Chinese Trade

Building Walls not Bridges

A staff member stands next to robots at a plant of Kuka Robotics in Shanghai, China August 13, 2014. REUTERS/Pete Sweeney/File Photo
All is not as well as it could be for Kuka in Shanghai as politicians battle over market access.
  • Why it matters

    Why it matters

    China is vital for German and European companies – though growth is flagging – but restrictions hamper their efforts to expand in the Chinese market. Chinese companies, meanwhile, have been given free rein to freely invest in German firms, with one notable exception.

  • Facts

    Facts

    • Chancellor Angela Merkel is traveling to China on Sunday.
    • Chinese direct investment in Germany increased by 44 percent from 2014 to 2015.
    • Two recent acquisitions by Chinese investors in Germany are machine builder Krauss-Maffei and Hahn Airport near Frankfurt.
  • Audio

    Audio

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After a boom period, German companies in China are downbeat. The double-digit growth rates that many industries were starting to take for granted have come to a swift halt. Managers complain that they are being held back from expanding in the country by tight regulations in some sectors. At the same time, they are keeping a close eye on how the Chinese are snapping up companies in Europe.

It comes as no surprise that ahead of Chancellor Angela Merkel’s tip to China on Sunday she has turned up the volume on calls for a free market and long promised Chinese reforms.

But her trip is overshadowed by the fact that the German government has wasted a good chance to brighten the outlook for German companies in China, through its abrupt rejection of the Chinese takeover bid for robot maker Kuka.

European companies have good reason to grumble about Chinese restrictions and the disparity in market access. On the one hand, Europe is more popular than ever among Chinese investors. Last year, Chinese direct investments in Germany rose to €14 billion ($16 billion), a 44 percent increase over 2014. The expansion is gathering speed this year, especially in the form of takeovers. Machine builder Krauss-Maffei, Hahn Airport and possibly even Kuka are just a few examples.

On the other hand, European investments in China declined by 9 percent in the same period, to €9.3 billion. While Chinese companies can invest without restriction in almost all industries in Europe, European companies are still excluded from many sectors in China.

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