China branches out into Europe to 'acquire technology and advance management'
Their aim, the political analyst argues is to acquire technology
and advance management techniques so that the state sector can
improve through facing broad competition.
RT:It's not only private billionaires who are rushing for Europe, but state firms too. Why now? What's changed?
Joseph Cheng: China has a very big war chest amounting to more than $3.2 trillion. Most of this money has been invested in US treasury bills with very low returns and the danger of depreciation. So it is natural for Chinese investors to branch out into Europe. Secondly Europe has been more generous in terms of technology transfer with less reservation based on strategic considerations. Finally Chinese exporters would like to expand their operation to Europe upstream and downstream to maintain and even expand their market share. This is a good time because prices are low and inexpensive because of financial difficulties in Europe.
RT:EU companies have long complained that when they do business in China, the government unfairly supports domestic producers - forcing Westerners out of business. Is it more difficult to do business in China than in Europe?
JC: Not exactly, certainly China is finding it quite easy
investing in Europe and in developed countries. Sometimes they
also get their fingers burned because of inexperience and also
because they do not appreciate, they do not understand the
Western operating style.
RT:What is it like if you’re a businessman outside china, trying to do business within China; I gather that the Chinese government supports its domestic producers over the foreign incomers. Is that not true?
JC: Yes. China has a broad definition of state sectors and the major state-owned enterprises are kind of reluctant to entertain competition from foreigners.
RT:So it is not a level playing field?
JC: Yes, because China is yet to be fully participating in the global market. It is still in the process of opening up.
RT:Economic growth in China, while still impressive, is slowing. Are we going to see less investment abroad because of that?
JC: No, China has enough reasons to invest abroad for the reasons I’ve just explained. They want to maintain their export market share. They want to acquire technology and advance management. At the same time China is opening up very slowly because the authorities also understand that the state sector needs to face stiffer competition in order to improve.