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Nov. 27 (NBD) -- Evergrande Real Estate Group (Evergrande)'s investment in Faraday Future (FF) has been listed in the Office of the United States Trade Representative's updated Section 301 report investigating China's possible practices of intellectual property theft and technology transfer.

In November last year, Evergrande Health, a Hong Kong subsidiary of Evergrande, announced its plan to purchase 45 percent of the shares in FF's parent company Smart King.

As a part of the deal, Evergrande Health agreed to invest 2 billion U.S. dollars within three years in Smart King, and 800 million U.S. dollars of the total has been paid in May, 2018.

Then Evergrande Health refused to provide another 700 million U.S. dollars FF asked for in July when the U.S. automaker said it has used up the initial investment.

FF said it was prevented from seeking other financing and Evergrande held the payments back attempting to gain control of FF and acquire its intellectual properties.

According to the refreshed report, Evergrande's 2-billion-U.S. dollar pledge to Faraday Future is an illustrative example of investment or acquisition from Chinese companies led by Chinese government to unfairly obtain cutting-edge technologies and intellectual property in certain industries.

Currently, FF has submitted applications for nearly 2,000 patents, around 400 of which have been approved.

The report cited Evergrande's chairman Xu Jiayin's speech which mentioned that the acquisition enables Evergrande to access FF's patents registered in U.S. and China and will help China realize its strategic goal of becoming an automotive power.

China's Ministry of Commerce Spokesman Gao Feng stated last Thursday China is deeply concerned with the new accusations, Xinhua reported.

Evergrande Health told the 21st Century Business Herald that its investment in FF was only driven by commercial motive. The application for the deal was filed with the Committee on Foreign Investment in the United States on March 9 this year and gained approval from the committee on June 18, the Hong Kong-listed company said.

The U.S. firm and its employees now are taking legal actions against Evergrande.

FF has clearly realized Evergrande's intention to obtain the ownership and intellectual properties of the automaker and FF must not send its core technology to the hands of Evergrande, Matthias Aydt, FF's head of research and development, said in a meeting called Faraday Future Evolutionary held on November 12.

Two days later, more than 250 FF shareholders took the lawsuit in Los Angeles, accusing Evergrande Health of seizing the control and core intellectual property rights of FF with fraud.

However, Evergrande insists that investing in FF is only a part of its strategic layout to make inroads into the high-tech sector. From the beginning of the year, Evergrande started to expand presence in the industry, focusing on new energies, artificial intelligence, robotics and other fields.

Email: zhanglingxiao@nbd.com.cn