Tuesday 11 December 2018

Chinese tech deals face EU clampdown

Robotic arms manufactured by Chinese target Kuka operate on a Volkswagen Passat chassis inside the VW factory in Emden, Germany
Robotic arms manufactured by Chinese target Kuka operate on a Volkswagen Passat chassis inside the VW factory in Emden, Germany

Natalia Drozdiak and Jonathan Stearns

Chinese investors that have renewed their billion-dollar shopping spree for high-tech assets in Europe face greater scrutiny under new EU rules.

The technology sector in particular has been an important target as China is intent on developing its own semiconductor production to lessen its dependence on foreign tech.

EU negotiators last week approved the first bloc-wide rules to prevent foreign investments from threatening national security, largely driven by unease over acquisitions by Chinese companies.

Under the new rules, authorities are likely to intensify their scrutiny of so-called dual-use technology that can be tapped by both the civilian and military sectors, according to Mikko Huotari, deputy director at the Mercator Institute for China Studies in Berlin.

France and Germany in particular are likely to train their eyes more closely on acquisitions from China, he said.

Chinese buyers have been behind €3.8bn in European deals this year, up almost twice the volume on 2017.

Under the new law, EU states will be allowed to request information and offer comments on a FDI in a particular country. The nation would have to take any remarks and opinions into account when deciding on the deal.

EU officials hope the mechanism will provide a broader overview of Chinese investment in Europe amid concerns that companies with indirect ties to the state are snapping up strategically important businesses. Economy Minister Margarete Schramboeck of Austria, which holds the EU's rotating presidency and negotiated the November 20 accord on behalf of the bloc's national governments, called the 2016 acquisition of German robotics company Kuka by Midea Group a "wake-up call" for the bloc's politicians.

The attempted purchase of Aixtron, a German semiconductor supplier, by a consortium of Chinese investors also fanned concerns in Europe and the US. The deal derailed after the Obama administration blocked it on national security grounds.

Ms Schramboeck stressed the EU mechanism isn't aimed only at Chinese investments. Still, China appears to feel targeted. The Mission of China to the EU said investments aren't part of a political strategy and that it hopes the EU can "steer clear of trade protectionism."

Bloomberg

Irish Independent

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