China Gets High Technology by Takeover of Hi-tech Companies Abroad


Industrial robots at a Kuka Robotics factory in Shanghai. Photo: Reuters

Industrial robots at a Kuka Robotics factory in Shanghai. Photo: Reuters

China has to obtain high technology to facilitate its transformation from labor-intensive to hi-tech industries. That is the cream of Xi Jinping’s reform for creation- and invention-led growth.

China is making great efforts to obtain high technology through creation and invention at home, but some high technology has already existed abroad. Why not buy it? That will be a shortcut and China has the money to buy.

Overseas companies are not willing to sell as they rely on high technology for their survival.

Then what about buying the companies to get the high technology? That is certainly a better way. China will be able to get not only the company’s existing but its future technology and China has lots of funds to do so.

However, there is strong resistance from both the company related to employees’ job security, customers supply availability, etc. and even from the government that does not want China to get the high technology for whatever reasons.

However, SCMP says in its report titled “How Chinese buyers are soothing fears amid record spree of overseas deals” today that many Chinese have the skill to overcome the resistance.

It quote Nicola Mayo, a partner at London law firm Linklaters who specializes in China-Europe transactions, as saying,“Many Chinese companies have become much more adept at navigating international deals in the last few years, and at soothing the concerns stakeholders might have. In many of the larger Chinese companies, you’re dealing with managers who were educated abroad or have worked in international firms. They understand the concerns about China and know they need to move carefully.”

SCMP cite’s Midea’s takeover of Germany’s most advanced robot manufacturer Kuka as an example. The resistance seemed insurmountable. Germany’s economy minister insisted that Kuka’s automation technology should stay out of Chinese hands.

However in two months, Midea had overcome the resistance and succeeded in the takeover through political courtship, guarantees on jobs security, and support from influential customers, etc.

According to SCMP, China has succeeded in make quite some large takeover deals this year. Certainly, there will be more in the future.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be found at http://www.scmp.com/news/china/economy/article/2039536/how-chinese-buyers-are-soothing-fears-amid-record-spree-overseas

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5 Comments on “China Gets High Technology by Takeover of Hi-tech Companies Abroad”

  1. Steve says:

    That’s the Best strategy – Buy the company, keep it’s geographical advantages overseas, maintain customer support and send the high technology back to its parent company in China for R & D., and send Chinese technicians overseas to learn.

    Like

  2. Joseph says:

    This article makes it like China is the vultures that benefit from those companies’ miseries and that China is a threat to them. But of course it is from the point of view of outsider journalists who does not have the employees best interests. The truth is, those so-called hi-tech companies are fortunate that Chinese companies are willing to take interest on their bankrupt companies. Otherwise, the employees will be jobless as the companies go bankrupt. And those so-called ‘hi-tech’ skills will be wasted anyway. From my past experience touring American ‘hi-tech’ companies, the employees were not even high skilled. The dependency on the automations had made it easy to operate that even illiterate employees could do the jobs. As they bluntly said, even monkeys can be trained to do the job. However, since the companies are in trouble, there must be something wrong with them. And the most frequent reason is the employees inefficiency. I f I want to buy a company in trouble, I will assess what is the problem. I will not want to sack the whole employees as it will leave the company inoperable. But I will certainly screen the most productive employees and sack the useless. In the end, the chance of company’s survival will be its purchasing value. So I cannot accept that just because a Western company is bought by Chinese, the Chinese cannot sack anyone. It is just wrong. The notion that it is insulting to have new Chinese boss sacks old Western employees, is just absurd and racist. They may resist, but the don’t have any right to. Just as any new Western bosses, the new Chinese bosses have every right to sack anyone they think necessary. Those Western employees should respect their new bosses and demonstrate why they should not get fired. They cannot expect to have their troubled company to be business as usual with the new boss, while it is rotting as usual like under the old boss, just because the new boss is Chinese. Their value is their productivity, and not because they are Western. As mentioned above, China has the capacity to make hi-tech companies at home. Why buy abroad? There must be something that those companies can offer. In the end, buying companies abroad is not about politic, race or market. It is about the potential to earn profit. It is just business.

    Like


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