Chinese companies spent far less on German firms in the second half of this year as German Chancellor Angela Merkel’s government moved to tighten its grip on foreign investment, data compiled by business services provider Ernst & Young LLP showed.
Chinese investment in German takeovers or in stakes in German companies plunged to US$311 million during the period, compared with almost US$10 billion in the first half of the year. The number of transactions for the full year dropped to 34, compared with 54 last year and 68 in 2016.
“We expect the number to stabilize next year,” Ernst & Young China business specialist Yi Sun (孫軼) was quoted as saying by the Frankfurter Allgemeine Zeitung, which first published the figures.
“It will take some time before we see another slight increase,” she was quoted as saying.
Merkel’s Cabinet earlier this month agreed to lower a threshold for government probes of foreign stakes in German businesses to 10 percent, driven by concern about China’s efforts to gain footholds in sensitive industries, such as those related to security and defense.
Media companies are also included, while a previous 25 percent threshold remains in force for all other cases.
Germany has stepped up pressure for coordinated EU action since the takeover of robot maker Kuka AG by China’s Midea Group Co (美的集團) in 2016. That led the German government to rethink its tools for shielding technology companies and securing German competitiveness.
German state-owned investment bank KfW in July agreed to temporarily acquire a 20 percent stake in 50Hertz Transmission GmbH, thwarting an attempted acquisition by a Chinese company.
In August, Merkel’s Cabinet stopped a Chinese bid for the first time by vetoing a potential purchase of machine tool maker Leifeld Metal Spinning AG.
Ernst & Young is advising Chinese clients to avoid investing in German companies like aerospace suppliers, Sun told the newspaper.
Europe’s biggest economy nonetheless remains “relatively open” compared with the US and Canada, and there are investment opportunities in machinery, auto parts, healthcare, pharmaceuticals and chemicals, she said.
Ernst & Young’s figures for this year were inflated by Zhejiang Geely Holding Group Co’s (浙江吉利) February acquisition of an almost 10 percent stake in Daimler AG, the newspaper said.
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