A growing number of Chinese enterprises are acquiring high-tech companies across Europe, a move which has unnerved European policymakers due to concerns over a potential outflow of critical technologies.
But analysts noted that their worries should be dismissed, as the takeover deals generally yield a win-win outcome and will remain quite normal in an era of globalization.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, noted that for European high-tech enterprises that are eyeing the Chinese market, domestic companies' capital support will help them make inroads into the Chinese market.
Meanwhile, the acquisition of European high-tech firms by Chinese companies reflects a strategic move into the high-tech industry, in a bid to upgrade domestic industry and boost productivity, He Weiwen, an executive council member at the China Society for WTO Studies, told the Global Times on Wednesday.
"This is also in line with the central government's 'Made in China 2025' blueprint proposed in 2015," Bai told the Global Times on Wednesday, noting that the goal is similar to Germany's "Fourth Industrial Revolution," which aims to link physical factories with the virtual world.
Worried concerns
Chinese appliance giant Midea's recent acquisition of German industrial robotics supplier Kuka AG, a company that is placed at the heart of the Germany's Fourth Industrial Revolution drive, serves as a prime example.
Midea secured 94.55 percent of Kuka's shares on August 8, making it the largest shareholder in the German robotics company, according to a statement published on the company's website the same day. The report also noted that the action is currently pending regulatory approval.
Under the deal the company is valued at 4.6 billion euros ($5.1 billion), domestic news portal qq.com reported on August 11.
This move means a lot for Midea in terms of its brand recognition and global credentials, He noted.
"Midea is also looking to replace its labor force with robots, and the introduction of Kuka's core business will help accelerate manufacturing automation and cut costs," said He.
Initially, Midea's bid prompted concerns in Europe, as a number of German policymakers and industry players expressed worries over the potential that critical technology know how would be transferred into Chinese hands.
To ease angst, Midea pledged in June that it would maintain Kuka's independent operation and protect its business secrets. It also has no plan to delist the company for the next seven-and-a-half years, according to a filing Midea sent to the Shenzhen Stock Exchange.
"This can be viewed as a guarantee to the European government that Germany is still in control of its cutting-edged technology," said Bai.
Additionally, Kuka's performance in the Chinese market has been quite sluggish in recent years, and Midea's involvement will help prop up its overall growth in revenue, experts noted.
It is estimated that driven by the explosive growth of the Chinese market, Kuka will fulfill its goal of raising revenues to 4-4.5 billion euros before 2020, with the Chinese market projected to contribute to 22 percent of total revenue, according to domestic news portal 163.com.
Increase in acquisitions
Traditionally, Chinese enterprises have focused on mergers and acquisitions (M&A) in sectors like manufacturing and property, but now they are eyeing the high-tech sector across Europe, expert noted.
In March, an investment controlled by the Beijing municipal government purchased Germany's largest waste management company EEW in a deal worth 1.4 billion euros.
This was followed by the acquisition of Osram's business unit Lamps by a Chinese consortium, which included IDG and Chinese lighting company MLS, in July, according to media reports.
Swedish Syngenta AG agreed to a takeover bid by China National Chemical Corp for $43 billion, Bloomberg reported in July.
According to statistics released by Deloitte, out of the 79 M&A launched by Chinese enterprises towards European counterparts in 2015, 31 related to industrial technology.
Although European governments do not have clear regulations concerning foreign acquisition of high-tech companies and have not publicly announced any opposition prior to the Kuka deal in recent years, it seems like they will have a more cautious attitude toward this sector in the future, said He.
"The worries are centered on key technologies," He said. "But in a globalized era, M&A are quite normal, and the development of high-tech technologies requires cooperation of all people involved."
