The July 2026 meeting between Dutch Trade Minister Sjoerd Sjoerdsma and China’s Commerce Minister Wang Wentao was cordial. That might have come as a surprise given the tensions that erupted between China and the Netherlands following a high-profile dispute about Nexperia in the fall of 2025. The new Dutch government made it clear that it wanted to patch up ties with Beijing.

Underneath the mess, the Nexperia incident was actually a comparatively successful economic security intervention – and that carries important lessons for Europe.

At the July 2026 talks, the Chinese side called on the Dutch to “promote the proper resolution of disputes involving relevant companies,” a clear reference to the Nexperia case. Meanwhile The Hague is keen to let the courts move ahead. 

Nexperia’s Chinese owner, Wingtech, claims Nexperia China is now an independent producer, while Nexperia expects the worst shortages on the European side to ease by year’s end. China’s position of power means that a split of the company appears unavoidable, but at least its European business was saved.

There remain many uncertain factors, not the least Wingtech’s arbitration procedure against the Dutch state incorrectly claiming expropriation while a court case that could permanently replace management is underway. Yet, a combination of not all Anglophone press fully grasping what really happened, Chinese distortion of the facts, and some Dutch ministerial amateurism raise the risk that Europeans draw the wrong conclusions about a vital policy area.

Acting on the back-foot in response to a clear threat to European economic security, the Dutch economic affairs minister and Nexperia’s European leadership faced Beijing’s usual recipe of escalating to force the other to de-escalate when they moved to protect the automotive chip manufacturer. The minister’s moves should have been planned better, yet it was necessary to finally call a halt to the company’s hollowing out by its Chinese owners. If European countries want to avoid high long-term costs, they not only need to face the disproportionate short-term costs that Beijing will seek to inflict but also accept that any wins will only ever be partial.

The Longer Timeline

The story of Nexperia is one of several interventions that lacked sufficient force to change the overall trajectory. Things only came to a head when the remaining choice was between biting the bullet and losing everything. The company’s importance to supply chains was not fully appreciated when it was created out of the low-margin Standard Products unit of NXP Semiconductors – itself carved out of Philips in 2006.

In 2017, this new Nexperia was sold to Chinese state-backed funds JAC Capital and Wise Road. The next year, the two funds organized a closed-door auction of the company only open to Chinese bidders. The winner was Wingtech, a small company with no serious experience in the field. These sales were little remarked on in the years before the EU enacted its FDI screening. At the time, Chinese investment was welcome. In fact, two other Philips Semiconductor components also moved to Chinese ownership: chip designer Goodix and Ampleon.

Despite promises to prevent leakage at the time of takeover, former CEO Frans Scheper told Dutch television that it was clear Wingtech’s Zhang Xuezheng tried to turn Nexperia into a Chinese company from the beginning. Nexperia’s European directors were largely unaware of Zhang’s checkered record in China, where he had been sentenced to prison in 2005 for unlawfully obtaining ZTE trade secrets and fined in 2024 for concealing shareholdings back in 2017. The Dutch civilian intelligence agency AIVD was asking questions about Zhang in 2019, but nothing came of it.

The first sign of external trouble stemming from Chinese ownership came a few years later. In November 2022, the U.K. government forced Nexperia to reverse the acquisition of a fab in Newport. The company started talks with the Dutch Economic Affairs Ministry about governance reforms that would allow it to be treated like a European company, after it missed out on German chip funds in 2023. Nexperia’s customers pressured it to address concerns and diversify. 

When Wingtech was put on the Entity List by the U.S. government in December 2024, engagement with the ministry intensified. Rather than solving the problems, those typically Dutch talks ended up triggering the Chinese management.

As time wore on, the Europeans began to believe that Zhang was acting in bad faith in multiple ways. In China, he had been setting up parallel structures with his WingSkySemi (WSS) fab in Shanghai under his own Wentianxia holding. The Chinese owners stopped the incomplete expansion of its Malaysian assembly center, despite customer demand. Zhang was focused on China, where his true interests lie. 

When the talks between Nexperia and the Dutch government honed in on governance changes, the Chinese owners began to fear they would lose control. A Chinese legal firm was brought in to advise. Matters came to a head when Wingtech allegedly violated Dutch company law to remove European directors and give unqualified Chinese officers financial control.

This is when the interventions happened. Both the Dutch ministry and Nexperia’s European managers told the court there were imminent plans to move R&D and production to China. Zhang supposedly drew up a plan using DeepSeek and ChatGPT that would have entailed laying off almost half the European staff. The court filings accuse Zhang of placing an unnecessarily large order of $200 million from his own WSS fab in Shanghai. Talks were no longer enough to resolve this chasm in understanding.

The Dutch Polder Model

Now the dust has settled, all that remains of the interventions is the Dutch court order. All attention has been drawn to Dutch and U.S. government actions; however, the real effects stemmed from the specific nature of the Dutch system. That legal route is precisely why The Hague cannot be forced by Beijing to reverse what has happened.

The world learned about the Enterprise Chamber of the Amsterdam Court of Appeals – the court responsible for corporate matters – in October 2024. Nexperia’s chief legal officer had turned to the court accusing Zhang of mismanagement, joined by the workers’ council. 

The Dutch Ministry of Economic Affairs had been aware beforehand and moved first. Afraid that Zhang would act to forestall the case by firing the directors, Vincent Karremans – then the minister of economic affairs – issued an unprecedented instruction under never-used Cold War legislation to put the company under special supervision. The next day, on October 1, the Amsterdam court issued its first of several provisional rulings that suspended the Chinese owners’ powers over a company that remained in their possession.

The timing was unfortunate, coming just as Washington announced a rule that would have extended Wingtech’s Entity List status to its subsidiary, Nexperia. Allegedly, The Hague had even lobbied Washington to postpone the announcement to prevent the resulting conflation of U.S. action, Dutch ministerial instruction, and the Nexperia directors’ litigation. 

In hindsight, the Dutch minister’s politically sensitive instruction was perhaps never necessary and is now suspended. The U.S. export controls were suspended for a year on November 10, 2025 as part of the Trump–Xi truce. What has actually impacted Nexperia is the Dutch legal system and its unique conception of corporate governance.

The first notion that allowed the court to play its role was Nexperia’s European directors’ accusations against the Chinese owners of “wanbestuur”’ – mismanagement, harming the interests of the legal entity they were responsible for in pursuit of personal gain. This concept may be harder to understand for businesspeople from China or Silicon Valley, given their obsession with the intrepid founder juggling various legal entities and jurisdictions to create an empire. However, in the Netherlands the swashbuckling Zhang ran into a rather different view. Dutch enterprise law protects firms against directors – even if the owners originally brought the entity into being in order to exploit it.

A second component that outside observers missed in the Nexperia case is the Netherlands’ so-called polder model, related to “tripartism” in English. The idea is that the government, employers, and workers come together to discuss and agree on the issues in a game of give-and-take. The Netherlands’ traditionally relatively autonomous ministries often seem to represent their respective fields within the government based on the consensuses they have reached with their stakeholders. The condition, however, for a ministry to go to bat for you is engaging in good faith in tripartite engagements. A Chinese company should be able to comprehend that notion of cooperating with the government.

The talks between the Economic Affairs Ministry and Nexperia on governance reforms were held under those conditions. Wingtech’s failure to renew Nexperia’s collective bargaining agreement with the trade unions demonstrated its misunderstanding of the “voluntary” nature of such talks. The reporting suggested a genuine desire by a perhaps somewhat naïve Dutch ministry to help find a way to have the company treated as European. Zhang appears to have never cared about the European nuances.

It seems likely that the Dutch Economic Affairs Ministry expected a similar outcome to an earlier case. Just the year before, in 2024, the ministry had supported the CEO of Ampleon – another former subsidiary of Philips Semiconductor bought by a Chinese owner – when he also turned to the same Enterprise Chamber in secret. The problem was similar: a Chinese owner planning to move research capacity to Shanghai. The result was a settlement in 2025 with continued Chinese ownership under safeguards against IP-leakage. That case remained secret until the newspaper FD revealed that it had happened at all in April 2026. 

Beyond the minister’s instruction and lack of U.S. factor, something else was different in Nexperia’s case: Zhang Xuezheng.

China’s Decentralized Industrial Coercion

The threat of hollowing out that Nexperia faced was the consequence of China’s decentralized industrial policy, but the coercion that followed the economic security intervention was centrally directed. While many abroad did not understand the nature of the Dutch system, The Hague’s actions showed key actors likewise did not fully appreciate this aspect of the Chinese system.

In China, swashbuckling founders like Zhang Xuezheng are not uncommon – in fact, entrepreneurial businesspeople like him are actively enabled by the state. The Chinese party-state creates a centrally-determined industrial policy that is executed locally, something often misunderstood by Europeans. Beijing sets incentives that motivate not just people like Zhang but also their local home governments to pursue central goals. Certain key strategic sectors, such as the quest to replace ASML, are centrally led, but most – including not only electric vehicles but also the less flashy parts of the semiconductor industry – are the result of local public-private entrepreneurship.

Reading the Dutch press and court documents, it seems that Nexperia was used as a tool for Zhang’s grand plans for a tech empire inside China. His personal benefit coincided with incentives that spurred local government to act in support of China’s quest for industrial dominance – such as helping build Zhang’s independent WSS fab. The neglect of Nexperia’s business outside of China was the result of systematic indifference that this focus engendered. Yet for Beijing these effects are by design, even when specific cases like this one are not planned.

The Dutch Economic Affairs Ministry’s unsophisticated approach subsequently turned this locally-supported process into a political challenge that elevated the issue to the central level. The minister’s intervention and the court’s ruling were conflated due to The Hague’s lack of communication, China’s limited understanding of the Dutch system, and Beijing’s deliberate distortion. However, once the Dutch action on Nexperia had become a public challenge to China, Beijing had no choice but to publicly intervene anyway.

Read against the background of the China-U.S. tech war and Dutch compliance with regards to ASML, Beijing easily cast this as another U.S.-inspired step to contain China’s technological rise. Moreover, it had a strong interest to ensure that nascent European action to protect the continent’s economic security is nipped in the bud by quickly making an example of the Dutch. Rising nationalism also easily inflames sentiments in China. Chinese propaganda presented the incident as a case of jealous Dutch robbery of China’s semiconductor progress, even when Nexperia’s core technology was European.

What followed then was the typical playbook. Beijing escalated sharply with export restrictions on October 4 to create immediate pain – using its growing legal toolkit for exploiting the country’s powerful supply chains  to make the counterparty sue for negotiations. Later, China went around The Hague in an attempt to force Nexperia to deal with Wingtech and Beijing by itself, even using Berlin and Brussels as well as panicking German car manufacturers to put pressure on the Netherlands. Throughout, China framed the whole case as a business dispute that the Dutch government had turned political.

Unavoidable Costs

The Dutch stakeholder approach does not work when your corporate counterpart is enmeshed in China’s decentralized industrial policy. Zhang never intended to comply; he did not understand the Dutch system and felt he did not need to. It is, however, also an open question whether he would have been allowed to comply in the first place. The subsequent escalation into a visible political clash made it necessary for Beijing to get involved. Both for the sake of deterring other countries and because of its importance in China’s industrial plans, it is not possible for Beijing to back down. The Chinese side of Nexperia was thus lost from the beginning.

The remaining widespread ignorance of Chinese tactics on the European side was made obvious when the Dutch minister – an inexperienced politician gearing up for national elections – wrote to Parliament that his ministry had not expected Beijing to respond with export control measures on Nexperia’s Chinese assembly centers, since export controls are a non-proliferation instrument – even though trouble at customs is usually the first sign something is amiss. With hindsight, there is also the question of whether the ministerial instruction was actually needed or turned things unnecessarily political.

Yet the minister is hard to fault for trying to do something. The risk that Nexperia would have been wholly lost otherwise is very real. The large impact on the global car industry of China’s export controls on Nexperia’s Chinese sites shows what inaction would have handed to Beijing. 

On top of that, the escalation in this specific case also relates to a changing Chinese side. Nexperia could not follow the quiet approach of Ampleon’s boss anymore after Wingtech broke the court-ordered secrecy with a public filing in China. In addition, the specific regulations that Beijing has adopted since, including language that invokes the Nexperia case, shows the shrinking likelihood of Beijing ever again accepting an Ampleon-style approach.

Most importantly, the outcome shows that the costs are survivable. Nexperia’s Malaysian site is now expanding. The inexperienced Chinese owner sustained structural damage; Wingtech is in financial trouble and risks delisting from the Shanghai exchange. It is true that Nexperia is now separating into its European and Chinese components. Yet the European side is in fact surviving, which was the goal of the intervention. 

In an interview with Handelsblatt, the interim chief said the biggest shortages for European customers will be over by the end of 2026 as assembly expands in Southeast Asia. The loss of what is now developing into a separate Nexperia China is painful, but was always unavoidable.

However, if economic security elsewhere in Europe is not safeguarded, then what remains of Nexperia will wither away anyway due to a dearth of clients. Moreover, there are other European companies bought up by Chinese investors in the same situation. To correct Europe’s painful mistakes of neglecting economic security over the past decades, some painful episodes will occur again and again. The correct response starts with designing instruments that work in your particular political system – and then to bite the bullet.