Chinese business and government combine to take down and take over a firm–at the NY Times:
Rush of Chinese Investment in Europe’s High-Tech Firms Is Raising Eyebrows
After a customer canceled a large order at the last minute, shares in Aixtron, a German high-tech company [website here], sank fast. Months later, with the stock still reeling, a Chinese investor agreed to buy the company.
If only it were as simple as smart deal-making.
Financial filings and public statements indicate a web of relationships among the customer, the buyer and the Chinese state. The links highlight the blurred lines between increasingly acquisitive Chinese companies and Beijing’s long-term industrial policy.
“The Aixtron case makes it very clear: It is not regular investment that is at work here,” said Sebastian Heilmann, president of the Mercator Institute for China Studies, a think tank based in Berlin. “Instead, we see governmental-program capital working behind the scenes.”
Chinese leaders have made clear their intention of using state funds to acquire technological capabilities overseas and bring them home, and a series of purchases in recent years have highlighted that strategy.
That has led to questions about how to treat bids that cross between private investment and state-orchestrated takeovers. It has also fed into broader suspicions about the fate of the takeover targets, and whether national champions will ultimately be absorbed into the supply chain in China. Aixtron — one of a growing number of European businesses with cutting-edge technologies that have recently been targeted by a surge in Chinese overseas investment — provides a case study…
Chinese companies bearing checkbooks have generally been welcomed in Europe. They have provided a source of fresh capital for ailing European enterprises, like the Swedish carmaker Volvo, the Italian tire maker Pirelli, the French resort operator Club Med, and the port in Piraeus, Greece.
But deals over the past two years — which last year hit a record 20 billion euros, or $22.4 billion, according to a survey by Rhodium Group and the Mercator Institute — have begun targeting leading-edge companies with crucial technologies and iconic brand names.
Anxieties are perhaps most acute in Germany, which has had Aixtron and the well-known robotics company Kuka — whose technology is ubiquitous in German car factories — both go to Chinese bidders this year. Largely because of those two deals, Germany has become the largest recipient of Chinese investment in Europe thus far in 2016, according to the Mercator Institute.
In the United States, a number of Chinese bids for chip companies have been undone by regulatory concerns. Regulators thwarted an overture by San’an for an American semiconductor company, and the Treasury Department’s Committee on Foreign Investment in the United States is reviewing the Aixtron bid.
By contrast, European laws give politicians few avenues to block acquisitions, though that has not stopped them from trying…
Now see what happened in 2013:
But what would the investment landscape here be if the current government negotiates a major trade deal with China? Have a look at this article by a very experienced Canadian businessman:
Comment: Why Canada should avoid free trade with China
Gwyn Morgan [more here]…