China Gets High Technology by Takeover of Hi-tech Companies AbroadPosted: October 25, 2016
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