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Indebta > News > China demands sensitive information for rare earth exports, companies warn
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China demands sensitive information for rare earth exports, companies warn

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Last updated: 2025/06/12 at 5:04 AM
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Western companies say China is demanding sensitive business information to secure rare earths and magnets, raising concerns about potential misuse of data and exposure of trade secrets.

Beijing’s commerce ministry is asking for production details and confidential lists of customers as part of its export approval process for critical minerals and magnets, according to multiple companies and official guidelines.

China dominates the processing of rare earths and manufacturing of the magnets in which they are used.

These magnets are widely used in electronics, electric vehicle motors, wind turbines and defence applications such as fighter jets, giving Beijing a significant point of leverage with its trading partners.

Frank Eckard, chief executive of German magnet maker Magnosphere, said Chinese authorities were asking companies to reveal “confidential information” about their products and businesses to obtain export approvals.

“It’s a matter of [China] getting information . . . officially” rather than “trying to steal it”, he said.

In early April, Chinese authorities introduced stricter export controls on seven rare earth metals and related magnet materials as part of its tit-for-tat trade war with the US. The move sent companies around the world rushing to secure supplies to maintain production.

The US and China this week struck a framework deal under which President Donald Trump said Beijing would ease constraints on the flow of rare earths, a priority for the White House.

China has not said it would abandon its export controls and it was unclear if the latest deal would affect the approval process for shipments of the critical materials.

Under the current rare earths licensing regime, China requires foreign companies to submit comprehensive data about their operations, workforce, end-use applications and production information.

Companies can be also asked to provide images of products, facilities and details of past business relationships, according to the commerce ministry guidelines for dual-use exports.

“They ask for a lot of things, really a lot of things,” said Andrea Pratesi, supply chain director at Italy’s B&C Speakers, which makes speakers for concerts at a plant near Florence.

He said the company had submitted pictures and a video of its production line as well as information about its market, the names of its customers and some customer orders with names blurred out.

“We had to, otherwise they put aside all your papers and wait for what they requested,” he said, adding that B&C had received approval for two orders and were waiting on a third. “We have nothing to hide — we produce loudspeakers.”

Experts agreed that the commerce ministry’s demands sometimes went further than its published guidelines. A Chinese export control lawyer, who asked not to be named, said the ministry had frequently requested information covering end users’ “production and operations, process flow”.

Matthew Swallow, a product manager at UK-based Magnet Applications, said his company had received several rejections in April “for lack of end-user evidence”.

“We now provide photographs of the magnets in production, details of the ultimate application [and] the customers of the end users,” among other details, he said, which has helped them obtain several export approvals.

Swallow said there was “certainly concern” about unmasking their customers. He said he was advising clients to not include trade or IP secrets in their applications.

The applications are typically submitted to local commerce bureaus by Chinese suppliers on behalf of their clients, underscoring concerns about possible theft of trade secrets and business partners.

China’s commerce ministry did not immediately respond to a request for comment.

Jens Eskelund, chair of the EU Chamber of Commerce in China, said the level of detail made it difficult for companies in sensitive industries to comply with or even apply for the export licences.

“For some of the applications, you need to stipulate the uses to such detail that it creates an IP concern,” he said.

But another European executive, who asked not to be named, said that, for now, most companies were prioritising their need for rare earth magnets over longer-term security concerns.

“Companies are willing to do whatever China wants to get the supplies,” they said.

Data visualisation by Haohsiang Ko in Hong Kong

Read the full article here

News Room June 12, 2025 June 12, 2025
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