analysis concludes that the security clearance issues faced by Chinese companies acquiring US companies are: industry attributes and sensitive technologies, derogation agreements and political risks. Corresponding strategies are therefore proposed for the three parties to respond: rights-limiting acquisition options, lobbying and a US-China bilateral investment agreement to facilitate bi-national investment with the joint role of companies and both governments.