Biotechnology and gene sequencing equipment maker MGI Tech Co., Ltd. is under U.S. congressional scrutiny for its ties to a Chinese conglomerate deemed “a significant risk” for aiding Chinese government surveillance and civil-military fusion. Formerly owned by BGI Genomics Co., Ltd., MGI has been a critical supplier to its former parent company, corporate records and disclosures show.
Last week, members of the U.S. House Select Committee on China introduced the BIOSECURE Act, which if passed into law, would restrict federally funded medical providers from using equipment or services of certain biotech companies of concern.
The legislation describes MGI as a subsidiary and direct affiliate of BGI, which has been involved in genetic analyses used to further the repression of ethnic minorities in China and diverting genetic data to China’s military programs, according to the U.S. government.
The Senate has also introduced corresponding legislation, “The Prohibiting Foreign Access to American Genetic Information Act of 2024," which would “fast-track” a ban on BGI, MGI, and other Chinese companies.
In response to the proposed bill, MGI Tech said in a statement that it does not collect any of the gene sequencing data processed by its customers. MGI has also previously denied any connection with its former parent BGI. Its chief scientific officer told the Financial Times last year that MGI was “completely different” and “independent” of BGI.
Close Ties Between MGI and BGI
In 2016, MGI was spun off from BGI as a legally separate company. It was later publicly listed on the Shanghai Stock Exchange in 2022.
Despite the legal separation, BGI’s co-founder and chairman, Wang Jian, continues to serve as the chairman of MGI. Wang also controls MGI under Chinese corporate law, according to corporate disclosures.
As of 2022, MGI’s largest customers were BGI Genomics and its subsidiaries, including Huada Forensic Technology and BGI Research Institute, which were added to the U.S. Bureau of Industry and Security’s (BIS) Entity List in March 2023. Sales to BGI and its subsidiaries in 2022 exceeded those of MGI’s second-largest customer by more than threefold, showcasing a strong business tie between the two companies.
Huada Forensic Technology provides genetic sequencing services to the Chinese police and has a subsidiary in Xinjiang that was added to the Entity List for “conducting genetic analyses used to further the repression of Muslim minority groups."
MGI sold $4.9 million (RMB 35 million) worth of products to Huada Forensic Technology and BGI Research Institute in 2022, according to corporate disclosures. By the first half of 2023, the sales increased to $5.9 million (RMB 42 million).
In early 2023, Complete Genomics, a U.S.-based subsidiary of BGI, announced that it would be serving as the distributor for MGI's gene sequencing equipment in the United States. Complete Genomics was originally acquired by BGI in 2013 but corporate records now show it is a subsidiary of MGI.
Complete Genomics’ patent portfolio and R&D capacity also play an important role in MGI’s China operations. MGI expressed concern in a 2022 disclosure that potential U.S. restrictions on Complete Genomics’ export of sensitive technology to China could negatively impact MGI's operations.
Customers with Military End Use Exposure Risk
MGI’s customers in China also include two research institutes affiliated with the People’s Liberation Army (PLA), according to the company’s corporate disclosures.
As of December 2021, MGI had a contract to develop a high-tech sequencing system for the Xi'an Institute of Optics and Precision Mechanics, which has conducted research and development on aerospace optical systems for the PLA and other military research organizations.
In November, MGI won a bid to provide a whole genome sequencer for Harbin Institute of Technology. The institute was placed on the BIS Entity List in 2020 for acquiring U.S.-origin technology for China’s military.
Last week, members of the U.S. House Select Committee on China introduced the BIOSECURE Act, which if passed into law, would restrict federally funded medical providers from using equipment or services of certain biotech companies of concern.
The legislation describes MGI as a subsidiary and direct affiliate of BGI, which has been involved in genetic analyses used to further the repression of ethnic minorities in China and diverting genetic data to China’s military programs, according to the U.S. government.
The Senate has also introduced corresponding legislation, “The Prohibiting Foreign Access to American Genetic Information Act of 2024," which would “fast-track” a ban on BGI, MGI, and other Chinese companies.
In response to the proposed bill, MGI Tech said in a statement that it does not collect any of the gene sequencing data processed by its customers. MGI has also previously denied any connection with its former parent BGI. Its chief scientific officer told the Financial Times last year that MGI was “completely different” and “independent” of BGI.
Close Ties Between MGI and BGI
In 2016, MGI was spun off from BGI as a legally separate company. It was later publicly listed on the Shanghai Stock Exchange in 2022.
Despite the legal separation, BGI’s co-founder and chairman, Wang Jian, continues to serve as the chairman of MGI. Wang also controls MGI under Chinese corporate law, according to corporate disclosures.
As of 2022, MGI’s largest customers were BGI Genomics and its subsidiaries, including Huada Forensic Technology and BGI Research Institute, which were added to the U.S. Bureau of Industry and Security’s (BIS) Entity List in March 2023. Sales to BGI and its subsidiaries in 2022 exceeded those of MGI’s second-largest customer by more than threefold, showcasing a strong business tie between the two companies.
Huada Forensic Technology provides genetic sequencing services to the Chinese police and has a subsidiary in Xinjiang that was added to the Entity List for “conducting genetic analyses used to further the repression of Muslim minority groups."
MGI sold $4.9 million (RMB 35 million) worth of products to Huada Forensic Technology and BGI Research Institute in 2022, according to corporate disclosures. By the first half of 2023, the sales increased to $5.9 million (RMB 42 million).
In early 2023, Complete Genomics, a U.S.-based subsidiary of BGI, announced that it would be serving as the distributor for MGI's gene sequencing equipment in the United States. Complete Genomics was originally acquired by BGI in 2013 but corporate records now show it is a subsidiary of MGI.
Complete Genomics’ patent portfolio and R&D capacity also play an important role in MGI’s China operations. MGI expressed concern in a 2022 disclosure that potential U.S. restrictions on Complete Genomics’ export of sensitive technology to China could negatively impact MGI's operations.
Customers with Military End Use Exposure Risk
MGI’s customers in China also include two research institutes affiliated with the People’s Liberation Army (PLA), according to the company’s corporate disclosures.
As of December 2021, MGI had a contract to develop a high-tech sequencing system for the Xi'an Institute of Optics and Precision Mechanics, which has conducted research and development on aerospace optical systems for the PLA and other military research organizations.
In November, MGI won a bid to provide a whole genome sequencer for Harbin Institute of Technology. The institute was placed on the BIS Entity List in 2020 for acquiring U.S.-origin technology for China’s military.
