Chinese technology companies have finally woken up to the threat from Washington.
It may be too late for many of them.
A Foreign Lobby Report analysis (see chart below) of lobbying filings reveals that at least 15 Chinese technology companies spent almost $16 million in lobbying and public relations in the first three quarters of 2020. That’s up from around $15.3 million for all of 2019, which itself dwarfed 2018.
Six of those companies only started lobbying this year. Together those six have hired nine lobbying firms and three former members of Congress, while spending more than $1.1 million on influence operations so far this year.
The spending surge has largely failed to rein in the Donald Trump administration or silence bipartisan concerns on Capitol Hill about Chinese threats to US intellectual property and national security. Just last week the Department of Commerce blacklisted China’s leading semiconductor company and the world’s biggest drone-maker, restricting US technology exports to the companies.
China watchers don’t expect the dynamic to change much under the incoming Joe Biden administration.
“Chinese companies operating in or buying products from the US are under unprecedented scrutiny, there is bipartisan unhappiness with China, and the American public is increasingly critical of China’s trade and foreign policy,” US-China Business Council spokesman Doug Barry said in an emailed statement. “With respect to Congress, there are more than 400 pieces of China-related legislation coursing through the body, many of which are intended to sanction China. Although most will not become law, some will, further straining the relationship.”
Barry said that a “different tone in the bilateral relationship” is needed for business ties to improve, with a couple million US jobs at stake.
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The latest lobbying push continues a trend that started in 2018 as the Trump administration turned the screws on telecommunications giants Huawei and ZTE. After relying on US businesses to advocate for the US-China relationship for years, Chinese technology companies began to invest heavily in their own lobbying operations.
The efforts have had mixed results. While ZTE was able to reverse a ban on its US operations in July 2018 after a massive lobbying campaign, Huawei has instead opted for a $3.5 million public relations push as it fights US restrictions in the courts of law and public opinion.
Despite the warning signs and the bipartisan signals from Washington, lobbying records show several Chinese companies have still been caught flat-footed by recent US actions.
These include the newly blacklisted Semiconductor Manufacturing International Corporation (SMIC), which hired its first lobbying firm in mid-September. That month the US Commerce Department began warning US companies that exports to the giant chipmaker posed an “unacceptable risk of diversion to a military end use.”
Other companies that only started lobbying in 2020 include technology conglomerate Tencent, which owns the widely popular WeChat app that President Trump targeted in an Aug. 6 executive order; China’s leading cloud computing company the Inspur Group, which the Department of Defense designated as having links to the Chinese military in June; image sensor company Omnivision; smartphone maker OnePlus; and videogame company Riot Games, which is owned by Tencent.
Several former US lawmakers are working on the new Chinese contracts. Former House Foreign Affairs Committee Chairman Ed Royce (R-Calif.) is lobbying for Tencent and Omnivision via Brownstein Hyatt Farber Schreck. Former Rep. Peter Roskam (R-Ill.) is lobbying for Inspur via Sidley Austin. And former Rep. Jon Christensen (R-Neb.) is helping OnePlus with visa applications via Appo-G.
Meanwhile former Sen. David Vitter (R-La.) has been lobbying for the US affiliate of Hikvision via Mercury Public Affairs since 2018.
Company | Current lobbying issues | Influence firms | 2020 spending (Q1 – Q3) | 2019 spending (excluding subcontractors) |
ByteDance (Entertainment) | Parent company of TikTok Targeted by President Donald Trump Executive Order of Aug. 6, 2020 | ByteDance (in-house lobbying) Covington & Burling Monument Advocacy K & L Gates Mehlman Castagnetti American Continental Group | $1.53 million terminated $330,000 $120,000 $300,000 $260,000 | $270,000 $140,000 $100,000 $40,000 N/A N/A |
DJI Technology Inc. (Drones) | Accused of human rights abuses in Xinjiang Added to Commerce Department “entity list” restricting US technology exports to the company on Dec. 18, 2020 | DJI Technology Inc. (in-house lobbying) K & L Gates BGR Gov’t Affairs Akin Gump Cassidy & Associates CLS Strategies | $1 million $190,000 terminated $240,000 $90,000 $10,000 | $680,000 $240,000 $80,000 $40,000 N/A N/A |
Fujian Jinhua (Semi-conductors) | Accused of intellectual property theft Added to Commerce Department entity list in October 2018 | Steptoe & Johnson Brownstein Hyatt Farber Schreck Jim Handy Blueprint Communications | $210,000 $360,000 Unknown $17,500/month | $240,000 $670,000 Unknown N/A |
Hikvision (Video Surveillance) | Accused of human rights abuses in Xinjiang Added to Commerce Department entity list in October 2019 | Sidley Austin Glover Park Group Mercury Public Affairs Burson-Marsteller (public relations) | $1.5 million terminated $767,000 (Jan. – June) $1.04 million (Jan. – June) | $640,000 $240,000 $1.4 million $820,000 |
Huawei Technologies (Tele- communications) | Accused of being a threat to US national security Added to Commerce Department entity list in May 2019 Designated a national security threat by the Federal Communications Commission in June 2020 | Huawei Technologies USA (in-house lobbying) Jones Day Racepoint Global (public relations) Steptoe & Johnson Sidley Austin Squire Patton Boggs Pivot Integrated Communications Ruder Finn (public relations) | $450,000 $0* $2.4 million $160,000 $0* $380,000 $964,000 (terminated) Unknown** | $2.99 million $60,000 $1.05 million $210,000 $0* $230,000 $282,000 N/A |
iFLYTEK (Voice recognition) | Accused of human rights abuses in Xinjiang Added to Commerce Department entity list in May 2019 | Chartwell Strategy Group Pillsbury Winthrop Shaw Pittman | $300,000 $753,000 (Feb-July) | $150,000 $865,000 (through Jan. 2020) |
Inspur Group (Cloud computing) | Added to list of Department of Defense list of “Communist Chinese military companies” in June 2020 | Sidley Austin | Unknown | No lobbying |
Lenovo (Computers) | Dutko Worldwide | $100,000 | $260,000 | |
Lexmark (Printers) | Richard Goodstein Venn Strategies | $120,000 $120,000 | $160,000 $0* | |
Omnivision Technologies (Image sensors) | Approved to sell image sensors to Huawei in Oct. 2020 | Brownstein Hyatt Farber Schreck | Unknown | No lobbying |
OnePlus (Smartphones) | APPO-G | Unknown | No lobbying | |
Riot Games (Video games) | Owned by Tencent (see below) | Platinum Advisors | $150,000 | No lobbying |
Semiconductor Manufacturing Int’l Corp (SMIC) (Semi-conductors) | Accused of ties to entities of concern in the Chinese military industrial complex Added to Commerce Department “entity list” restricting US technology exports to the company on Dec. 18, 2020 | Akin Gump Capitol Counsel (via Akin Gump) | $50,000 Unknown | No lobbying |
Tencent (Tech conglomerate) | Parent company of WeChat app Targeted by President Donald Trump’s executive order of Aug. 6, 2020 | Tencent Holdings (in-house lobbying) Paul Weiss Rifkind Wharton & Garrison Toby Myerson Brownstein Hyatt Farber Schreck | $500,000 $210,000 $150,000 $130,000 | No lobbying |
ZTE Corporation (Tele- communications) | Designated a national security threat by the Federal Communications Commission in June 2020 | ZTE USA (in-house lobbying) APPO-G Hogan Lovells Akin Gump | $30,000 $50,000 terminated $850,000 | $120,000 $150,000 $2.94 million $80,000 |
** Huawei signed a year-long, $1.45 million contract with Ruder Finn at the end of October
Source: Lobbying Disclosure Act (Congress) / Foreign Agents Registration Act (Department of Justice)
Update: This post was updated on Jan. 12, 2021 to note that former Sen. David Vitter (R-La.) is a registered foreign agent for Hikvision (US).