Chinese Company Under Scrutiny For Tainted Water And Tax Breaks

In Sidney, Ohio, about two miles southwest of the city’s 166-year-old fairgrounds, past the Louis Sullivan-designed bank and the ornate buildings surrounding Court Square, sits the newest U.S. operation of SEMCORP Manufacturing USA Inc., a Chinese manufacturer of battery components.

The company arrived in Sidney with ambitious promises. In 2022, SEMCORP projected that its new plant would create 1,199 full-time jobs and generate roughly $73 million in annual payroll. Those numbers helped persuade the Sidney City Council to unanimously approve a job-creation tax credit for the project.

Four years later, the picture looks considerably different.

Photos and other investigative materials reviewed by the Daily Caller News Foundation show Chinese nationals being transported between local motels and the SEMCORP plant at unusual hours. The schedules appear similar to China’s well-known “996” work culture, in which employees work from 9 a.m. until 9 p.m., six days a week. Job advertisements posted by the company have also listed Mandarin as a preferred language for certain positions.

The use of Chinese workers is not itself improper. SEMCORP confirmed that Chinese nationals are employed at the Ohio facility, and James Shih, the company’s head of global projects and legal, said those employees are in the United States on L-1 visas. Those visas allow companies to transfer executives, managers and employees with specialized knowledge between international offices.

Shih also pushed back on suggestions that there was anything suspicious about workers staying in hotels or being transported by the company. Some foreign employees, he said, do not have American driver’s licenses and therefore rely on company-arranged transportation.

Still, the arrangement has fueled questions in Sidney because the project was originally sold as a major source of employment for local residents.

SEMCORP also received a substantial local incentive package. Under a Community Reinvestment Area agreement, the company was granted a 75 percent property-tax exemption for 15 years, a benefit previously reported by independent journalist Breanna Morello.

“We are encouraged by their willingness to be a good neighbor,” Sidney City Manager Andrew Bowsher said after the agreement was approved.

The state offered incentives as well. SEMCORP was initially expected to receive Ohio tax credits over 15 years in exchange for creating 1,199 jobs. Two years later, that commitment was reduced to 300 jobs, according to the Ohio Department of Development. Ultimately, however, SEMCORP never completed the agreement required to receive the credits. The Ohio Tax Credit Authority voted June 1 to cancel the arrangement entirely, the department told the DCNF.

Shih said SEMCORP does not intend to use city tax breaks tied specifically to hiring or investment benchmarks.

“SEMCORP America is proud to be the first company to invest in the commercial-scale manufacturing of coated lithium-ion battery separator, a critical component of our energy supply chain, in the United States,” Shih said in a statement. “We’re also proud of our international employees working shoulder-to-shoulder with our local workforce.”

He added that the company remains early in its launch and expects eventually to create hundreds of manufacturing jobs in Ohio.

The dispute surrounding SEMCORP reflects a broader debate over how much American taxpayer support should go to companies with significant ties to China, particularly in industries with national-security implications.

The One Big Beautiful Bill Act, signed into law by President Donald Trump in July 2025, included restrictions intended to prevent certain tax benefits from flowing to companies owned or effectively controlled by China, as well as firms heavily dependent on Chinese supply chains.

Michael Busler, a policy analyst and finance professor at Stockton University, said government support for Chinese battery manufacturers deserves particular scrutiny because advanced batteries have both commercial and military applications.

“It is critically important that the U.S. does not rely on China for these products,” Busler told the DCNF.

The difficulty is determining where an ordinary commercial enterprise ends and China’s strategic industrial policy begins.

The U.S. State Department has long warned about Beijing’s policy of military-civil fusion, which seeks to integrate civilian research and private industry with military development. Critics argue that Chinese companies can also structure their American operations through U.S.-registered subsidiaries, allowing them to qualify for incentives while maintaining significant connections to parent companies in China.

For residents of Sidney, however, national security is only one concern.

Environmental questions have followed SEMCORP since shortly after the project was announced. Within weeks of Ohio Gov. Mike DeWine announcing the Sidney plant in 2022 as part of more than $1 billion in planned investment across the state, residents crowded City Hall to question the project.

J.R. Edwards, who had lived in the area for two decades, told the Sidney Daily News that he worried about potential runoff reaching nearby property. SEMCORP manufactures separator film used inside lithium-ion batteries, a production process involving industrial chemicals and solvents.

Those concerns have gained new relevance because of problems at SEMCORP’s first factory outside China.

The company opened a plant in Debrecen, Hungary, in 2023. By 2026, Hungarian authorities were investigating serious groundwater contamination near the facility.

According to a June report by the Hungarian outlet Index, testing found aluminum in groundwater at levels roughly 13,000 times above the legal limit. The plant had already been under heightened environmental scrutiny after foam from a malfunctioning fire-suppression system entered groundwater in 2024.

Hungarian environmental officials reportedly detected a strong-smelling substance in February 2026, but SEMCORP did not submit requested testing related to metal contamination until May 14, according to Index.

In late June, regional authorities suspended the plant’s production license and halted operations, Reuters reported.

Shih said many of the substances detected in the groundwater are not used in SEMCORP’s manufacturing process. The facility operates in an industrial park containing other battery manufacturers, he noted. Aluminum, however, is used in SEMCORP’s process.

Local officials in Hungary have called for a full investigation.

Debrecen Mayor Papp László urged regulators to determine whether SEMCORP was responsible and said authorities should consider suspending its manufacturing operations or revoking its environmental permit if warranted.

“We strongly urge the environmental protection authority to conduct a comprehensive investigation into this matter,” László said in a Facebook video translated by the DCNF.

The Debrecen water utility has said the contamination has not affected the city’s drinking-water supply.

The controversy is unfolding against a larger political backlash in Hungary over foreign-owned battery factories. Former Prime Minister Viktor Orbán had aggressively courted Chinese battery and electric-vehicle manufacturers with tax incentives and favorable regulations. Critics argued that the policy conflicted with his government’s longstanding opposition to large-scale immigration because the factories frequently depended on foreign labor.

The political cost appears to have been significant. Opposition to battery plants and government subsidies became an issue for voters, and the sector’s unpopularity may have contributed to Orbán’s electoral defeat in April.

Prime Minister Péter Magyar announced new restrictions on non-European Union visas in June. European media have reported that many such visas had previously gone to foreign workers employed in Hungary’s automotive and battery industries.

Similar debates are now emerging in the United States.

SEMCORP’s former international chief executive, Jeff Liu, previously served as CEO of Fuyao Glass America, another Chinese-owned manufacturer operating in Ohio. Fuyao’s plant in Moraine was also promoted as a major source of American manufacturing employment and received millions of dollars in government support.

Federal agents raided the Moraine facility in 2024 as part of an investigation involving allegations of illegal staffing practices and money laundering. According to the Department of Justice, investigators uncovered a network of staffing companies accused of recruiting unauthorized Chinese and Mexican workers and placing them in jobs while arranging housing and transportation.

No criminal charges had been filed two years after the raid, according to local news reports, and the investigation remained ongoing.

Shih said Liu left SEMCORP in 2023, before the Sidney facility began operating.

SEMCORP is not the only Chinese-linked battery supplier receiving American incentives.

In North Carolina, Green New Energy Materials Inc., or GNEM, plans to manufacture lithium-ion battery components at a facility in Lincoln County. A 2024 announcement from Gov. Roy Cooper’s office described GNEM as a Delaware-based company founded in 2023 and said the project would create 545 jobs.

GNEM is a subsidiary of Shenzhen Senior Technology Material Co. Ltd., commonly known as Senior-China. The Chinese parent company was not identified in the state’s initial announcement.

North Carolina has approved as much as $3.6 million in Job Development Investment Grant incentives for the project over 12 years. An archived job advertisement for GNEM said Mandarin-language ability was “a plus.”

Senior-China’s chairman, Chen Xiufeng, has held positions connected to Chinese political institutions. Chinese records indicate that he served as a delegate to the Fifth Shenzhen People’s Congress and has participated in the All-China Federation of Industry and Commerce, an organization that functions as a bridge between private companies and the Chinese Communist Party.

“I navigate life with two books, one is the Tao Te Ching, one is the Selected Works of Mao Zedong,” Chen said in a 2022 interview translated by the DCNF.

Senior-China has also disclosed connections to China’s defense establishment. Its 2016 initial public offering prospectus stated that a former senior executive had received a military-to-civilian award from the China Academy of Engineering Physics, the institution responsible for much of China’s nuclear-weapons research and development.

GNEM did not respond to a request for comment.

Senior-China has also faced intellectual-property litigation in the United States.

Battery-separator manufacturer Celgard sued the company in 2019, accusing it of using proprietary technology obtained after a former Celgard employee joined Senior-China as chief technology officer. Celgard alleged that Senior hired the employee specifically to gain access to knowledge involving patented battery-separator designs.

Senior-China disputed the allegations and argued in court that, as a Chinese corporation, it had not intentionally directed business activity toward California.

The companies reached a confidential settlement in November 2023. Senior-China established its U.S. subsidiary, GNEM, that same year.

By 2024, the North Carolina operation was receiving state incentives. The state Department of Commerce described GNEM as Shenzhen Senior’s first manufacturing expansion in the United States.

Taken together, the projects in Ohio and North Carolina illustrate the difficult tradeoff facing state and federal officials.

American communities are competing aggressively for factories that promise hundreds of jobs and large capital investments. Battery manufacturing is also considered an important part of the growing electric-vehicle supply chain. But when those projects involve companies tied to China, the economic benefits come with additional questions about foreign labor, intellectual property, environmental enforcement and national security.

The Western Journal

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