China is courting Swiss start-ups for their intellectual property

China is courting Swiss start-ups; "technological dominance lies behind this" Keystone-SDA

China is courting Swiss start-ups with offers that sound too good to be true such as interest-free funding, free office space for years on end, accelerator programmes and a business-friendly regulatory environment.

But according to historian Ariane Knüsel, the real objective is not cooperation, but rather technology transfer and dominance in strategic sectors. China’s appeal to Swiss start-ups is certainly nothing new, but it is taking on increasingly sophisticated and dangerous forms.

In an interview with the AWP news agency, the expert from the University of Fribourg – who has been studying relations between Beijing and the West for year, with a particular focus on Switzerland – reveals the mechanisms behind an attraction that may harbour deadly pitfalls for intellectual property and the very future of these companies.

According to the professor, the roots of China’s strategy lie in the past.

“As early as the 1980s, China began systematically importing Western technology and know-how through high-tech zones, joint ventures and technology parks,” she notes. But it was 2015 that marked a decisive turning point, with the introduction of “Made in China 2025”, a plan that set out to make Chinese companies global leaders in ten strategic industrial sectors.

“In the long term, China wants to become a technological superpower by 2049,” explains Knüsel, emphasising that Beijing still needs access to Western technology to transfer university research to industry.

Not a bridge but world domination

The recruitment of Swiss talent takes place through multiple, well-organised channels.

“China has created a dense network for start-ups, featuring venture capital firms and state-backed funds, as well as support measures such as incubators and accelerators,” says the expert. “So-called talent programmes are also used, which attract researchers with high salaries and suitable facilities. Foreign researchers, entrepreneurs and students are also approached for this purpose.”

Officially, the aim is to build a bridge for economic exchange between Europe and China. But Knüsel is categorical: “In reality, this is about technology transfer – that is, access to intellectual property, research findings, information on production processes, data and know-how. Such structures are not illegal in themselves, but they provide China with access to technology and research.”

A telling example is the failed “Innovation Centre Rapperswil”, which SinoSwiss Holding, a subsidiary of the Chinese firm Fenshare Holding, wanted to build in 2023 in Rapperswil-Jona in the Swiss canton of St Gallen. The project offered free premises for three years, training programmes and access to funding.

“It certainly sounds tempting – in fact, it’s very tempting,” admits Knüsel, but warned start-ups not to be blinded by the perks.

“China has the long-term goal of dominating various high-tech sectors. This has been clearly set out in the latest five-year plans. There will be no room for Swiss rivals. The aim is Chinese dominance, not a Sino-Swiss partnership.”

There is certainly no shortage of opportunities for those who decide to venture into China: funding, tax breaks, land and subsidised rents await businesses in the targeted sectors. But the risks are just as real.

“The biggest risk is losing control over one’s own technology, production processes and know-how,” warns the historian. “Economic espionage is rife in China, and to successfully defend against intellectual property theft, you need to be able to afford lawyers. Not all Swiss start-ups or companies can afford to do so.”

Furthermore, depending on the location, companies may be forced to hand over knowledge or technology.

“We must not forget that China is still an authoritarian state-capitalist regime,” warns Knüsel.

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Translated from Italian, reviewed by an English Department journalist.