Lately, articles in the international media (including The Wall Street Journal and Reuters) have been focusing on the Alpi Aviation dossier, a story concerning the Chinese takeover of an Italian drone manufacturer (and Defence Ministry supplier), performed in 2018 through “opaque methods,” which Decode39 extensively reported on back in September.
The Guardia di Finanza, Italy’s financial crime police, charged the company with failing to abide by arms export laws and the so-called Golden Power, i.e. the State’s final say-so on matters concerning strategic companies. Mario Draghi’s government is ready to challenge the takeover and trigger sanctions, including a hefty fine and restoring the status quo ante.
Two companies involved in that opaque takeover are particularly noteworthy: China Corporate United Investment Holding (CCUI), an investment fund, and CRRC Capital Holding, part of CRRC Group. Both are overseen by the Chinese State Council’s Commission for the Supervision and Administration of State-owned Assets.
CRRC Group also controls railway titan CRRC, active in real estate, logistics, materials trading and the construction of highways, buildings, bridges, tunnels, airports and ports. Through CRRC Capital Holding the group also has a stake in CCUI and was recently included (for a few months) in section 1237 of the US Department of Defense list, which contains companies linked to the civil-military hybrid efforts of the People’s Republic of China.
CRRC has 51 subsidiaries and 182,000 employees, 6,000 of whom work outside of China. Datenna, a Dutch financial intelligence firm specialising in China, pointed out that the group is central to the Made In China 2025 and Silk Road initiatives. “Through the ownership structure, we can see that there are links between CRRC and the Chinese military,” the experts told Decode39.
The Blue Engineering takeover
Among the deals mapped by Datenna was yet another one concerning the takeover of an Italian company by CRRC. Dated 2017 (i.e. the year before the Alpi Aviation affair), it involved Blue Engineering, a Turin-based reality specialised in ICT and design and engineering of aerospace, automotive, naval and railway vehicles.
CRRC acquired 65% of the company. 10% went to the infrastructure group CMC; another 5% to another Chinese company, Genertec, specialised in channelling Chinese investments in Italy; the remaining 20% remained with the founding partners. Additionally, in 2019 Blue Engineering was “upgraded” to CRRC’s Italian research centre.
“The Silk Road railway is born: the Italy-China link is strengthened after the [former PM Giuseppe] Conte-[Chinese President Xi] Jinping deal,” wrote the Italia daily Italia Oggi back then, celebrating the deal in 2019 after Italy signed the Belt and Road Initiative Memorandum of Understanding with China.
Blue Engineering’s website states that the company has always “transcended technological and geographic frontiers. Our qualitative and extensive development is due to this vision: our centre is in Italy as well as in Turkey and China.” The company works with its parent company’s plants in Tangshan, south of Beijing. As explained in that article, the goal of that operation was to facilitate access to European technologies and markets for Chinese companies.
“At the moment, the development plans for the railway sector are more than rosy,” said Blue Engineering’s CEO Mohammed Eid to Italia Oggi back then. “We’re working on automotive. Aerospace will be our development area for the coming year. Our partners are proving to be extremely professional, sensitive companies with a strong desire to make us grow,” he added.
The company’s operations may suit the description of a recent US Department of Defense report on China’s military force detailing the Chinese plan to acquire foreign strategic know-how. “The [People Republic of China]’s [military-civil fusion]-influenced industrial and technology endeavours include Made in China 2025,” a national strategy “that sets targets for the PRC to achieve greater self-sufficiency in key industrial areas such as aerospace, communications, and transportation.”
That period’s official papers reveal that the 2018 Blue Engineering takeover by CRRC was never disclosed to Parliament. However, it’s yet to determine whether the Turin-based company’s actions would have brought it within the regulatory framework of the Golden Power rules. What appears evident is that Italy allowed another national technological champion to end up in the hands of the Chinese government.
Blue Engineering was not immediately available for comment.
Other CRRC acquisitions
Datenna recorded several European CRRC acquisitions, including 75% of the British semiconductor company Dine through Zhuzhou CRRC Times Electric (a 2007 deal, completed with 100% of shares in 2019); the German automotive champion Boge Elastmetall through Zhuzhou Times New Material Technology Co Ltd in 2014; the British Specialist Machine Developments, specialised in submarine supplies, through CRRC Times Electric, in 2015; the Finnish company Beneq, which operates in the semiconductor sector, through Sri Intellectual in 2018; Vossloh Locomotives through CRRC Zhuzhou Locomotive Co, a 2019 deal that the German government is about to block.
Additionally, CRRC Zhuzhou Electric Locomotive Co Ltd is looking at Europe, particularly the Czech Republic and Austria, after recently opening an office in Vienna, the base for its expansion in the railway sector of the Old Continent.
