Beijing Skyrizon Makes Third Acquisition Attempt for Motor Sich, Ukrainian Defense Contractor

On August 4, Chi­na’s Bei­jing Skyri­zon Avi­a­tion sub­mit­ted a joint bid with Ukrain­ian indus­tri­al con­glom­er­ate, DCH Group, mark­ing the Chi­nese company’s third attempt­ed acqui­si­tion of shares in the Ukrain­ian defense con­trac­tor, Motor Sich.  The bid is cur­rent­ly under con­sid­er­a­tion amid a vocal cam­paign by the company’s new Ukrain­ian part­ner for its approval.  In a state­ment issued on August 10, DCH Group, assert­ed that, in this new con­fig­u­ra­tion, the Anti­mo­nop­oly Com­mit­tee of Ukraine (AMC), had “no legal grounds” to reject the Chi­nese company’s bid.

Skyrizon’s two pre­vi­ous attempts to acquire a con­trol­ling posi­tion in Motor Sich faced polit­i­cal and reg­u­la­to­ry scruti­ny over con­cerns that they were non-trans­par­ent and posed a nation­al secu­ri­ty threat. In this most recent iter­a­tion of its acqui­si­tion bid, Skyri­zon appears to view the inclu­sion of  DCH as a means to get past this oppo­si­tion. DCH Group is among the most impor­tant indus­tri­al finan­cial groups in Ukraine.  Its CEO, Olek­san­dr Yaroslavsky, is a for­mer mem­ber of the Ukrain­ian par­lia­ment (Rada).

The repeat­ed acqui­si­tion effort by Skyri­zon has raised con­cern among Ukrain­ian and West­ern secu­ri­ty offi­cials. In Ukrain­ian media, con­cerns have been raised about the nation­al secu­ri­ty impli­ca­tions of the deal poten­tial­ly ben­e­fit­ing, not just Chi­na, but also Russia’s mil­i­tary-indus­tri­al capa­bil­i­ty.  Until 2014, Motor Sich was a key sup­pli­er of heli­copter engines to the Russ­ian mil­i­tary, with Chi­na report­ed­ly replac­ing Rus­sia as the company’s largest mar­ket after the annex­a­tion of Crimea.  Although Motor Sich has denied the alle­ga­tions, reports as recent­ly as July 2019 alleged that the com­pa­ny con­tin­ues its mil­i­tary-tech­ni­cal coop­er­a­tion with Moscow in some unspec­i­fied capac­i­ty.

Skyri­zon is con­trolled by Wang Jing, who has pre­vi­ous­ly par­tic­i­pat­ed in oth­er projects sim­i­lar­ly infused with strate­gic moti­va­tion, includ­ing efforts to build an inte­ro­cean­ic canal in Nicaragua.  The com­pa­ny has also been alleged to have own­er­ship links to the Peo­ple’s Lib­er­a­tion Army.