Yesterday, the Financial Times had a good article on the growing resistance to China's purchases, mentioning both Aixtron (see my blog from yesterday) and Syngenta as cases in point. The article [ Western resistance to China blocks $40bn of acquisitions by James Kynge] claims Germany and the Swiss "took into account security and competition concerns". And, though many of these deals seem to be on the table, more and more countries are taking a closer look.
These main issue in both the EU and the US is whether a purchase by a State Owned Enterprise is really a purchase by another business or China itself. In my first book, I went through some of the issues with Chinese businesses not being like ours. Some of the foreign businesses in China have levels of Chinese ownership and control specified in law. Conglomerates are so diverse as to make you wonder if any of them had business plans when they started. They buy other entities that bear no relationship to anything the company currently does. That alone would raise some eyebrows in the M&A markets. But diversity is only one aspect.
The other issue is security. Australia recently blocked the sale of Ausgrid, part of their core electric grid. What the rest of the world should be looking at is the tech that goes into 5g, advanced networks and any long-haul communications. The Chinese are looking to control the Internet and use it to collect intelligence needed to meet their political and economic objectives. They do it well in their own country and are using that model to seep into the rest of the world. When they buy something, there is almost always a reason.
No comments:
Post a Comment