Ger­many gets tough on Chi­nese takeovers

The Myanmar Times - - International | Business -

ALARMED by a raft of Chi­nese takeovers, Ger­many is putting the brakes on the Asian gi­ant’s shop­ping spree as it sends out the mes­sage that not ev­ery­thing is for sale – at the risk of an­tag­o­nis­ing Bei­jing.

The more as­sertive noises com­ing out of Ber­lin are likely to dom­i­nate Econ­omy Min­is­ter Sig­mar Gabriel’s trip to China in the com­ing days, putting to the test the oft-vaunted “spe­cial re­la­tion­ship” be­tween the top ex­port pow­ers.

Ger­mans have watched with un­ease as Chi­nese en­ter­prises have swal­lowed up a record num­ber of home­grown tech com­pa­nies this year, spark­ing fears of Ger­man knowhow and in­tel­lec­tual prop­erty be­ing sold off to the high­est bid­der. The wave of ac­qui­si­tions has also stoked grum­bles over China’s easy ac­cess to the coun­try’s open mar­kets, of­ten through state-backed com­pa­nies, while for­eign in­vestors there face tight re­stric­tions.

“Ger­mans seem to be grow­ing more and more scep­ti­cal about China, and con­se­quently more will­ing to pur­sue a tougher ap­proach to Bei­jing,” said an­a­lyst Ger­man Mar­shall Fund Hans Kund­nani from the Ger­man Mar­shall Fund.

In the clear­est sign yet that Ber­lin could be squar­ing up for a bat­tle, the Ger­man econ­omy min­istry last week said it was tak­ing a closer look at two planned Chi­nese takeovers – ef­fec­tively stalling both deals.

The moves have not gone un­no­ticed in Bei­jing and Mr Gabriel will likely face some prickly questions when he leads a 60-strong busi­ness del­e­ga­tion on a five-day trip to China and Hong Kong from to­day.

Ger­many’s first punch came last week when the min­istry said it had with­drawn its ap­proval for Grand Chip In­vest­ment’s 670 mil­lion euro (US$730 mil­lion) pur­chase of chip equip­ment maker Aix­tron, cit­ing se­cu­rity con­cerns.

Ger­man daily Han­dels­blatt said the sur­prise re­ver­sal came af­ter US in­tel­li­gence ser­vices warned that Aix­tron prod­ucts could be used for mil­i­tary pur­poses. The deal is now back un­der re­view, a process that could last three months.

Days later, the econ­omy min­istry said it was also re­view­ing the mooted sale of Ger­man firm Os­ram’s gen­eral light­ing unit to a Chi­nese buyer.

So far there has been lit­tle of­fi­cial re­ac­tion from Bei­jing.

But a by­lined com­men­tary car­ried by the of­fi­cial Xin­hua news agency was scathing, ac­cus­ing Ger­many of “pro­tec­tion­ist moves” that called into ques­tion “Ber­lin’s sin­cer­ity in se­cur­ing an open and trans­par­ent in­vest­ment climate”.

Chi­nese firms spent over 11 bil­lion eu­ros on Ger­man com­pa­nies be­tween Jan­uary and Oc­to­ber, a new record, ac­cord­ing to ac­coun­tancy firm EY.

In­cluded in that is the 4.6 bil­lion eu­ros pur­chase of lead­ing ro­bot maker Kuka by Chi­nese ap­pli­ance gi­ant Midea, a deal that sparked par­tic­u­lar alarm and which Gabriel had sought to thwart. Mr Gabriel, also Ger­many’s vice chan­cel­lor, has since drawn up a list of pro­pos­als to give Euro­pean Union gov­ern­ments greater pow­ers to block takeovers by non-EU firms in strate­gic in­dus­tries.

Cru­cially there has been no word yet on whether Chan­cel­lor Angela Merkel – who has cham­pi­oned close eco­nomic ties with Bei­jing – ap­proves of the idea.

But Mr Gabriel is likely to get a sym­pa­thetic hear­ing from at least some Euro­pean peers.

The new Bri­tish gov­ern­ment re­cently de­layed the con­tro­ver­sial Hink­ley Point nu­clear project over con­cerns about China’s in­volve­ment, be­fore giv­ing it the go-ahead.

In Brussels, an in-depth EU an­titrust probe is hold­ing up state-owned ChemChina’s proposed takeover of Swiss seed maker Syn­genta.

Ob­servers say Ger­many is not about to close the door on China, one of its most im­por­tant trade part­ners.

Rather, the lat­est ma­noeu­vres should be seen as part of a grow­ing de­bate about how “to get a level play­ing field” with China.

Mr Gabriel him­self told re­porters this week for­eign in­vest­ment with China could not be “a one-way street”.

For­eign in­vestors have long com­plained of the ob­sta­cles to do­ing busi­ness in China, such as the re­quire­ment to team up with lo­cal part­ners, while some sec­tors are com­pletely off-lim­its. –

‘Ger­mans seem to be grow­ing more and more scep­ti­cal about China.’

Hans Kund­nani

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