USA approves takeover of KUKA by Midea
After the American veto against the takeover of Aixtron by a Chinese company, 2017 seems to herald a better start for Chinese company buyers. The responsible US authorities have given their blessings to the 4,6 billion heavy acquisition of the German robot manufacturer KUKA by the Chinese Electrical Engineering group Midea (美的). To avoid any further doubts and another veto on security reasons, KUKA had already sold their armament department.
China’s M&A activities in Germany
Overall, Chinese investors have spent around 11.6 billion Euro for the purchase of German companies – twenty times the amount, which had been invested in previous years. Besides KUKA, the machine tool manufacturer KraussMaffei, the energy and environmental technology enterprise EEW, as well as Bilfinger Water Technology were bought by Chinese investors.
The weak Chinese economic growth did not lower the merger and acquisition activities of Chinese companies – instead, they increased. The era of huge economic jumps and cheap labor are over and China is aiming for sustainable economic growth. It’s not without reason that market entry and the acquisition of technology and know-how are among the most often cited motivations for Chinese investments in Germany.
Exemplary is the initiative „Made in China 2025“. It aims at making the People’s Republic of China a worldwide leader in manufacturing and production until 2025. Thereby, it does not only focus on production volume, but also the automation and digitization of production. China already plays a leading role when it comes to the purchase of industrial robots. The German strategy for the future, Industry 4.0, to intelligently connect humans and machines is hereby serving as an example for the China and makes them see Germany as a role model in this field. Buying KUKA and other technology companies from Germany is just a logical consequence and a way for China to catch up in the High-Tech-Industry.
Chinese Investments in Germany
First Half Years 2011-2016 (in million Euro)
German M&A activity distinctly lower in China
However, Chinese company acquisitions have been viewed quite critically in the German business world. The freedom of purchase, which Chinese companies enjoy in Germany does not exist the other way around. That is why German takeovers in China rarely happen. The President of the European chamber of commerce in China Jörg Wuttke demands the same rights and obligations in Germany, as well as China. The chairman of the federal association “Mergers & Acquisitions” Kai Lucks (in German) is equally concerned about the increasing number of M&A activities through Chinese corporations. Although many German companies are interested in Chinese enterprises, German M&A activity in the People’s Republic underlies strict regulations or are outright forbidden.
Interest in renewable energies and health
For this year, less purchases by Chinese entrepreneurs are predicted in the field of High Tech. Beside concerns from the Western governments, new restrictions on capital export by Chinese authorities and evolving demands by Chinese investors play a big role. Investments in automation will continue to be important. But, the aging population and the burdensome environmental problems will cause Chinese firms to draw their attention more towards renewable energies and the health sector. But also consumer goods, electric mobility and real restate will gain in importance.
Continue reading about similar topics such as Frankfurt could become the new investment favourite after Brexit or Chinese foreign direct investments in the heart of Europe.
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