Why Germany fears China will want more after robot-maker deal
AS CHIA’S Midea Group courts German robot maker Kuka, the suitor has guaranteed German jobs and factories for more than seven years and says it can help Kuka boost sales in China. Kuka’s management deems the offer fair, and top shareholders are backing the deal.
So what’s the problem? This being Germany, it’s about sausage. “It’s the salami strategy,” said Serden Ozcan, a professor at WHU - Otto Beisheim School of Management in Vallendar, Germany. The government, he says, is concerned about the transfer of technology to China – especially in strategic industries.
Foreign interests “take a slice and if there’s no response they take another and another,” Ozcan said. “If you don’t establish the rules of the game now, what are you going to do when the Chinese come after really big companies?”
In June, Midea announced an offer of 115 euros a share for Kuka, which values the company at 4.6 billion euros ( RM20 billion). Midea initially said it aims to acquire at least 30 per cent of Kuka and now has commitments from holders of 76 per cent of the shares. Midea’s stock closed up six per cent in Shenzhen trading. Kuka was up 0.1 per cent in Frankfurt at 1pm last Friday. The company set a deadline of midnight Friday for owners to tender their stock.
China’s biggest maker of home appliances is a Kuka customer and says it can upgrade its factories with more robots from the German company. Midea has promised independence for Kuka, whose robots build cars and airplanes, assist doctors in hospitals, and sort goods in warehouses.
The offer has been met with scepticism and hand-wringing among the German political elite. Guenther Oettinger, the EU’s commissioner for digital economy and a former prime minister of the state of BadenWuerttemberg – has said it’s important to keep strategic knowledge in Europe.
And Economy Minister Sigmar Gabriel says the region needs regulations to fend off “unfair competition” from countries with state- directed economies. “I’m not prepared to sacrifice jobs and companies on the
It’s the salami strategy...If you don’t establish the rules of the game now, what are you going to do when the Chinese come after really big companies? Serden Ozcan, a professor at WHU - Otto Beisheim School of Management in Vallendar, Germany
altar of open markets,” he told reporters in June.
And in an open letter on his ministry’s website, he calls for an expansion of EU rules to allow reviews of foreign investment in sectors that could have “existential meaning for the strategic sustainability of the European economy.”
After Midea announced its proposal, Gabriel sought a European buyer to counter the bid. Siemens demurred saying that Kuka, one of nine German companies chosen to showcase its capabilities to Chancellor Angela Merkel and President Barack Obama at a trade fair in April, doesn’t fit with its strategy. Switzerland’s ABB played down any interest, and its CEO called reports that it might make an offer “pure speculation.”
Still, Merkel herself hasn’t voiced any real opposition to the deal, at least publicly, because she has no legal means to scuttle it and she understands that the German and Chinese economies are growing increasingly interdependent. — WPBloomberg