Berlin pushes back against China’s business plans in Trump era

By Andrew McCathie, dpa

China is now Germany’s fourth-biggest foreign investor, and US trade tensions threaten to push Beijing to step up its drive into Europe’s biggest economy even further, despite growing resistence in Berlin.

Berlin (dpa) – As a result of its trade war with the US, China could begin stepping up its shopping spree in Germany aimed at acquiring the country’s fabled technological know-how, despite growing resistance to Beijing’s investment drive in Europe’s biggest economy.

“The headwinds have increased [in Europe],” said Yi Sun, a China analyst with the professional services group Ernst & Young.

This is especially the case among high-tech companies and utilities where there are more “political concerns and worries about a sell-out of know-how,” said Yi.

German machine tool manufacturer Leifeld announced last week that China’s Yantai Taihai had abandoned its bid to acquire the group, hours before Berlin was tipped to veto the deal on strategic grounds.

A civilian nuclear power parts supplier, Yantai Taihai’s decision came less than a week after Berlin blocked China’s entry into the German electricity sector on the grounds of national security.

And Chinese auto parts group Ningbo Jifeng is hoping that its long-running battle to acquire a majority stake in Bavarian-based auto interior maker Grammer will finally come to an end on Monday night when a majority of shareholders sign off on its 700-million-euro (809-million-dollar) takeover bid.

But while the Berlin authorities have already given the greenlight to the takeover, saying they did not have any issues with the deal, the move risks provoking fresh anger in Germany about China’s inroads into the nation’s key industrial sectors.

In recent years, Chinese investors have secured stakes in German firms as varied as machinery groups, solar and alternative energy, material handling, building equipment and piano manufacturing.

The investment offensive forms part of Beijing’s drive to turn its own products into global brands and transform the country into a major industrial giant by the nation’s 100th birthday in 2049.

Yi estimated that Chinese companies have splurged about 10 billion euros in Germany since January – out of a total of about 15 billion euros spent in Europe.

In February, Chinese automaker Geely became the biggest stakeholder in Daimler – the manufacturer of luxury Mercedes-Benz cars – after its purchase of a 7.3-billion-euro stake in the Stuttgart-based firm.

It also represented the biggest Chinese investment in Europe so far this year, with China now the fourth-biggest foreign investor in Germany.

The issue of Chinese investment could complicate any moves by Beijing and Berlin to forge a united front against the White House as US President Donald Trump attempts to reset the US’s global trade relations under his “America First” protectionist plan, which now includes an escalating trade war with China.

However, the tensions with the US could again “lead to a greater willingness in Europe to get Chinese investors on board,” Yi said.

This is particularly the case as several of the German companies  targeted by Chinese investors are highly specialist family-run firms with long corporate histories that have struggled in recent years in the face of rapid market changes and moderate economic growth in Europe.

Still, trade tensions between China and Germany have been building for some time.

Long before Trump entered the White House in January 2017 to demand “trading relationships to be fair and to be reciprocal”, Germany has raised the alarm about Beijing’s trade practices along with its Made in China 2025 plan, which was launched in 2015 and aimed at emerging as a leader in technology.

During a tense visit to China two years ago, Sigmar Gabriel, then Germany’s economics minister, called on Beijing to end restrictions on foreign companies investing in China to ensure that they had the same access to the world’s second-biggest economy that they were granted in other nations such as in Europe.

Gabriel’s at-times acrimonious visit to China in 2016 came just one week after his ministry withdrew its approval of the takeover of the German chipmaker Aixtron by the Chinese investment fund Fujian Grand Chip Investment, once again citing national security concerns.

The rejection prompted an official complaint from Beijing.

This came after a 5-billion-euro bid in early 2016 by Chinese home appliance group Midea for leading German industrial robot maker Kuka brought to a head Beijing’s global investment expansion drive.

By January 2017, Midea had finally secured control of Kuka after a protracted battle.

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