Europeans' lack of understanding of China

(18 May) In the past, when I looked at the data of multinational mergers and acquisitions (M&A), I found that China's M&As could be roughly classified into two types: resource M&As and technology M&As. If it wasn't to acquire natural resources (like minerals or fuel sources), then the main objective of the M&A was to obtain technology(of all types. Since the influence of Made in China 2025*, the M&As in the ten key industries increased.) Of course, there are other purposes like money launderingbut that is more difficult to determine based on the data.

Interestingly, despite the US being a major player in technology. Approaching mainly through researchers (Thousand Talents Plan) or technology transfer (via joint venture agreements), the US has long since been warier of China. Most Chinese M&As are with Europe, especially Germany, the manufacturing giant that best meets China's technological needs. It wasn't until 2016, when China acquired the Bavarian+ robotics company, Kuka, that the alarm bells sounded for Germans. By then, it was too late.

The problem with Europeans is that they always lacked a deep understanding of China. According to Bloomberg News, Manfred Weber - leader of the centre-right EEP++ [sic] in the European Parliament - told German media that he was in favour of a temporary one-year ban on Chinese buy-outs because China was taking advantage of the destruction that the Wuhan pneumonia caused the world. As economic performance slipped and maintaining operations became difficult, low-cost acquisitions of enterprises occurred on a large scale in many countries. 

This actually began when the Wuhan pneumonia started spreading all over the world. China had already taken action. Not long ago, China had acquired Indian firms, which promptly caught the attention of Indian Prime Minister Modi. Besides freezing those deals, he also declared a temporary ban on all Chinese applications for the M&As of Indian firms. 

Compared with Taiwan's awareness of human-to-human transmission of the Wuhan pneumonia or the Indian Prime Minister Modi's wariness of Chinese M&As, Europeans lack not only in their understanding of China but also in their sluggish response. Up to present, there has yet to be a consistent policy as it remains stuck at the stage of being appealed by politicians. 

The pandemic not only revealed the government's poor handling of emergencies and the bureaucratic sluggishness in European nations, but it also exposed Europeans' lack of understanding of China.

Editor's Note:

* Made in China 2025 is a strategic plan issued by the Chinese government in 2015 to transition from producing cheap goods to more technology-focused goods. The ten key industries are information technology, robotics, sustainable technology, aerospace, nautical and submarine, railway, power, material science, medicine and agriculture. 

+ Bavaria is a German state.

++ The original article made a typo. EPP stands for European People's Party.

Source: Facebook 

https://www.facebook.com/1640627496/posts/10219890809454218/