China must play fair in acquiring foreign assets and technology
Michael Clauss says a Chinese company’s offer to buy a top robotics maker in Germany has amplified criticism of unfair competition, as state-backed Chinese firms are shielded from competitors and have access to huge funds
US presses China to lower barriers for foreign business as confidence hit by protectionist concerns
Why is there even a debate, and why is it happening now? Germany is a global leader in openness towards foreign investment. Foreign takeovers are not subject to special scrutiny, let alone restrictions. The only restrictions we have are extremely narrowly defined and relate to security risks, usually with military relevance. There is a strong traditional consensus that this openness has been a major factor in keeping Germany’s manufacturing sector globally competitive – by subjecting it to relentless competition.
It’s in China’s own interest to level the playing field for foreign companies
Chinese investments, in particular, are warmly welcomed, even by trade unions: Chinese investors have a good record in maintaining and even increasing employment.
With the Kuka takeover bid, we now see different views emerge. Some are even mulling a possible European counter-offer. What are their concerns? They can be summarised by the acronym “Aittac” – that is, asymmetric investment, technology transfer and competition.
● Asymmetric investment: Germany and others maintain an open investment environment, while China has not made any tangible progress towards further opening. Joint venture obligations have not been lifted, financial services are tightly closed to foreign investors, which hold a market share of about 2 per cent, and so-called “negative lists” for foreign investment, though often talked about, are not materialising. Protectionism is on the rise and the burgeoning bureaucracy of licensing appears to be a tool of choice: A US$30 million factory by a pharmaceutical company is now under severe threat because of discriminatory licensing practices.
