High-tech poised to grab bigger share of Sino-German trade

Investment in technology-based services and trade in high-end products - such as cloud platform systems, smart manufacturing projects and sensors and industrial automation goods - is set to account for an even greater proportion of Sino-German bilateral trade, officials and experts say.

Chinese investment in Germany has not been as heavily concentrated in regular manufacturing and greenfield sectors in the past few years. It has started to focus on more high-tech companies for acquisition, such as leading robotics manufacturer Kuka AG, which received a takeover offer from Chinese consumer products company Midea Group last year.

Feng Yaoxiang, spokesman for the China Council for the Promotion of International Trade in Beijing, says Chinese companies are eager to have the most modern technologies.

"With the advent of Industry 4.0, launched in Germany in 2013, we will see new players - especially from the internet field - entering the manufacturing sector, where they will change the customer-supplier relationship in both China and Germany," says Feng.

Bilateral investment remains robust. China pumped more than $2.95 billion (2.6 billion euros; ￡2.3 billion) into Germany last year, a 258.6-percent increase year-on-year, while Germany invested in 392 projects in China with an investment volume of $2.71 billion.

"The dramatic surge in Chinese outbound investment last year triggered a noticeable rise in protectionism, such as the blocking of a Chinese consortium's attempt to acquire German chipmaker Aixtron SE," says Terence Foo, co-managing partner for China at London-based law firm Clifford Chance.

To protect their own interests, France, Germany and Italy asked the European Commission in February to give them the right to veto high-tech takeovers.

"Some lessons certainly can be learned from the deals that were successfully completed in 2016," Foo says, adding that Midea completed its acquisition of Kuka after the Chinese company won over the sellers by offering commitments to allow Kuka to operate independently, to preserve jobs and the current management and to keep its public listing."

In the same year, a consortium of Chinese investors successfully acquired Osram's lamp business. Although the German government was initially hesitant about approving the deal, it was convinced that it did not involve sensitive technologies. The buyers also promised to continue using the Osram brand.

Joe Kaeser, chief executive officer of Siemens AG, says China is making progress on the path to becoming an advanced and competitive economy, but it will take time for these changes to have an impact. Patience and consistency will be required, as well as continuous reforms along the way, he says.

Xue Rongjiu, deputy director of the Beijing-based China Society for WTO Studies, say: "As the United States has been pressing both China and Germany to appreciate their currency exchange rates to maintain competitiveness in manufacturing, both countries have been keen to upgrade the content of their partnership, especially in services and high-end product trade."

Germany is China's biggest trade partner in Europe. Trade between the two countries totaled $151.29 billion last year, accounting for one-third of the total volume between China and the European Union.

zhongnan@chinadaily.com.cn

(China Daily Africa Weekly 06/09/2017 page29)