In the first quarter of this year alone, China engaged in more foreign investment than in all of 2015. The shopping tour is no accident. Chinese companies are under massive pressure to acquire foreign technologies to increase their economic value creation in the mid-term. The Chinese government made this a priority in its “Made in China 2025” plan, and is pressuring interesting countries and regions to further develop its economy in terms of technology and consumer orientation.
From a European point of view, China’s rise as an export market offers a chance, while its activities as a strategic investor constitute a menace. We have come to a crossroads and must decide: Do we support free trade or will we give in to protectionist reflexes? Or is there an intelligent compromise between the two?
The call for open markets is often followed by the sheepish wish to exclude investors from China. But as the Kuka sale demonstrates, this view is too short-sighted. About 35 percent of the company’s global growth occurs in China, which is thus a key market for the robot maker. Kuka’s technology is being installed in many factories to generate the data that is the new gold of the digital era.
No one knows yet exactly where the profit margins will be achieved in Industry 4.0, nor who the winners will be in the related value-creation chains. There is a legitimate worry as to whether added value can be preserved in Germany. But up to now, there has been little worry about not acquiring access to Chinese data platforms. The reality is that the fourth industrial revolution of digital technologies announced by Klaus Schwab at Davos has indeed begun, and it will have a profound influence on the 21st century. It would be wrong to cut ourselves off from this.
Europe needs both open markets and protection against selling off key technologies. It’s too late to form European consortia when a takeover offer has already been made. That’s why new policies are in order.
One approach needs to be strengthening industry through additional efforts in research and development. Companies and creativity flourish in that sort of ecosystem. And in times of rapid change, this is better than industrial policy planned on a theoretical basis.
But the essential impulse must come from the economy: particularly from technology providers and investors expanding German and European companies into the growth market of China. The business future of the Continent is certain if we trust ourselves and act in a considered manner.
To contact the author: firstname.lastname@example.org