Western manufacturers are being pushed into an uncomfortable corner. China, the global powerhouse in rare earths and magnet production, has tightened its export approval rules—leaving companies little choice but to hand over highly sensitive information just to keep supply chains moving. Tesla (TSLA) and other major EV players rely heavily on these magnets for motors, while the same materials power defense equipment, wind turbines, and consumer electronics. The new rules, which kicked in this April, now require foreign buyers to submit end-use details, customer lists, photos, videos, and in some cases even production line footage.
Several executives say the demands go well beyond what's publicly outlined. A UK-based magnet supplier reported that its applications were initially denied until it added visual proof of how the magnets were being used, who was using them, and why. Italian manufacturer B&C Speakers said they had to share not just documentation—but an entire video of their factory operations. German magnet maker Magnosphere warned that it's no longer about stealth data collection—it's happening in plain sight, with Chinese authorities requesting trade-sensitive information as part of a formal process. While some firms are blurring names or scrubbing order details, most admit that giving up this level of access feels like a strategic risk.
Still, the calculus seems simple: no data, no magnets. Even with a framework deal between the U.S. and China hinting at some easing of tensions, China hasn't pulled back on these controls. And for many companies, security concerns are being sidelined in favor of immediate survival. As one European executive put it: “Companies are willing to do whatever China wants to get the supplies.” For now, access trumps IP protection—and Beijing knows it.
